Both large- and small-scale housing projects would be economically feasible if the city of Ketchum requires a portion of new developments to have deed-restricted housing units, according to a recently completed study.
The city of Ketchum contracted with Marie Jones Consulting to determine the feasibility of inclusionary zoning, an affordable-housing requirement currently under consideration.
The study proposes limiting inclusionary housing to 24 percent of residential development on the first, second and third floors. Retail is left out of the calculation so mixed-use projects would not be penalized.
It also suggests that projects would be feasible if they limited commercial development to 25 percent of the ground because it is less profitable than residential space.
Ketchum is considering requiring affordable housing units because many businesses are not able to find or retain qualified employees due to the high cost of housing. Citizens are also lamenting the departure of lower- and middle-class residents because they are taking with them the sense of community and character that made the town unique.
Because construction and land is so costly in the Wood River Valley, and Ketchum in particular, some developers are concerned that any market-rate square footage taken out of the overall square footage would be cost prohibitive for projects—akin to a tax for building in Ketchum.
Developers in Ketchum now can either include some affordable housing or pay a negotiated sum as an in-lieu fee. That money is put in a fund for the city to develop its own affordable housing, but the demand is fast outpacing Ketchum's ability to provide.
The city of Sun Valley was the first in Blaine County to institute inclusionary zoning. Sun Valley's requirement is 10 percent.
Jones' study defines workforce housing as units that are affordable to households earning 150 percent of the area median income ($102,528 for a two-person household) while affordable housing would be affordable to those earning 80 percent of that figure.
Based on a family spending 30 percent of its income to buy a workforce condominium, it could spend $343,000. Buyers of affordable units could spend $182,900.
Those percentages are higher than some communities' because Ketchum's income levels are comparatively higher as well. Higher percentages are better for developers because they can charge more for deed-restricted units.
Workforce housing units are proposed to be a minimum of 750 square feet, and affordable units at least 650 square feet.
For projects that have more than 7,500 square feet, the ordinance could require 12 percent of the square footage of a project's residential portion be set aside as workforce housing and another 12 percent as affordable housing.
For projects with less than 7,500 square feet, the ordinance might require 24 percent of the residential portion to be used for workforce housing. Smaller projects are less profitable, so eliminating the requirement for the cheaper affordable units makes them more viable.
Compared with other mountain town communities, which have inclusionary housing requirements between 10 and 50 percent of residential projects, Ketchum's median-family income is high, at $79,204. The median home price in Ketchum is also high, at $670,000, with a large percentage—54 percent—being second homes.
The study also compared Ketchum with 75 cities in California, which has a high-cost housing market. The median home price in those California cities is only slightly higher than Ketchum's, at $686,986. Those cities have an average affordable housing requirement of 12.5 percent.
Floor space devoted to retail use was left out of Jones' Ketchum equations because it would disproportionately burden the feasibility of mixed-use projects, according to the study.
Fourth floor space was also left out because of the proposed transfer of development rights system, wherein property owners in some areas of town could sell their undeveloped extra floors to property owners in other parts of town for greater height allowances. The purpose is to save smaller heritage properties that are fast disappearing, in exchange for greater density elsewhere.
Residential fourth-floor development can't support both goals of historic preservation through TDRs and inclusionary housing, the study says.
Findings of the Marie Jones Consulting study of Ketchum's housing market include:
The median 2BR/2BA condominium unit on the market in Ketchum has an asking price of $717/square foot, or nearly $1.29 million.
Smaller 2BR units usually sell quickly for 3 to 5 percent under the asking price.
Larger 3BR units sell more slowly for about 5 percent under the asking price.
The average sale price of a condo in 2005 was $673,154.
The average sale price of a single-family home in 2005 was $889,875.
The average cost to build a unit was $485,466