Updates from Sally Shiekman

In June of 2017, after a hard-fought land use battle, mid-valley landowner Ace Lane acquired approvals from the Eagle County commissioners by a 2-1 vote for a project known as the Tree Farm. The project is approved for nearly 135,000 square feet of commercial space and 340 residences, including a hotel and an independent living facility. The fourth out of four parcels is now under contract with upcoming closings scheduled. Contracted by out of area developers, construction is slated to begin this spring. 
 
Concerns about the density of the project, the number of homes and the fact that the amount of traffic would drastically increase at this already dense area of Highway 82 where traffic already gets backed up were main points of contention from those who opposed the development.
 
Please click on the link below to read the Aspen Times article for more information.
 
https://www.aspentimes.com/news/final-component-of-tree-farm-project-taking-shape-in-el-jebel/?utm_source=second-street&utm_medium=email&utm_campaign=sunrise-rundown
 

It’s not surprising that two Aspen real estate developers have filed a citizen initiated ordinance to repeal the hastily passed legislation which imposes a six month moratorium on residential redevelopment within the city of Aspen. In order for the ordinance to succeed, the two developers must collect 993 signatures over the next 180 days. The halt on residential redevelopment could have far reaching impacts on all those involved in the construction industry, including contractors, laborers, architects, designers, etc.  

To read more, see the attached article from the Aspen Times below.
 
https://www.aspentimes.com/news/citizen-initiative-seeks-to-repeal-aspens-residential-and-short-term-rental-moratorium/?utm_source=second-street&utm_medium=email&utm_campaign=sunrise-rundown
 

The scheduled March debut of the Vail-based Steadman Clinic and the Steadman Philippon Research Institute — a 65,000-square-foot, three-story building currently under construction at Willits Town Center in Basalt is a welcome addition to the valley’s medical care options but will impact Aspen Valley Hospital’s bottom line. Read the story below.
 
https://www.aspentimes.com/news/aspen-valley-hospital-readies-for-shifting-landscape-in-2022/?utm_source=second-street&utm_medium=email&utm_campaign=sunrise-rundown

The Fed announced that it will raise interest rates in 2022. How much is yet to be seen. But this will affect buyers looking to purchase property. Buyers should consider taking advantage of the lower interest rates by contracting for a property and locking in an interest rate NOW!
 
See below for more detail and explanation, provided by Carolyn Hamlet, a mortgage specialist with Hamlet Financial Services (619.252.2277).
                                                                                                                      
"Yesterday (12/15/2021), the Federal Reserve concluded its December meeting by announcing it would speed up the taper of its asset (bond) purchase program (and cease purchases by mid-March 2022) and that it expects to raise the Federal Funds rate three times in 2022.  

As the Fed’s stated goals are maximum employment (which is determined by a number of indicators including the unemployment rate, labor force participation, job openings, wages, flows in/out of the labor force and looking broadly/inclusively at different demographic groups) and stable pricing, the decision to taper is due to high inflation (projected to be 5.3% this year but dropping to 2.6% in 2022) and the strength of the labor market (projected to be 3.5% unemployment by year end).

It is important to note that the chair of the Federal Reserve, Jerome Powell, indicated that the rate projections do not represent a plan; they will wait for the data (he noted there is a lot of uncertainty) and hike rates when appropriate. In addition, no rate hikes will take place until the tapering is complete (as raising rates is considered removing accommodation while asset purchases raise accommodation, so they do not do both at the same time).

While long term mortgage rates are influenced by the economy and inflation (pointing to an upward trend), with U.S. government yields higher than most of the world (e.g. the German 10-year bond is at negative .38%) and the safest place for investors to park their money, market analysts expect long-term rates to remain relatively low for quite a bit longer."

On 12/8/21 the Aspen City Council voted 5 to 0 to pass a temporary 6 month moratorium, effective immediately, on new land use applications affecting residential uses in all zone districts within the city of Aspen that meet the definition of demolition, or would have the effect of increasing the height, gross square footage, net leasable or net livable area of any building. While there are still a lot of projects in the queue for building permits, this will have a rippling effect on developers, interior designers and the entire construction industry. It isn’t clear to me if building permits will be issued for projects solely needing cosmetic remodels. Please click on the link below to read the article and call me at 970-948-7530 if you’d like a copy of the ordinance.
 
https://www.aspentimes.com/news/freeze-on-residential-development-sails-through-approval/?utm_source=second-street&utm_medium=email&utm_campaign=sunrise-rundown

There are two main changes proposed in the land use code for the purposes of affordable housing mitigation.

The first is eliminating credit given to existing floor area, so for example if a 2,000-square-foot home is demolished and replaced with a 3,000-square-foot one, the owner would have to mitigate for all of it and not get a credit for the existing floor area.

Under that scenario, mitigation fees would jump from $60,236 to $180,708.

The second change is eliminating exemptions for basements and other square footage areas, like garages and stairways.

So if a home was 3,000 square feet above grade and 3,000 square feet subgrade, the mitigation rate for demolition under current rules would be $108,708 and under the proposal, it would be $474,358.

According to Ben Anderson, the city’s principal long range planner in the community development department, the idea is that many of the old properties that are being rebuilt were never mitigated for and the new calculations address the city’s antiquated affordable housing mitigation system.

“The current system is woefully underrepresenting the employee generation impacts of this kind of development,” he said, adding that some people argue that houses being replaced does not change the population and doesn’t add new units to the residential sector, and therefore it isn’t growth.

On 12/7/21 Aspen City Council adopted, by a 5-0 vote, an emergency moratorium which included a prohibition on new applications for city-issued vacation rental permits, which have been required of property owners since late October 2020.  This is in an effort to give City Council an opportunity to digest how the short term rental industry has impacted available and affordable rentals for locals as well as to align the land use code with the stated intentions of the Aspen Area Community Plan, which most recently was updated in 2012. The AACP — which is a reflection of the community’s goals for employee housing, transportation, communication character and other aspects of living here — was crafted to help guide council policy-making.

https://www.aspentimes.com/news/local/city-stops-accepting-vacation-rental-applications/?utm_source=second-street&utm_medium=email&utm_campaign=sunrise-rundown

New loan limits were just released by the Federal Housing Finance Agency.  The conforming loan limit for 2022 was raised to $647,200 (from $548,250 in 2021) and the new 2022 high balance loan limits are as follows:
 
EAGLE:              $862,500
GARFIELD:        $856,750
PITKIN:               $856,750
 
This will give Buyers who need loans more buying power as interest rates are still low and conforming loans (vs jumbo loans) allow Buyers with good credit scores to get the best interest rate pricing.