Editor’s note: This article has been updated with the correct spelling of the Dillon Valley.

Frisco Town Council members weighed four options for modifying one of its incentive programs aimed at increasing workforce housing after developers said the program was no longer financially viable. Town Council members took no action but supported options to increase the number of deed-restricted units and reduce the number of required parking spaces for new developments.

Summarizing the issue, council member Andy Held said, “The question is, can we get more higher density that would be more affordable than just building McMansions, because that’s essentially how our system is set up at this point. There are not many reasons for developers to go down this route.”

The Frisco bonus density incentive was first established in 1998. It has been altered over the years, but it essentially permits a developer to exceed the maximum allowable density on a site in exchange for building workforce housing, Frisco housing program manager Danelle Cook wrote in a staff report.

Since its inception, the incentive has created 29 deed-restricted units across seven developments, she said, which accounts for 18% of all deed-restricted units.

After meeting with developers, the committee created four options for the council to consider and presented them at Tuesday’s meeting. The options are meant to address the growing cost of construction compared to area median income. Labor and materials have gone up more than 30% according to U.S. Bureau of Labor statistics, while area median income only went up 8%, Cook said.

The following options are from Cook’s staff report and would reportedly not change town code but simply add to it.

The first option would allow multifamily projects to exceed the maximum density with bonus units so long as at least half of the total number of bonus units were deed restricted at 100% of the area median income. Each deed-restricted unit in the first proposed option must be at least 85% the gross floor area of the corresponding bonus market-rate unit.

The second option proposed by the committee would allow for the developer to build the affordable units off-site. The developer could exceed the maximum allowable density so long as at least two deed-restricted units are built for each bonus unit. The deed-restricted units could be built off-site within a 1-mile radius of the town. If the deed-restricted units were constructed off-site, the total combined floor area of every two off-site affordable units would have to be equal to or greater than the floor area of the corresponding on-site density bonus unit. In no instance, however, could an off-site affordable housing unit be less than 600 square feet in gross floor area.

Council member Andrew Aerenson voiced support for allowing bonus units outside of the town’s boundaries.

“This is a communitywide problem. Most of the people living in our workforce housing aren’t actually working in Frisco, so I don’t actually see the need to have our density units exist in Frisco,” said Aerenson.

He said if the town considers the second option, it should also consider expanding the allowable radius to include parts of the county beyond Frisco.

Countering Aerenson’s opinion, Held said, “I would be hesitant to afford developers the ability to build whatever they want here, buy a bunch of units in Dillon Valley and then call that our workforce housing program. That’s not Frisco-esque.”

Town staff proposed a third option that would allow a development to exceed the maximum density so long as all of the bonus units are deed restricted. The restrictions would be based on the Housing Helps program, which requires occupants to work a minimum of 30 hours per week in Summit County but has no area median income limitation, according to a report by Cook. She said this would create a financially feasible option for a developer, double the number of deed-restricted units created and would require no subsidy from the town.

The fourth option would be similar to the first option but with a provision for low-income housing tax credit projects. Those projects require that the units are deed restricted to average 60% area median income but development could not require occupants to work in the county. Since federal dollars are involved, she said the county could not discriminate based on the location of someone’s workplace. With the fourth option, the development could exceed the maximum density so long as at least half of the total number of bonus units are deed restricted.

Given the area median income requirement, Cook said she wouldn’t worry about someone abusing the fourth option. If someone had a job outside the county, she said she’d expect them to make more than the allowable income.

Several councilors were absent for Tuesday’s meeting, but those present supported the third and fourth options.

Councilor Jessie Burley also brought forward a new consideration about parking. She said the town should consider changing its code to not require one parking spot per bedroom.

“Let’s allow that density, bring the cost of the project down and not require parking spots for everyone,” she said.

The last modification to occur happened in 2019 when the town approved ordinance 19-04, making all affordable housing units generated by the bonus density incentive deed restricted at 100% of the area median income. When the town’s Workforce Housing Development Committee met with developers in 2022, developers expressed a desire to take advantage of the density incentive, but the increased cost of building meant it was no longer financially viable. As a result, the developers requested to combine the bonus density with either town-funded subsidies or to allow for a higher area median income.

The town created the bonus density incentive to encourage affordable housing without any financial responsibility from the town. The 2022 town budget allocates zero dollars to the bonus density incentive, Cook wrote.