Park City Council Weighs Possibility Of Rental Units At Homestake Property

Aug 5, 2019

Credit Park City Municipal

The Park City Council received an update on the city’s affordable housing efforts at the council’s mid-year retreat Thursday, including plans to build rental units as part of its affordable housing stock.

As the city works toward a goal of bringing 800 affordable or attainable housing units online by the year 2026, the focus of city-built projects has mostly been on for-sale homes. But city staff has confirmed the need for affordable rental units, which tend to be more accessible to a lower-income bracket. A report from the housing staff points to a $3,000 median monthly rental rate within city limits and nearly no available housing stock for full-time residents, as many rentals have transitioned from long-term to nightly.

The city council was introduced to the potential for city-built rentals at its retreat in February this year. Budget Manager Nate Rockwood devised a rental model, where the housing authority—currently, the city council—would bond against future rental revenue. Rockwood says it’s like the city’s for-sale funding model, in that the city will own the land and subsidize 20% of the construction costs, but the housing authority bonds would cover the rest of the costs. This would allow the city to build units continuously, rather than waiting to sell units to fund the next project.

To demonstrate the model, Rockwood used the upcoming Homestake project as a test. At 43,000 square feet, the Homestake development could have 60 to 70 units, varying in size from studio, to one-bedroom, to two-bedroom. With an equal mix of each unit, priced off 30-60% area median income, or AMI, Rockwood calculated rents plus HOA fees, which include utilities, maintenance and management costs. Studios at 35% AMI could cost $850 per month; one-bedroom units at 45% AMI $1,200 per month; and two bedrooms at 50% AMI $1,500 per month. The model also includes a 2% rent increase per year to account for inflation. Still, Rockwood says there’s nothing at this price in Park City’s rental market.

“A one-bedroom or two-bedroom in town typically are going for $1,800 to $2,000 plus, if you can even find it,” Rockwood said.

Most councilmembers expressed hesitancy at the city acting as landlord. Councilmember Steve Joyce says when he thinks of roles and functions the city performs, landlord isn’t one of them.

“I've never wanted to be a landlord for the city," Joyce said. "It's disappointing that we can't find some mechanism that kind of smells like this, that leverages our strengths and our buying capacity and our bonding capacity and everything, with somehow working with the private industry.”

Councilmember Becca Gerber pointed out that the housing authority doesn’t have to be the city council. She says she’s interested in a future discussion exploring a regional housing authority. But for now, Gerber sees some benefits.

"It's not an ideal situation," Gerber said. "But I do think that I appreciate the control that being the landlord gives the city. If we want to talk about being able to enforce how many people are living in each unit and maintaining the quality of them, and also being able to control who's living in them and making sure that we're actually housing our workforce, so there are pros and cons to every situation."

Community Development Director Anne Laurent encouraged the councilmembers to look at the bigger picture—that of the 800-unit goal, they’ve only identified 500 units and still need to find funding and available land for the remaining 300. Laurent says there are opportunities to be creative and work with different partners to achieve the city’s affordable housing goal.

Of the 800 units, 54 have been completed since 2016. The city is also looking to build affordable rental units in the forthcoming arts and culture district.