After reviewing the recent financial analysis for an $86 million public housing project, members of the Snowmass Village Finance Advisory Board insisted the town has the money needed to finance it, but warned it could hamper future development.

The $86 million, 79-unit Draw Site project will be on the ballot in November. The city is asking voters if they agree to use tax revenue, state grants, rental income and more to build the largest workforce rental housing project in 25 years. The advisory board said the funding sources for Draw Site are correct, but the city should consider the impact of having to pay off the project over the next 30 years.

“Our concern is that this is going to be very expensive,” said Phil Sirianni, a representative of the advisory board, during a Snowmass City Council meeting on Monday. “These are supposed to be affordable housing units, but this project is about $1 million per unit, so you have to think about that.”

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Rising construction costs have contributed to the project’s $86 million cost. About $70 million will be financed through bonds, an estimated $10 million will come from state and other local grants, and about $5.4 million will come from partnering with local businesses to sell priority housing or units that local businesses subsidize for their employees. The city will owe about $3 million annually to finance the bond, according to the advisory committee’s audit.

The city plans to use some of its tourism tax revenue to fund the remaining $3 million in annual costs. In 2022, voters approved allocating a portion of the tourism tax fund to workforce housing projects. According to current tourism tax revenue, $3 million would take up 60% of the funds set aside for housing, potentially hindering future housing projects the city plans to use those funds for, Sirianni said.

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With this in mind, the Advisory Board recommended amending the Town’s 2021 Housing Master Plan, which includes a goal of building 200 affordable housing units to address the growing affordable housing crisis in the Village.

“Your goal is to get 200 units. If you spend $3 million alone out of that $5 (million) to $5.5 million (from the tourism tax fund), you’re not going to get the 200 units,” Sirianni said. “If you plan for 200 units, you’re going to run out of money unless you look elsewhere (for financing).”

The tourism tax fund isn’t the only way for the city to fund future workforce housing projects, but it is one of the few funds permanently available specifically for workforce housing. The city could tap local, state and federal funds to fund future projects — as it is doing for the draw site — and several state agencies have expressed interest in funding affordable housing in the mountains, said Betsy Crum, Snowmass’s housing director.

But because the city is in negotiations to purchase a 3-acre parcel adjacent to the draw site behind Snowmass Center to create workforce housing, it could spend most of the tourism tax funds on those two projects over the next few years, Sirianni said.

The Advisory Board cited the opportunity cost of building the 79 draw site units and recommended considering construction projects further down the valley or in more suitable locations, such as near the Brush Creek Road interceptor property.

“Do you have the money to do it now? Yes, you do. But you’re limiting yourself to things you could do in the future because that’s the cost alone,” Sirianni said. “Think about the opportunity cost of this project compared to projects further down the valley… I know the city wants to create housing up here in Snowmass, but the problem is you’re limited in terms of what you can build here.”

For months, Snowmass City Council members have debated the size and scope of the Draw Site project, which is going through a lengthy planned unit development (PUD) process. Some council members have said that the project in its current form – a two-tower design with 79 units and underground parking on a steep lot northwest of City Hall – is too much for the site and should be scaled down.

Council member Tom Fridstein repeatedly urged city staff to scale down the project and remove the underground parking garage, which Fridstein and Sirianni said accounted for a large portion of the cost.

“That’s a lot of debt and maybe we should save our money for things that really make a difference,” Fridstsein said. “I mean, when we started the draw site, the center site wasn’t an option, nobody thought about it and maybe we should rethink how much we build on the draw site.”

The cost per unit for the draw site is about $1 million. To scale down the project, the city would likely have to raise rents, potentially making the units unaffordable for city workers, Crum has said in the past.

The town is also looking at housing options outside of Snowmass. During Monday’s meeting, it approved the purchase of two lots for a housing complex in Glenwood Springs promoted by Habitat For Humanity. But organizations and communities throughout the Roaring Fork Valley are vying for space to build workforce housing, and some council members said the town should take advantage of opportunities that arise, especially if it means keeping Snowmass workers in the village.

“I would say housing people in our village and building a community is another consideration, not just the economics of the project, and I think about what needs to happen for a community to be sustainable and continue to be viable,” said Council Member Susan Marolt. “If you have a place where young people or young professionals or people in the early stages of their careers can’t find housing, then they’re not going to build a community here. Then pretty soon you’re not going to have people building businesses and moving up the economic hierarchy that we need in our town.”

Sirianni stressed the importance of the 30-year financial commitment to the project and urged the city to consider the most economical approach possible.

Council member Britta Gustafson said that while she is not opposed to building a community, she is concerned that the high costs could affect future housing options.

“This problem isn’t going to be solved in a decade, but we’re going to be paying for it for 30 years, so I understand both sides of those concerns,” she said. “And it’s certainly nice to have people living here, but if the need for workers is more pressing now than building a community, then I think there needs to be conversations as well.”

Gustafson has also encouraged city staff to consider scaling down the project during several Draw Site presentations.

Voters are being asked to authorize the city to spend up to $86 million on the Draw Site project, which will include up to 79 one-, two- and three-bedroom apartments. In approving the final ballot language for the Draw Site on Monday, the City Council agreed to use the term “up to” to allow flexibility if the project is scaled down in the future. Voter approval would not require the city to build the project if extenuating circumstances arise during the development process.

The city will formally approve the ballot wording during its City Council meeting on Sept. 3. Council members are seeking community input on the project and encourage people to provide public comment at the Sept. 3 meeting.