Aspen City Council Reveals Lumberyard Financials

The city of Aspen provided much-anticipated cost estimates and proforma information for the Lumberyard affordable housing project in a memo released on Thursday. 

The Aspen City Council voted to release the information after an executive session on Tuesday. The release closely follows the council’s Sept. 19 decision to approve the Lumberyard project’s land use entitlements.

Tuesday’s vote was unnaminous. The memo said the vote was conducted in the “customary fashion for elected bodies to consider the release of work product.” “Work product” is a class of internal documents used to guide council in decision-making that is not available to the public unless the council releases it.

In the months before the council approved land-use entitlements for the Lumberyard — essentially a preliminary and changeable approval for the project’s design — members of the public submitted at least 100 emailed comments to the city, often urging officials to release budget and financial information about the project. 

In an Aug. 14 work session, city staff presented six funding scenarios to the council, which included cost estimates ranging from $361 million to $754 million, depending on construction costs, debt issuance and budgetary decisions. The timelines did not show the details of the actual models by which staff arrived at their estimates.

The information released this week by the city shows those same cost estimates, as well as two previous estimates created in 2020 and 2022, which vary depending on the project’s timeline and its evolving design up until this year. 

The information also includes a pro forma estimation of whether the project will make money once it is built. Assuming the project was occupied in 2023 for modeling purposes, and assuming that all 277 units are administered as non-market-rate rentals (the number of units, number of rental units, and possibility of market-rate units is still slightly flexible), the pro forma shows annual operating expenses at $1.77 million, capital reserve savings (property repair costs) at about $173,000 and rent revenues at $4.93 million. These add up to an annual net operating income of $2.99 million. Debt service payments then reduce that to about $498,000 in cash. 

In all, if the entire project were built this year (the city is recommending a phased process instead), the city’s total subsidy on the project, or the amount it would spend and not recoup in rent payments, over the next 50 years would be about $221 million. In this scenario, the city would need to draw about $229.4 million from its existing housing fund as well as $32.5 million in loans and $46.2 million in contributions from the federal government, the state or other sources.

Because the city does not currently have the required housing fund money on hand, city staff recommend a phased construction process over the coming years. Staff have estimated in previous city council meetings that tax revenues will likely grow enough to make this process possible. 

The released information also includes schematic designs, full project cost estimate breakdowns and financial models.

A Sept. 21 memo included within the released information states: “When compared to Aspen’s prior affordable housing developments, the enclosed estimates related to the Lumberyard affordable housing development, during its time, are relatively consistent with like affordable housing developments during their time.”

In a Sept. 19 interview, the city’s affordable housing project manager, Chris Everson, told the Aspen Daily News that one reason council may have been hesitant to publicly release that information was concern about damaging the city’s ability to negotiate a competitive contract with a private partner who will build and initially operate the project. 

On Thursday, a news release from the city said the released information is part of a “broader strategy to provide information to the community without negatively impacting the project cost.”

"As we advance, our objective is to negotiate the most beneficial terms for the city and its residents. However, we are also aware that transparency is an indispensable part of this process," Mayor Torre said in the release.

Within the next six months, city staff will work to move existing plans for the project to the design development phase, meaning they also will create a new, further-informed cost estimate for the project. Staff also will seek allocations for the Lumberyard in budget discussions this October. 

The Lumberyard project is designed to provide greater affordable housing for the upper Roaring Fork Valley. Spanning an 11.3-acre city-owned site, the approved development is anticipated to feature up to 304 units of deed-restricted housing and will be sustainable, including features such as solar panel rooftops, pedestrian and bike trails, and extended public transit service. 

The Lumberyard site is located at the eastern end of the Aspen Airport Business Center.

Austin Corona | Aspen Daily News | September 29, 2023