Cooperation urged on land prices
Said key to boosting affordable housing
With the median price of a home in Mesa County nearly doubling in the past seven years and apartment rents jumping close to 50 percent in the past four years, housing experts Wednesday emphasized that public and private agencies have to work together to keep land costs down so more affordable housing can be built.
“To create an environment where land costs aren’t such a barrier to development, everyone has to contribute,” said Bill Cunningham, managing principal with Leland Consulting Group, a Denver-based firm that offers economic development and real-estate advisory services. “The landowner has to contribute. The public sector has to contribute. The private sector has to contribute.”
Roughly 70 builders, lenders, housing providers and government leaders attended a morning-long forum at
Two Rivers Convention Center titled, “What goes up must come down: A Grand Valley housing strategy for uncertain economic times.”
Several people who spoke during the forum said less-expensive starter homes and multifamily projects aren’t being built in the Grand Valley because developers can’t recover their investment. With the price of undeveloped land at an all-time high, the only way to make a profit is to build more expensive homes on larger lots.
Cunningham suggested several tactics to reduce land prices:
• Use a nonprofit master developer to eliminate the profit from land sales.
• Contribute land owned by a nonprofit or a public entity for a housing project.
• Reduce real-estate broker commissions.
• Cluster housing units to reduce utility costs.
• Promote and reward compact development.
• Keep vacant land off the tax rolls.
• Create a predictable, certain development process for builders.
Some housing officials, including Troy Gladwell, president of Medici Communities, a for-profit company that builds affordable housing, suggested that local governments should consider cutting development fees or offering other financial incentives. Gladwell said water- and sewer-tap fees and building-permit fees can cost tens of thousands of dollars, making it difficult to build affordable housing.
Gladwell recently tackled a mixed-use development in a blighted area of Aurora after the city offered a property tax abatement. The project includes 110 apartments and 17,000 square feet of retail and office space.
Gladwell said the incentives “made it work financially, but it’s also political will.”
He said local governments must create more higher-density-zoned land if they hope to make land prices reasonable.