The Dillon Town Council is zeroing in on a potential ordinance that could require developers proposing projects in town to provide workforce housing or make a payment toward the town’s housing goals.

The council previously discussed these so-called inclusionary housing requirements in June and July. But Dillon Town Manager Nathan Johnson said at the council’s meeting Tuesday, Oct. 8, that there is renewed urgency to get these workforce housing requirements on the books since a developer is expected to submit plans for a new project after a special election earlier this month overturned his original plans.

“This is primarily because of the results of the special election,” Johnson said. “Whether we like it or not, the voters decided to vote down the (planned unit development) that I think we had a lot of leverage to get what we wanted with workforce housing.”

Dillon residents voted decisively Oct. 1 to overturn the council’s earlier approval of a planned unit development, which allows variations from the underlying zoning, for a project at 626 Lake Dillon Drive. With that project shot down, Developer Jake Porritt has instead said he plans to construct a 240-unit condominium complex that he believes complies with town code and therefore can be built “by right,” or without discretionary approval by the town.

“We’re anticipating that we’re going to get another application for a ‘use by right’ product of which we as staff, at least me particularly, don’t feel that we have any bargaining chips there to mandate the workforce housing,” Johnson said.

A number of towns across Colorado have passed different types of inclusionary housing requirements, which require developers to meet certain housing requirements as a condition of development.

The Dillon Town Council has looked at examples of inclusionary housing ordinances from the towns of Superior and Vail. 

The town of Superior requires new residential developments with more than 10 units to have at least 15% of the units be workforce housing units with deed restrictions. It also requires residential developments of less than 10 units to pay a fee in lieu of providing workforce housing.

The town of Vail requires that 10% of a new residential development’s square footage be workforce housing. Vail’s code includes provisions allowing the developer to pay a fee in lieu of constructing workforce housing. It also has provisions requiring commercial businesses to provide workforce housing based on the number of employees the business will generate.

The Dillon Town Council on Tuesday discussed a number of potential inclusionary housing requirements, including potentially requiring developers to build workforce housing equal to about 10% of the units they are proposing or of the development’s square footage.

Mayor Carolyn Skowyra said that she thinks any inclusionary housing requirements should provide “flexibility” for the developer. Carolyn suggested giving the developer three options: include workforce housing in the development, provide workforce housing somewhere else in Dillon or the county, or pay a fee in lieu of constructing workforce housing. She suggested the town could also aim to incentivize developers to include a larger percentage of workforce housing through offering decreased tap fees or other negotiations.

Council member Oliver Luck suggested that the town could also look at upping its impact fees, which for a large development currently require a developer to pay about $2 per square foot, which he called “very modest.”

Luck also stated that he believes that the town should be pursuing inclusionary housing requirements not only because of the potential for an imminent project from Porritt but “because it’s the right thing to do.”

Council member Dana Christiansen said that as the town looks to spur redevelopment in its town core, it needs to strike the right balance between requiring things from developers without disincentivizing development.

“If it’s a mandated thing you don’t want to set the bar too high or you’re chasing off all the developers because no other town in the county has this requirement right now,” Christiansen said. “So better start at a pretty low bar.”

Council member John Woods also raised the idea of looking into establishing a 1% transfer fee that would collect money for the town’s housing fund anytime a property is bought or sold in town.

Geoff Wilson, an attorney advising the town, told the council that he believes a transfer fee would be allowed under state law. But Wilson said that to comply with the Colorado Taxpayer Bill of Rights, or TABOR, there has to be a “nexus” between the purposes for which the transfer fee is imposed and the cost of the program it supports.

Skowyra instructed staff to draft an inclusionary housing ordinance that has “several options to meet that requirement.” In addition to that, she said the council would also like to explore potential changes to the impact fee and what a transfer fee would look like.