Water Rules Stall Affordable Housing

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The phrase "water and growth" could easily stand as Payson's mantra of the new century. And these two hotly debated concerns share one important characteristic: too little can kill a town, too much can drown it.

While the future of Payson's water supply will remain a mystery until some hired gambler strikes a lucky borehole, the town's growth is comparatively easy to predict.

And according to Community Development Director Bob Gould, the town's chief growth prognosticator who bases his predictions on new housing starts, Payson's growth has been on the slow end of an even keel for the past few years now.

Housing starts holding steady

During the 1998-1999 fiscal year, there were 255 new housing starts. And for 1999-2000, he said, "We're projecting that we should have from 260 to 270."

While that figure represents a slight gain, it is well below previous years, Gould said.

In 1996-1997, the number soared to 390 from the 1995-1996 fiscal year's 299 well above Gould's prediction for the current year.

The Town of Payson tracks three basic types of housing starts: site-built units, manufactured homes, and multi-family units such as apartments and condominiums.

What was different during the last year, Gould said, is that "We haven't dropped off much in terms of manufactured and site-built housing units.

There's still quite a few being built. In fact if you go back to the 1995-96 fiscal year, when we had 283, or '98 to '99 when we had 235 you'd see that we've remained fairly steady on that. We'll probably end up with 185 to 200 this fiscal year when all is said and done."

Multi-family out of the mix

However, there has been a drop-off in multi-family development, which Gould said "kind of skews" the final calculations.

"While that may seem like a significant drop, it's really only the result of fewer multi-family housing units being provided."

Wall of water

The reason for that trend, Gould said, is twofold: demand and the water ERU issue.

"We've had people come in with proposals for subdivisions, even multi-family units. But based upon the requirement that once you exceed 20 units, you have to provide a water supply, a lot of developers just back out because they don't see a way of accomplishing that," Gould said. "It can be a real deal-cruncher. That by itself is limiting the number of people that we even talk to about development within the Payson area."

Prices out of reach for some

While Gould does not think the town's development impact fees are hurting housing starts, he does think they are affecting Payson's ability to provide affordable housing.

"This is an important concern," Gould said. "I think development impact fees kind of puts a damper on the affordable housing issue, but we're exploring ways to mitigate some of that such as letting them pay the fees over a longer period of time, or allowing them to pay the fees at the time of final inspection when they have their mortgage in place."

Price is no object for others

For the moment, though, Gould concedes that the point is fairly moot, because "The market of people who are moving here right now aren't the low- to moderate-income households."

The effects of the impact fees also depend on what other communities are doing, Gould said.

"Look at somebody who wants to move to northern Arizona. They may be looking at Payson, Sedona, Prescott, Prescott Valley... and if those other communities don't have impact fees and we do, they may get a better share of the development than we would.

"But right now we're not seeing that, because here, there is still a significant market demand for the higher-end homes."

Bigger homes in demand

One thing those and all other homes in the area have in common, Gould said, is a 20-percent increase in size over the past four years. In 1995-96, the average size home was 1,801 square feet, and last year, it was 2,158 square feet.

Construction valuations have increased as well.

During the 1995-96, fiscal year, they were less than $90,000, compared to $138,000 for the past year.

"So there are a lot more expensive units being built today than were built just four years ago," Gould said.

A primary explanation for those increases, he said, is the success of the upscale Rim Club and Chaparral Pines developments in east Payson.

"I think they are having an effect on the type, the construction valuation and the size of the homes now being built."

There are other developments on Payson's horizon that may impact the future, Gould said.

"I recently had a meeting with a developer who wants to put in a 120-some-unit subdivision, and they have the ability to bring water with that. That's a major development. But it won't (qualify as affordable housing) because it'll be a mixed development with multi-family units starting around $150,000, and single-family detached units expected to start off at $250,000."

As for revenues incurred at the building end of Planning and Zoning, Gould said "There has not been a significant drop ... We'll still pull in about $600,000 in total revenue next fiscal year, and our total expenses will be right in that area partly because of the type of homes that are being built.

"We collect very little on manufactured homes the state limits us to maybe $120 per unit. It's more than 10 times that for a site-built unit. Of course, we also do a heck of a lot more work on those."

Builders moving to the 'burbs

One of the biggest concerns facing the town, he said, is the presently increasing number of developments on the immediate outskirts of Payson.

"Just within the past few months, Gila County has been considering a 253-unit subdivision at the end of Granite Dells Road," Gould said. "There's also a proposal for another 447 to 536 units out by Thompson Draw. And recently there was a pitch for a 72-unit manufactured home subdivision in the Star Valley area."

What that means to Gould is that developers who believe the fees and restrictions are too tough in Payson are now focusing on the outlying areas.

"I'm especially concerned about the Granite Dells proposal," Gould said, "which would mean routing 3,000-plus trips a day through a residential area to provide access.

"But I do understand what the county is going through. It's had budget problems for years now, and here they are saying, 'One of our ways of dealing with this issue is to maximize the use of land.' So when they get a development proposal, knowing that only 3 percent of all the county is private lands, they're going to do whatever they can to maximize the development and the return to the county on those properties."

Sometimes, Gould said, that strategy doesn't fit in with what are usually considered good planning principles and that may be the case here.

"These subdivisions outside of town are still going to increase the demand for services within town," he said. "Police protection, fire protection, and things like that are still going to have to be increased by the town."

Predictions for the future

Searching his crystal ball for a preview of the year to come, Gould said that, "For this fiscal year, I believe we'll finish up with revenues in line with what we did last year, maybe slightly higher.

"I also think we'll have a slightly higher number of total housing costs this fiscal year. Next year, I think we'll probably level off and not see any significant increases. But if the town goes out and finds 1,500 acre-feet of water, and the ERU requirement is eliminated, that could make things very, very different."

Something else Gould thinks could alter the future is Payson's newly-elected town council.

"I believe they'll probably be a little more interested in economic development, and trying to attract jobs which pay a living wage," he said.

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