Mitigation Rules

A moratorium on development proposals in town is lifted now that elected officials have narrowly passed a new policy meant to spread the burden of building workforce housing.

The new rules dramatically shake up Teton County’s development landscape by requiring developers to pay for or provide affordable housing for a portion of the full-time, year-round employees generated by a development.

The result is a drastic increase in costs for developers of some types of projects, like offices or restaurants, and a decrease in requirements for multifamily residential development.

The aim is to bring housing growth into balance with job growth. Since 2012 jobs have averaged an annual growth rate of 3.5 percent, compared with 1.1 percent growth in housing.

“If there is development that generates demand, the housing supply to balance that demand is provided concurrently,” Long-range Planner Alex Norton said.

The regulations represent the culmination of a 16-month process to update how much affordable housing developers are required to pay for. The process included public engagement with hundreds of residents and several series of public hearings.

Still, there was controversy and disagreement about the policies — among elected officials as well as the public — up to the rules’ third and final reading Monday afternoon. Members of and advocates for the business community pleaded with the town and county to lower the proposed rates, saying they would hurt small businesses and entrepreneurs and encourage large chains over “mom-and-pops.”

“What gives this community the unique character is the small businesses, the mom-and-pop businesses and the nonprofits,” business owner and Jackson Hole Working member Ted Staryk said. “Those businesses, those nonprofits, aren’t going to be able to grow to meet our community needs. Those people that want to expand businesses aren’t going to be able to do it.”

The Jackson Town Council was closely divided on the new rules with a 3-2 vote, with councilors Bob Lenz and Don Frank opposed, and the Board of County Commissioners passed its rules 4-1, with commissioner Greg Epstein opposed. Dissenters among the electeds urged a continuance of the meeting before a vote, saying the rules needed more time, discussion and study.

“The Planning Department has not run a series of pro formas through all these different paradigms,” Epstein said. “I’m interested in seeing real, empirical data as to how this is really going to work, as opposed to taking a shot in the dark.”

Frank agreed, saying he would have liked to see several more meetings to look at what the rules would mean for real situations, “real people with real land, with real financial arrangements, and with a real understanding of the cost to build inclusive of the mitigation rates.”

“I think that would’ve been the appropriate way to vet whether these theories are going to result in projects being built and housing being delivered,” Frank said.

However, motions to continue were not supported, and the town and county moved forward in adopting new rules.

“What we’ve been doing has not achieved the results we want,” Commissioner Natalia Macker said, “so we have to look at the program differently.”

Mayor Pete Muldoon said it’s important to remember that the town and county have to be responsive to the hundreds of people who weighed in throughout the public process.

“The community spoke loud and clear about their desire to require commercial developers to mitigate their impacts,” Muldoon said.

The old housing mitigation model asked developers of residential projects to do the heaviest lifting on providing housing by requiring them to reserve about 25 percent of units in a complex as affordable.

Meanwhile, the requirement for nonresidential development was lighter: Those projects had to pay to house only a third of their seasonal employees. That meant types of development that relied on year-round workers rather than seasonal workers — like offices and industrial spaces — had especially low requirements.

The main shift of the new system approved Monday is that developers are required to house none of the seasonal employees generated by a project. Instead, developers must pay for housing for a significant portion of the full-time, year-round employees generated by that type of development.

In November staff recommended, and elected officials OK’d, a direction that would have required that all developers mitigate to the fullest legal extent by providing housing for all full-time, year-round employees who can’t afford market housing.

Worried about a rush to submit plans in advance of the adoption of more burdensome requirements, the Jackson Town Council approved a moratorium in March on new development applications, which are scheduled to end upon finalizing the new regulations.

After hearing the concerns from the business community, electeds voted to walk that back slightly toward a compromise.

They decided that nonresidential projects in the town, like offices or restaurants, will have to pay for housing for 55 percent of the year-round, full-time employees generated by the project. The same project in the county will need to provide housing for 48 percent. In both the town and county the mitigation rate for lodging and residential projects is 73 percent of full-time, year-round employees generated.

Compared with the old rules, a 90-unit apartment complex would have to provide 2.4 units of affordable housing, instead of 20. An office in town would have to provide 4.9 units instead of 0.2. The ultimate cost of producing those units is also governed by requirements for minimum square footage, numbers of bedrooms and affordability.

Some projects, including private schools, day cares, town and county development, and affordable housing development will be exempt.

What will the policy look like in practice? It’s hard to say.

“We don’t know for sure,” Commissioner Mark Newcomb said. “It’s likely it would slow job growth, and it’s likely that it could increase workforce housing growth, and address that imbalance.”

Some have predicted that the rules are a “no growth” policy that will lead to no more development or allow for only big chains and $1,000-a-night hotels.

“You’re creating a real barrier to entry for any new business or any business that wants to expand,” business owner Wes Gardner said.

Frank said a high mitigation rate for commercial projects could motivate a developer to build luxury housing instead.

“We may see more second homes in areas where we had hoped to have other kinds of goods and services,” he said.

On the flip side, planners have said that the lowered mitigation requirement for housing projects and increased requirements for nonresidential could incentivize more residential developments in mixed-use zones, therefore increasing housing supply.

The rules take effect today.

Contact Allie Gross at 732-7063, or @JHNGcounty.

Allie Gross covers Teton County government. Originally from the Chicago area, she joined the News&Guide in 2017 after studying politics and Spanish at Vanderbilt University in Nashville.

(3) comments

Madeleine Emrick

This will provide a great incentive for big projects to only employ part time help. That doesn't help our community spirit.

John Sinson

Does anybody this this helps development? You want more housing right? Let free market's allocate scarce resources... like it does everywhere else in the free world.

Tim Rieser

I’ve read a lot of your babbling posts and it is without question that you never have any idea what you are talking about. There is no “free market” and housing in particular has serious issues everywhere anyone wants to be. Commercial growth is creating jobs at three times the rate that housing is being created here. You have no grasp of the facts.

Welcome to the discussion.

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