Original post: Idaho business review
In many resort communities there is a real need for affordable housing that serves younger and entry-level residents and new employees.
Both renters and potential homebuyers are now facing an increasing affordability squeeze, and this is expected to continue. The disparity between local paychecks and rents and mortgages is a problem because the cost of housing in recreation areas is determined not by what workers can afford, but what more prosperous people outside the area can spend.
Employers struggle to secure affordable housing for sale, or for rent, that comes close to matching what they can pay their workers. In the long term, the entire community will suffer if affordable housing is not available to provide the diversity that every community needs. Governments must provide a regulatory environment that attracts the investment of private capital, ensuring their municipalities retain the character that citizens want to see.
A project sponsor must be able to earn a fair return on invested capital or they won’t invest, and a municipality must codify zoning codes to encourage that investment. Without new middle-income housing inventory, businesses and local governments won’t be able to fill jobs, and resort economies will stagnate or decline along with the quality of place. Government-subsidized tax credit programs do not address the needs of much of the workforce, namely those who earn more than 60 percent of area median income, or AMI.
The population in the middle, which makes up the majority of our teachers, healthcare workers, policemen, firemen, and other members of the workforce, has been completely ignored in the process and increasingly suffers the financial and social consequences of insufficient affordable housing. At the same time, higher regulatory and construction costs in this cycle combined with NIMBY challenges have resulted in developers building mostly luxury housing. Michelle Griffith (executive director of ARCH Community Housing Trust) says, “honestly the biggest impediment in Blaine County is folks who litigate against affordable housing.”
Teya Vitu at IBR sums it up, saying, “Technically, workforce housing and affordable housing are two distinct categories, but the lines have blurred. The workforce housing crunch at resorts was already underway when VRBO and Airbnb changed the dynamic. Part of the problem is that these short-term rental services are taking long-term rentals in resort communities off the market.”
Some Idaho resorts are taking action. Brundage Mountain Resort pre-leased apartments for 20 seasonal employees. Shore Lodge Whitetail LLC in McCall has found a way to house 112 employees on its McCall property. Colorado mountain towns have produced significant affordable housing via public subsidy, most recently in Vail where large-scale affordable housing has been produced on publicly owned land. This spring, Sun Valley Co will get started on a total of 176 dorm rooms. The dorms will include single, double, and triple rooms, which will ultimately house from 350 to 500 employees.
Bob Crosby, government affairs director for the Sun Valley Board of Realtors says, “For Sun Valley Company viability is measured by ensuring its access to employees without which they cannot serve their guests – just a cost of doing business that contributes to top line revenue, whereas viability for a for-profit developer is a project that gives a reasonable risk-adjusted return on investment.”
Similarly, the Blaine County School District is taking action to solve its own problems by entering the housing market. District Superintendent Gwen Carol Holmes told the board that about 20 teachers commute from outside Blaine County, and each year she sees new hires renege after failing to find housing, despite the district’s relatively high starting wage.
“It’s worse for support staff,” according to Director of Building and Grounds Howard Royal, who told the board of trustees last fall that half his employees drive in from outside the county.
Other resort-area districts have already taken action, most notably Teton County in Wyoming, the Aspen School District in Colorado, and the Roaring Fork School District, adjacent to Aspen. The Aspen district owns 43 units, and is looking to add more, according to a September article in the Denver Post. Roaring Fork owns 23, with another 32 slated for completion in 2018; new housing is dispersed through a weighted lottery, according to the district’s website.
Crosby says, “I do not know of any examples of viable affordable housing that are not subsidized in some way (free land or housing fund contributions from public agencies, tax credit financing, other federal construction, or take-out loan programs for deed restricted projects, etc.), nor of any viable affordable housing projects being undertaken by the private sector.”
The best solution to this dilemma is to grant developers more density with changed zoning, reduced regulations, and speedier decision making. As Crosby says, “The County needs to aggressively increase density and remove unnecessary subjective oversight through amendments to the zoning code in order to reduce per unit development costs.”
I’m confident that with the participation and suggestions of CCIM’s, the municipalities will begin to learn and change. I’m already seeing that happen here in the Ketchum/Sun Valley area.
Paul has lived in Sun Valley for 44 years, and as broker and partner at Paul Kenny & Matt Bogue Commercial Real Estate, has practiced all aspects of commercial real estate in the valley for the past 20 years. Paul’s work has included sales, leasing, investments, and development. Prior experience includes opening and operating Paul Kenny’s Ski & Sports for 16 years, and opening The Mercantile of Sun Valley, which was Timberland’s first concept shop in the country. Paul is also a license partner at Engel & Volkers Sun Valley, specializing in luxury residential real estate.
