Wednesday, August 9, 2006

Affordable housing pencils out

A California consultant has weighed in with a new report for Ketchum that shows construction of affordable middle-class housing is financially feasible.

Those who want to play the back-of-the-envelope calculations card to defeat any kind of government intervention in the local housing market may be distressed by the conclusion that affordable housing pencils out.

But it offers encouragement to businesses and employees struggling on the front lines of resort businesses.

Ketchum's lack of affordable housing requirements in new developments has left businesses crying for qualified employees, burdened by high labor costs, and starved for local business in the spring and fall when both visitors and residents are scarce.

Fully 54 percent of Ketchum's residential units are second-homes, the second-highest percentage of nine resort areas listed in the report. At 64 percent, only Breckenridge, Colo., is higher.

Before the predictable cry that local businesses should simply hike up their suspenders and pay higher wages, it should be noted that median family income in Ketchum at $79,204 is the highest of all the nine resort communities listed in the report.

The analysis contained in the report is comprehensive.

It details the current costs of developing workforce housing in residential buildings of mostly three stories, and those that contain both commercial and residential uses. It uses conservative assumptions throughout.

It doesn't short developer profit margins, which are projected between 19.5 percent and 23.4 percent. It doesn't cut corners on real estate commissions either.

After looking at inclusionary requirements for housing for average families in eight other mountain resort communities and 74 California cities with home prices similar to Ketchum's median price of $670,000, the report concludes that Ketchum's proposed requirement for 12 percent workforce housing in new developments is not excessive.

The 650- and 750-square-foot units recommended in the analysis would cost middle-income buyers between $182,650 and $337,500. That's surely not welfare. And the units would never be mistaken for lavish sprawling penthouses.

Now that the number crunching is finished, Ketchum's elected officials have only to gather their courage and enact the relevant ordinances to make workforce housing happen.

To do that, they will need strong support from wise residents, business and property owners who know that maintaining Ketchum as a lively and interesting community is a good investment for all.

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