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Vail InDEED Program Called Upon to Seed Significant Rental Housing Development via Deed Restriction Purchase

  • 16 October 2017
Vail InDEED Program Called Upon to Seed Significant Rental Housing Development via Deed Restriction Purchase
A proposed development agreement that would incorporate the first use of Vail’s new deed restriction purchase program, Vail InDEED, will be considered by the Town Council at its Tuesday, Oct. 17 evening meeting. The action item, Resolution No. 35, is listed as action item 5.4 on the agenda, which begins at 6 p.m. in the Vail Town Council Chambers with opportunities for public comment.

Sonnenalp Properties is proposing to construct 65 new rental apartments on the site of the existing 24-unit Solar Vail Apartments, located at 501 N. Frontage Road, and deed restrict another nine homes elsewhere in town. 

As proposed, 100 percent of the new apartments would be deed restricted for employee housing with 25 percent, or 16 of the new apartments, available for businesses and individuals not associated with Sonnenalp Properties to a minimum 12-month lease. A mix of studio, and one- and two-bedroom apartments are planned on the site.

Additionally, leasing preference would be given to employees and families working within the town boundaries.
According to the terms of the development agreement under review by the Town Council, funding from the new Vail InDEED program would be used to purchase deed restrictions for the proposed 65 Solar Vail Apartments at a cost of $65,000 per unit for a total of $4.225 million. The Vail Local Housing Authority, in its role as the Town Council’s agent, has been working with Sonnenalp Properties since mid-August to negotiate a fair market price for the deed restriction purchases to be used to fund the significant financial gap needed to break ground. Following the recommended town approvals and completion of the development review process, the 65 new apartments could be available for lease for the 2018-2019 ski season, according to Johannes Faessler, owner and representative of Sonnenalp Properties.

The Vail InDEED program was adopted by the Town Council in January 2017 to provide incentives for homeowners, developers, real estate buyers and sellers, and others to deed restrict their property to help the town meet its strategic housing goal of acquiring an additional 1,000 deed restricted units by the year 2027.

The Vail Town Council has seeded Vail InDEED with $3.7 million in funds to be used exclusively for deed restriction purchases. This includes $3.2 million which has been generated from fee in lieu payments received by the town from developments with either an inclusionary zoning or commercial linkage mitigation for employee housing requirements. A large portion of this amount, $2.3 million, are housing mitigation fees from Vail Health Center associated with the hospital’s current expansion. The remaining $500,000 is from the town’s capital projects fund which is mainly funded by a portion of sales tax and construction use tax on building materials. The Vail Local Housing Authority is currently negotiating a number of other deed restriction purchases.

Presently, nine of the 24 units at Solar Vail are deed restricted for employee housing. Sonnenalp Properties has agreed to deed restrict nine homes elsewhere in Vail to ensure that the new redevelopment of the Solar Vail Apartments is a net increase of new units within the community. The town has a deed restriction exchange regulation already adopted to facilitate the exchange of deed restrictions.

This is not the first time an attempt has been made to redevelop the Solar Vail Apartments. In 2008, Sonnenalp Properties received approval of a development application from the town to redevelop the aging apartment building. For numerous reasons, including the cost of construction and the ever widening gap in financing, the plans were shelved. Programs like Vail InDeed now make it possible to propose new approaches to redeveloping properties like Solar Vail to increase the total number of for-rent apartments in town.

Vail Housing Authority Chairman Steve Lindstrom says the proposed development agreement has the public interest in mind. “It ensures that 100 percent of the new apartments will be restricted to homes for employees, grants a preference in leasing to employees within the Town of Vail, affords opportunities for local business owners to lease homes for their employees, and subordinates any financial debt of the development to the deed restriction, thereby ensuring the deed restriction remains in place in perpetuity regardless of economic conditions,” he said.

To review a staff memo regarding the Solar Vail development proposal, visit the town’s website or to comment in advance of Tuesday’s meeting email the Town Council at towncouncil@vailgov.com.
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