What are Residential Employee Housing Impact Mitigation Fees?

When were the new Impact Fees adopted?

The employee housing impact mitigation fees were originally adopted in 2007.  On July 6, 2022 and on March 1, 2023 the San Miguel County Board of County Commissioners (BOCC) adopted updates to the Employee Housing Impact Fee, with changes effective July 15, 2022.  

Why are Impact Fees changing?

Prior to the adoption of the employee housing impact mitigation fees in 2007, people building one- and two-family residences were required to construct a deed-restricted accessory dwelling unit or caretaker unit on their property.  With the adoption of the impact mitigation fee in 2007, it was no longer necessary to build a unit, as the employee housing impacts were mitigated by the fee.  The fees have always been based on a specific mitigation rate related to the square footage being built.  As adopted in 2007, the impact mitigation fee provided for an annual increase, but the top of the scale was reached in 2015.  

How is the Impact Fee structure determined?

Impact fee payments may be assessed depending on house size for residential construction (single-family and two-family) in the unincorporated county within the Telluride R-1 School District. The updated mitigation fee is based on a Market-Affordability Gap approach, which looks at the difference between the free-market price of housing in the Telluride Region and an amount that is affordable to those living in the community and earning 100% of the Area Median Income (AMI). This same method is used by the Town of Telluride and the Town of Mountain Village. The Affordable Housing Fee Methodology Report describes the fee in more detail.

Is the mitigation rate the same for all new residences?

Homes that are 2,000 square feet in Floor Area or less or that are R-1 deed-restricted are exempted from paying the impact fee . The percentage of required mitigation is graduated, beginning at 18% for houses that are 2,001 square feet or larger, and rising to 90% for houses greater than 5,000 s.f.

Is the impact fee assessed on additions to existing residences?

Yes, the impact fee applies to the proposed additional Floor Area only for an existing residence.  The impact fee is calculated on the total size of the existing residence with the new addition, but is only applied to the new additional square feet.

How do I calculate the new Affordable Housing Impact Fee?

The adopted Affordable Housing Fee Method Report and Affordable Housing Impact Fee Calculation Worksheet is available online at https://www.sanmiguelcountyco.gov/198/Planning.  The impact fee is phased in with fifty percent (50%) of the impact fee assessed for complete building applications submitted between July 15, 2022 and May 31, 2023, and then assessing one hundred percent (100%) of impact fee for applications submitted and/or made complete starting June 1, 2023.

What if I build an Affordable Housing Unit (AHU) and rent it out to Qualified Employees?

A property owner who voluntarily constructs an affordable housing unit on site will receive a credit toward the payment of the impact fee.  The amount of the credit will depend on the size of the AHU and the primary residence. This permitted unit would be subject to the County R-1 Housing Deed-Restriction and Affordable Housing Unit Deed Restriction Covenant.  The covenant imposes occupancy requirements on the affordable housing unit. This would only apply in zone districts/areas where second units are allowed.

Is the fee completely waived if I build an Affordable Housing Unit (AHU) and rent it out to a Qualified Employee or is the fee is only reduced?

A credit may be applied against potential impact fees for a residential development depending on several factors.  First and foremost, an accessory dwelling unit (ADU) or caretaker unit must be an allowed use within the subdivision where the single-family residence will be constructed.  Second, a credit applied for the proposed Affordable Housing unit will be for the Floor Area of the ADU only, and if a balance of the impact fee remains, the balance of the impact fee is also due in addition to the building of the proposed affordable housing unit.  The Excel spreadsheet allows you to compute impact mitigation fees with and without an ADU.

If I build an Affordable Housing Unit (AHU), what is the affordable housing submission process and are there any limitations on who we rent to?

An AHU constructed in mitigation for an Employee Housing Impact Mitigation Fee for the single-family residence must be proposed by the Applicant at the time of application for the corresponding Development and Building Permits from SMC Planning and SMC Building Departments. The Applicant must complete the requisite County R-1 Deed-restriction and Covenant document for the proposed affordable housing rental unit within the property, and the separate Covenant Restricting Real Property for Use as Designated Employee Dwelling Rental Unit. The Covenant specifies who is a qualified employee (tenure, source of income, employment). County R-1 Deed-restriction Rental Units may only be rented to individuals and households so qualified as Employees according to the SMC Land Use Code and as a Qualified Household with the San Miguel Regional Housing Authority.

Is the requirement that we build square footage that COULD be affordable housing or is active renting required? If we decide not to rent it for a period of time down the road, will the fee then become due?

The ADU must be fully constructed concurrent with the principal dwelling, and the Covenant recorded prior to Certification of Occupancy. The Covenant Restricting Real Property for Use as a Designated Employee Dwelling Rental Unit contains restrictions on the use and occupancy of the Affordable Housing unit AND requires active renting of the unit in perpetuity. The Deed Restriction can only be terminated by the Board of County Commissioners.  If that occurs, the then-current fee would be due.

Where do I find all of the requirements and regulations regarding affordable housing?

Land Use Code Section 5-13 contains the regulations for Affordable Housing, including definitions, mitigation rates, mitigation fee, deed-restriction requirements, and guidelines for affordable housing.

Show All Answers

1. General Development Permit FAQ's
2. How do I comment on a Planning Commission Application?
3. How do I comment on a BOCC agenda item?
4. What are Residential Employee Housing Impact Mitigation Fees?