Are In-Lieu Fees enough?
Mammoth Lakes Housing Board considers “Inn at the Village” Affordable Housing Mitigation Plan.
The debate between requiring “Inn at the Village” developers to provide on-site workforce housing or pay an in-lieu fee to create off-site affordable housing continued at last week’s Mammoth Lakes Housing (MLH) Board special meeting.
The Inn at the Village project would expand the 80|50 private residence club in the North Village, adding a building C to the existing buildings A and B.
Building C would include up to 67 bedrooms, as well as a restaurant, spa, and outdoor pool and jacuzzis.
Developers Severy Realty Group and SFI Mammoth Owner, LLC requested an Affordable Housing Mitigation Plan (AHMP) that would allow the Inn to carry over alleged credits from the original 80|50 In-Lieu Fee Agreement for Affordable Housing Units to cover its requirement to either provide workforce housing on-site, or mitigate the project’s impact on affordable housing by paying an in-lieu fee.
The developers’ proposed AHMP states that the original 80|50 project paid for 4.5 Employee Housing Units (EHUs) never used in that project’s lifetime, and that the Inn at the Village could apply those EHUs to its requirement to provide 6.7 EHUs (10 percent of the total project units) on site.
That proposal failed to gain traction with the Board earlier this year. Board members argued that the Inn project could not be a successor to the 80|50 Agreement and only receive the remaining 4.5 EHUs of credit; if the Inn project was a successor to the 80|50 Agreement, developers would also owe $1 million per the original 80|50 Agreement to pay $1 million per development (A and B having already been paid for).
Severy Realty Group went back to the drawing board and came up with a new proposal: to pay an in-lieu fee of $77,794.
Severy Realty Group President Dana Severy argued that because Building C will be built atop the existing parking structure that serves the entire 80|50 complex; because of the transient nature of hotel use; and because the North Village is geared toward tourist and not community residents, providing on-site affordable housing would be “impractical and undesirable.”
Therefore Severy proposed paying an in-lieu fee. The new AHMP claims that a hotel room is equal to half a housing unit; therefore 67 rooms equates to 33.5 units, of which 10 percent of that total would be 3.35 units. At $23,222 per unit, according to the Interim Housing Policy, the total mitigation fee comes to $77,794.
Board members received the proposal with skepticism.
“The proposal is light on detail,” said MLH Executive Director Jennifer Halferty.
Board member Larry Johnston agreed. “I thought it was kind of weak,” he said. “The alternative [new AHMP], from my position, didn’t come up to our expectation of what I thought would be a reasonable amount of mitigation for that large a project.”
Halferty said that Board members questioned why, for instance, the AHMP considered a hotel rooms to be half a unit. “That’s not in the Interim Housing Policy,” she said.
Meanwhile, the Interim Housing Policy states that the in-lieu fee is $23,222 per unit for multi-family housing. “Is that applicable to hotels?” she wondered.
Halferty noted that Severy Realty Group used the 2011 Mammoth View Project as the premise for its AHMP proposal; however, to the Board’s knowledge, the Mammoth View AHMP never came before the Board for approval.
“We’re curious to know how and why that moved forward and was approved the way it was,” Halferty said.
Finally, “One of the major points clearly defined as a requirement for an AHMP is ‘greater community benefit,’” Halferty said. “There was no talk of that in Dana [Severy’s] proposal. He made a point that Mammoth View didn’t talk about greater community benefit, and argued that greater community benefit would be to provide housing off-site, which flies in the face of [the Interim Housing] policy.”
MLH Board member Bill Taylor agreed with Halferty’s concerns.
“While the proposed fee seemed to me to be insufficient to meet the housing need generated by the project, the real question is whether it meets the requirements of the Town’s code and housing policy,” he said.
Municipal Code prefers on-site housing, Taylor said, as it can provide diverse housing types spread throughout town.
“Sometimes a development is too far from transit, shopping, schools, etc. to work well for workforce housing, or might have livability issues, such as noise, and is not the best location,” he said. “In-lieu fees are great if they are sufficient.”
However, Taylor pointed out, “Development by a municipality can be more expensive, because of prevailing wage laws. Also, the housing provided through fees is usually not ready for occupancy at the same time as the development is completed, because the fees are not paid until the developer actually pulls a building permit and starts construction and the Town may have to collect fees from several developments before it has enough money to build or acquire a practical housing project.”
The MLH Board will meet again on Wednesday, Sept. 17, to further discuss the Inn at the Village AHMP proposal. Town Senior Planner Jen Daugherty said Severy Realty Group plans to explain why on-site housing is infeasible or undesirable, and why an in-lieu fee will result in an additional housing benefit.
