Just how many affordable housing units can a developer include before a project becomes unprofitable?
The Ketchum City Council approved a resolution Monday allowing the mayor to enter into a contract with Marie Jones Consulting for a market analysis of building costs and affordable housing.
The study, not to exceed $4,000, will be a component of phase two in the city's downtown master plan.
Economic development consultant Tom Hudson, of Moscow-based The Hudson Company, is under contract with the city to formulate a plan to revitalize the commercial core.
Jones' consulting firm will help Hudson by creating an economic model that the city can use when examining codes, transfer of development rights and other regulatory ordinances related to the plan.
The study will provide a baseline of what project values and costs are.
"If proposed development requirements are (X, Y, and Z), and developers say, 'That's exorbitant,' we'll have this economic analysis to give us a starting point to figure out the economics of zoning changes, as well as a negotiating point with developers," said City Administrator Ron LeBlanc. "We'll have some idea what the market can bear."
The project feasibility analysis will study two or three prototypical projects, LeBlanc said, and compare them with other areas' statistics, market data, census data, and construction costs by region.
That information will be put in an economic model to generate numbers that can be validated, LeBlanc said.
"It'll give us some idea what the economics are of building in Ketchum," he said.
Because of land value fluctuations, some council members doubted the study's worth.
"This is one of those economic models for which there is no answer," said Steven Shafran, whose background is in investment banking.
He voted to approve the allocation because it was a small amount, but he said its value would be close to worthless.
Councilman Ron Parsons agreed the sum made the study more attractive.
"We need to start somewhere," he said. "If we get $4,000 worth of good ideas, that might be what we get out of it."
City Planning Director Harold Moniz said there would be some assumptions made, but the city needs a base level of information before making affordable housing and other requirements.
"A number of developers have come back to us and said (30 percent) affordable housing is not going to work," he said. With the study, "we'll be able to recommend to the City Council ... what makes economic sense, what makes rational sense."