The Dillon Town Council is continuing to work toward a possible policy that would require developers proposing projects to contribute to the town’s workforce housing goals.

During a work session Tuesday, July 9, Town Council members brainstormed a variety of ideas for “inclusionary housing” requirements in town. Ideas floated by council members included requiring a certain percentage of units in residential developments to be used for workforce housing, coming up with a fee that developers could pay to the town instead of creating workforce housing themselves or a local transfer fee on the sale of real estate in town.

“There is a strong desire here in the community to look at other ways or other avenues to create workforce housing,” Dillon Town Manager Nathan Johnson said. “So we felt a follow-up conversation on the inclusionary housing requirements would be prudent.”

Johnson said that the Town Council previously discussed possible inclusionary housing requirements at a work session on June 11. He said the conversation is important because the town is being contacted about a variety of different mixed-use and residential projects, not just on the lakefront but elsewhere in town.

“So, we would probably need to get something on the books sooner than later,” Johnson said.

To date, the town has not had any official requirements related to workforce housing in new developments, Johnson said. But town officials were able to negotiate various workforce housing plans into several projects over the years on an “ad hoc” basis, he said.

Dillon town staff provided two examples of inclusionary housing codes adopted by the Colorado towns of Superior and Vail as examples for the Town Council. 

The town of Superior has inclusionary housing requirements requiring new residential developments with more than 10 units to have at least 15% of the units be workforce housing units with a deed restriction. Superior’s code also requires residential developments of less than 10 units to pay a fee in lieu of providing workforce housing units.

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

Johnson noted that while other Summit County towns, such as Breckenridge, are considering inclusionary housing requirements, none have yet adopted such requirements.

Mayor Carolyn Skowyra said that whatever inclusionary housing requirements the town comes up with should be flexible to allow developers multiple options that can be negotiated with the town.

“This policy that we come up with, I think we want it to be flexible, and I think we want it to seek density,” Skowyra said.

Council member Oliver Luck asked what definition of “workforce housing” the town is using.

Skowyra said that workforce housing could include anything from requiring a renter to work in the county or town for a minimum of 30 hours per week, area median income restrictions or an appreciation cap. Based on the conversation by the Town Council, she said it sounded like there is more support for “light” deed restrictions like requiring a certain amount of hours of local work, than “heavy” deed restrictions like appreciation caps.

Council member Kyle Hendricks said that he believes developers should be required to make a certain percentage of the residential units in a development be workforce housing.

“I think it should be a set amount, like 10% of the project,” Hendrick said. “If you give a developer an out they’re going to take it. So if we want workforce housing, we need to put it in there. Otherwise, we’re not going to have any, and they’re going to keep taking the way out to make more money for themselves.”

Council member Dana Christiansen, however, said that it could be cost prohibitive for a developer to put workforce housing in their main project, such as the “branded residence” project the Town Council recently approved at the Best Western site. He suggested that there be a provision in the code allowing developers to build workforce housing separate from their primary project.

Council member John Woods suggested that perhaps a 1% or 2% transfer fee on the sale of property in town be established in town with the funds going toward workforce housing.

“I want to understand that because everyone is telling me that the 1% (transfer) tax is the way to go,” Woods said.

Johnson noted that towns like Frisco and Breckenridge have a 1% transfer fee on property sold within town limits. But he said that Colorado’s Taxpayer’s Bill of Rights, or TABOR, has certain provisions related to transfer fees that have changed in recent years. Dillon’s town attorney was not immediately able to answer Town Council members’ questions about how a transfer fee might work or be established under the TABOR laws.

The Town Council also discussed a potential policy requiring developers to pay a fee to the town in lieu of constructing workforce housing. But Dillon senior town planner Ned West said the town already has an impact fee that requires projects of a certain size to pay $2 per square foot of floor space constructed.  He warned that having a fee in lieu of workforce housing and an impact fee could potentially be viewed as impermissible “double dipping.” Town Council members also suggested that perhaps the impact fee be raised.

Christiansen noted that Dillon already has many deterrents to development, such as the town owning the land that surrounds most buildings as well as much of the parking in town. He worried that some inclusionary housing requirements could act as further deterrents.

But Skowyra suggested that the town government could leverage the fact that it owns the land surrounding most buildings in town and parking as a “carrot” to help guide developers into negotiating with the town. She also asked that Summit Combined Housing Authority come discuss its latest needs assessment with the town to help guide future conversations on inclusionary housing.