Realtors and developers attending last week's meeting on proposed affordable housing requirements took issue with both the suggested percentage and an economic feasibility study commissioned by the city of Ketchum.
The purpose of the inclusionary zoning code is to ensure that new development in downtown Ketchum includes a reasonable supply of affordable housing for residents with incomes between 80 percent and 200 percent of the area median income.
"This section of code is two pages in length and probably has the most impact of anything we've ever done," Planning Director Harold Moniz said at the Aug. 17 special Planning & Zoning Commission session.
Inclusionary zoning and other regulations are being considered as part of the downtown master plan, which sets forth a vision of what Ketchum should be in the future.
Inclusionary zoning requires developers to make a percentage of housing available to low- and moderate-income earners. In exchange, developers can receive density bonuses, expedited permits and other incentives.
The suggested percentage is 24 percent of new development.
Creating an incentive is one way to ensure the requirement is not akin to a tax, which would be illegal, said City Attorney Ben Worst.
"This won't hold water unless it's an incentive," he said.
Developers, however, expressed concern that no one knew the depth of the market. As a result, they would be hesitant to build deed-restricted units if few people would buy them.
One of the tools used by city staff to draft the code was an economic feasibility study by Marie Jones Consulting.
It stated that development could still be profitable if affordable housing was limited to 24 percent of residential development on the first, second and third floors. Retail should be left out of the calculation, and commercial development should be capped at 25 percent of first floors because it is less profitable than residential space.
"There's a number of significant shortcomings in the analysis," said real estate broker Dick Fenton. "There's an element of judgment that has to come from (the P&Z and City Council) on what's the proper balance between increased density, attractive buildings and leaving the landowner intact from an economic standpoint."
Other criticisms included not taking into account all the building types in Ketchum, assumptions on what buildings could sell for and mathematical errors.
"Marie Jones' analysis is a guideline, not the end-all," said Commission Chairman Harold Johnson. "She came up with 24 percent. I didn't hear anybody come up with another percentage."
Economic analysis and precedents set by other resort towns indicate that a range of 10 to 30 percent inclusionary zoning is justified, according to the code's draft language.
Commissioner Greg Strong proposed an analysis of what's available and what's needed, to include information from the Blaine-Ketchum Housing Authority on how many people would want different types of units.
"If it's not feasible, it doesn't get built and we don't move forward," Strong said. "Development needs to make a reasonable profit in order to take the risks."
Michael Carpenter, president of the board of Advocates for Real Community Housing, gave a little laugh when he said he agreed with Fenton.
The two are often on opposite sides of the housing issue but agree that too high of a percentage requirement will scare away potential projects.
"I'm in almost complete agreement with Dick Fenton," he said. "It's important the way the code is designed that encourages units to be built. I think we're close ... but there's more work that needs to be done."
Ideas to mitigate risk include allowing deed-restricted units to go to market rate after a certain amount of time, and having the city initially buy the units to ensure they don't sit idle.
Commissioner Jack Rutherford said public comments are essential for making the code work.
"We are really at the starting point of this equation and defining our code," he said.