Town Pressure To Make ‘Contribution’ Could Prove Illegal

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Can Payson pressure property owners to contribute money to provide affordable housing without actually imposing a development fee?

Perhaps not legally — but the town’s been getting away with it so far, concluded the town attorney right before the council approved a $2,000 condition on a landowner asking for a property split.

The council acted after property owner Don Meloche said that even though the condition seemed arbitrary and illegal to him, he was willing to make the $2,000 contribution to a fund to

provide affordable housing in Payson.

“I don’t think much of the condition, but I’m willing to make the contribution,” said the former judge.

“It’s obviously not a legal requirement and for a city to look with disfavor on an application because someone does not make a contribution is highly improper. But I’ve brought in a million dollars to this town and a few thousand isn’t going to make a difference.”

However, the council directed the staff to come up with an ordinance that would impose a legal development fee for affordable housing, before attaching the condition to any other applications.

Meloche sought permission to divide his single, 7.2-acre lot into three lots, each more than seven acres in size. The general plan designation would have allowed him to put up to 2.5 houses per acre.

Councilor Michael Hughes, a Payson Realtor and former member of the town’s affordable housing committee, provoked the discussion about the allegedly illegal requirement when he moved to strike that condition from the zone change request.

“I don’t believe these conditions are enforceable and therefore should not be included,” he said.

That motion provoked a council discussion, as the three newly elected members struggled to understand the informal efforts approved by the previous council to raise money to provide affordable housing in Payson, where the average home costs far more than the average worker can afford.

The town for the past three years has pursued various plans to find ways to use new development to finance affordable housing, either by asking developers to provide some lower cost units or asking them to contribute cash that can be used to help other groups build low-cost housing.

Although developers have promised up to $100,000, the town has actually collected only about $8,000 — mostly due to the dramatic housing slowdown that has prompted many approved projects to put off construction. Other developers have promised to provide land or to ensure that some units in a project featured below-market financing — through shared equity funding or federal housing grants.

Councilor Richard Croy said the value of the incentives so far totals “several hundred thousand.”

Croy also served on the town’s affordable housing committee before his election to the council and for a living develops low-cost housing for seniors.

Councilor Su Connell objected to Hughes’ suggestion the town drop the affordable housing condition. “We have an affordable housing committee that has worked very, very hard on this critical need in the community. I’m really frustrated we would remove it.”

Councilor John Wilson noted that “the council has never formally acted,” on an ordinance to impose an affordable housing requirement. “Community development has picked that up, but no ordinance has come before the council.”

Hughes said “I’m not saying we shouldn’t encourage our developers to make a contribution, but from a legal point of view, we cannot put it in there as a requirement of the council.”

Councilor Mike Vogel observed, “If it’s not enforceable, then I have a problem with it being in there.”

Croy said that when the council granted the rezoning, it increased the value of the seven-acre parcel ten-fold, so requiring several thousand dollars for affordable housing seemed reasonable.

The town already imposes fees for water, parks, police and other infrastructure. The fees imposed by the sanitation district bring the total bill for impact fees to about $15,000 per new residence.

“The community is in need of affordable housing,” Croy noted. He said if the town removed the condition from this project, “I’m afraid everything we’ve done in the last three years will go down the toilet.”

“Does the precedent have any bearing?” asked Councilor Ed Blair, wondering whether all the previous agreements could come unraveled.

“Short answer: No,” said Assistant Town Attorney Tim Wright. “Every other case before the council has asked for this.”

Meloche then rose from the audience to cut away the tangles of legal barbed wire in which the council found itself enmeshed.

“I’m willing to pay what I’ve indicated when the property is developed. Although, in my opinion, it’s highly illegal.”

With that assurance, Hughes withdrew his motion to delete that condition and the council unanimously approved the rezoning request.

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