Orange Beach - What is Affordable

City Council delays vote on Canal Road project that includes 56 houses priced at more than $350,000 each
Friday, April 07, 2006
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- Amid questions over what constitutes affordable housing, the City Council delayed a vote this week to rezone about 10 acres along Canal Road for developer Robert Orlich to build 56 houses and 30 condo units.

Called The Fountains on Canal, the proposal was pitched to city officials as way to provide "affordable housing" at a time when soaring land costs preclude many new developments from being priced for anyone except the wealthy.

The only problem, city officials said, is that "affordable" in this case is more than $350,000 per home.

Planned for a wooded tract between Sawgrass Apartments and the Twin Lakes Condominiums, the homes would be built on small square lots arranged in a grid around shared parking and amenities, according to the plans.

Orlich said that many buyers in the area, particularly retirees, are looking for an alternative to condominium-style ownership, but don't want to assume the maintenance that goes along with a traditional single-family home with a large yard.

"We're trying to accomplish an area where people first of all can afford something even though the real estate prices on Orange Beach have blown through the roof," Orlich told council members Tuesday. "And to be able put a house on 1 acre and make it affordable is not going to happen. All we're doing is satisfying a need."

The proposal, according to the developer and city officials, highlights the absence in the city's zoning rules of any category that allows what are often called garden or patio homes -- individually owned houses with little or no yard that often share common green space and amenities like pools and parking.

In order to build houses closer together than zoning rules allow, as well as construct condos on the site, Orlich asks that the tract be rezoned as a planned unit development.

Guidelines for such developments allow the city to approve projects that may not meet certain zoning requirements but are deemed the best use of property.

In Orange Beach, developers granted such zoning are required to provide some "public benefit" to offset the project's deviation from regular rules.
Developers of Gulf-front high-rises, for example, have pledged portions of their property for public beach access in exchange for extra building height. Other planned unit developments, particularly those away from the beach, have been granted so that developers can arrange homes around a stand of desirable trees.

Lately, developers have pledged to build "affordable housing" in exchange for the coveted zoning status. Last year, 507 units of Portage Creek Condominiums were approved for a tract along the Intracoastal Waterway with the understanding that they would provide a cheaper alternative -- priced between $400,000 and $800,000 -- to Gulf-front living as part of their public benefit package that also included a public boat ramp.

Developers of The Homestead, a 286-home development proposed for a tract across the street from The Fountains site, have pledged to price the houses between $200,000 and $300,000 and place restrictions on them to prevent frequent sales and price escalation. In addition to the "affordable housing" tag, The Homestead developers have promised to provide hundreds of thousands of dollars in drainage work in the area in exchange for zoning that allows them to put the houses closer together than is typically allowed.

With The Fountains, however, only the homes' price-tag is being offered in exchange for planned unit development zoning.

"Our starting price for a 1,500-square-foot home is going to be right at $350,000," Orlich said. "If we have to reduce or modify this plan at all, that price isn't going to be there anymore, it's going to go up. It has to."

Generally when expressing the need for affordable housing, local officials have talked about houses for professionals such as local police officers, City Hall employees and teachers in addition to living quarters for laborers and service industry employees.

"The main issue is the fact that we're trying desperately to provide some affordable housing for Orange Beach," Orlich said.

"At $350,000?" Councilman Jeff Silvers asked.

Financed with a 30-year mortgage at 6.5 percent interest, a $350,000 home would cost about $2,200 a month without including money for taxes and insurance.

"If you look at the median income of Orange Beach, that's clearly way under the affordable housing means for this community," Orlich replied.

Councilman Larry Alexander, citing economic statistics from the Alabama Gulf Coast Chamber of Commerce, said the homes would be unaffordable even to those earning the median income in Orange Beach. According to Chamber of Commerce data, Orange Beach's median household income in 2003 was $46,897, while the average household income that year was $67,181.

"If we use that model then we'd have to sell these for $160,000," Orlich said.

The council declined to vote on the proposal, delaying a decision until its April 18 meeting.

"I still have a problem with saying just because they think this is affordable housing that that's their public commitment," said Mayor Pete Blalock. "I've got a serious problem with that. Hopefully maybe y'all can come up with something a little better."