Town "Emergency" - the economy is dying

The Town is stuck at a crossroads between the “nostalgia for yesterday” and the need to grow into the vibrant, business-minded realities of tomorrow. The Town is literally stuck. There are forces trying to save the small, one-story character of a quaint little town. And there are forces trying to build the town for the 21st century but only if it is economically feasible. There is a stalemate, and the Town is dying.

All land use planning in the United States starts with two rules. Rule number two is “not in my backyard” with your new development. Rule number one is “give me what I want first”. And so, the Town must decide how to let go of the death-grip on the nostalgia for the past and how to logically grow into the future.

The current Town "emergency" height ordinance is set to expire at the end of January. On January 2nd, the Town Council considered extending by another six months "emergency" ordinance 704 which is a moratorium on building structures over 28 feet in height in residential zoning districts downtown.

The "emergency" ordinance was placed in effect over five months ago after Town Council member Tony Simmons got upset with builder Todd Shelton's 35 foot building going up next door to his house, to hear Shelton explain it. Todd Shelton has mostly completed one 35 foot tall two-unit building and was about to legally build the second one. Shelton reported to the Town Council last week that it was Tony Simmons who managed to convince the Council that there was an outcry of public concern against such 35 foot buildings. Shelton argued that no one has demonstrated that there actually was such an outcry or that the public had any concern what-so-ever.

Let me admit up front that I have failed to discuss this matter with Tony Simmons before press time. I’ve driven by Mr. Simmons’ house and I’ll take the liberty of guessing (at my own peril) how Tony must be feeling about the situation. The Simmons house is cute, smallish and one story. Just like all the old houses in the neighborhood which are cute, smallish and one story.

But this story is not really about Tony Simmons’ cute, smallish house or the other old houses of the neighborhood. I’m writing about a dying economy and about the lack of new development downtown.

Tony Simmons’ house is a product of the last century. Todd Shelton’s duplex is a product of this century. Welcome to the new economy.

At last Tuesday's meeting, Town Councilmembers John Middendorf and Angela Atkinson expressed great concern that it was inappropriate to use an "emergency" ordinance to enact a height limit. No such "emergency" can be demonstrated. Secondly, since the Town has had its six month opportunity to address the "height issue", it is time for the Town to decide the matter once and for all.

A majority of the Town Council agreed to decide the issue at its upcoming Tuesday January 15th meeting.

A survey of three different experienced downtown developers puts the actual cost, today, of planning, permitting and building a structure downtown at about $300. per square foot -- or so they claim. This cost does not include the cost of the land.

From the "man in the street" perspective, all one needs to do is walk downtown to see that there has obviously been a financial disincentive to building anything downtown. Almost nothing has been built in the past five years. Almost nothing is being built now. No one seriously plans to build anything downtown in the foreseeable future.

So, it appears that the actual affect of the "emergency" height ordinance is to ensure that nothing will get built downtown as a matter of Town policy.

According to Sean Thompson, a local architect with projects downtown and in the County, "In this current political environment builders and developers are reluctant to be too vocal about capricious behavior on the part of the town for fear of their project being delayed indefinitely with procedures that come out of an inferior Land Use Development Code (LUDC) document. We are currently trying to amend the LUDC but it has taken almost a year since this process began and the committee is just now seeing the first draft."

Off the top of my head, the newer residential projects downtown consist of the mixed commercial Town Terrace next door to Victoria’s on Pagosa Street. Then there is Chris Smith’s Riverwalk condominums on the south side of town on the river. Bob Hart is bravely in the middle of construction on the river almost across from Town Park. Todd Shelton is wrapping up his two units behind Tony Simmons house.

There is not a whole lot more being built downtown. Nor is it likely that any new projects will be started any time soon.

Todd Shelton says he can build closer to $100. per square foot because he is a “do-it-yourself” kind of a guy. Most people can’t build that cheaply. He is building two units at 2000 square feet each, so that is a total of 4000 square feet. He says that he has $20,000. in impact fees per unit. So that is $440,000. in cost right there. Then he has to pay for the lot; let’s say $39,000. for that.

Maybe he can sell each unit for $250,000. each, maybe a little more. Well, if you do the math, this is not a get-rich-quick scheme. In fact, it doesn’t make financial sense. Too much risk, too little return.

Todd Shelton says that he “is done with the Town”. He won’t be building anything else.

Rumor has it that developer David Brown “is done” and he won’t be building anything.

Are things any better “in the County”?

Pat Alley of Whispering Pines is currently constructing 20 relatively affordable units on the east side of Lake Pagosa. Whispering Pines is the most productive developer in both the Town and the County combined. According to Mr. Alley, “The PAWSD (water) fees for the housing project are $192,203. for 20 small economical units. The county fees were $10,395. and the increase (due to inflation) on our sprinkler system cost is 35% in four months. The new county impact fee would now add another $37,540. to this project. That is $240,000. in fees for a so called affordable housing (project).”

“The investors are from Dallas and the most they may receive is a $150,000. return on sales of $3,200,000. that is less than a 5% return. I convinced them to do this project for the working class here in Pagosa. They had intended on investing more into this community but now have second thoughts because of the attitude of the town and county about growth and a self induced moratorium.”

It seems unlikely that a 5% return would be enough to motivate either the investors or Whispering Pines to build another project of this type any time soon.

Bill Hudson of the PagosaDailyPost.com has just been running a series of articles about how the Pagosa blue-collar worker is an “endangered species” and will need some kind of governmental “endangered worker” act to save them from disappearing from Pagosa all together.

“It is not possible to build a $100,000 single family home on a $40,000 lot. On the other hand, it is very possible to build a four-story apartment for less than $100,000 per apartment, because we can save up to 25 percent per unit by stacking four units on the same lot. In other words, we can still build new housing that is affordable, even in the current market. But this new housing will not reflect the historic, small town character that we hold so dear.”

And so Bill’s five part exploration ends, right on target, at the dilemma that faces us now.

Density -- bigger buildings -- downtown is the only viable way forward. Period.

There is another side of the issue to what Bill Hudson talked about in his five part piece on “Pagosa’s Endangered Species”. It is looking a lot like we are on the verge of losing some of our most talented builders. Three years ago, it might have looked like the builders were coming in from every direction. But now it looks like the exodus may begin.

As the builders give up and leave, there will be less jobs. Less income will mean less revenue for our stores. Less retail revenue means less sales tax dollars for the Town and the County.

There is no such thing as “no growth”. Economies grow and expand or else economies shrink and die. We are currently shrinking.

So, here is what I urge the Town to do on Tuesday January 15th. Restore the height limit to 35 feet. In other words, leave the height limit alone and don’t reduce it. Make it at least 35 feet to the roof mid-span or else you will end up with tall boxes.

Likely, in this shrinking economy, no one is going to begin building anything new even with the 35 foot height limit. But at least the Town will have thrown a bone to the developers in the hope that someone will try.

Next step: the Town needs to get into the drivers seat to make development happen downtown. The alternative is further shrinking in the downtown core, less jobs, less retail revenue, and less sales tax.

No one is expecting any community leadership from the County this year while it gets itself into order. We can only hope that community leadership comes from the Town.