Affordable housing through diversification

TELLURIDE — Lance McDonald walks onto the sprawling new deck overlooking his town.

“Look at this view,” he says, arms wide as he takes in the pink glow bouncing off the snowy peaks in the box canyon. “How nice would this have been when I first got here?”

McDonald moved to Telluride in the late 1980s. He was an intern, working for the town. And for a while he lived in the woods, squatting in a dilapidated cabin on Forest Service land. Today, he directs the town’s affordable housing program that includes the just-opened 18-unit Boarding House, where 46 workers pay as little as $385 a month to live dormitory-style just a short walk from Telluride’s historic downtown and chairlifts.

The Boarding House harkens back to mining-era days in end-of-the-road towns such as Telluride, Aspen and Crested Butte, when newcomers invariably bunked in, well, boarding houses. Like its historical predecessors, the Boarding House offers communal living, with shared bathrooms, television rooms and kitchens in the three-floor building wedged into the side of the steep valley below the ski area.

Telluride built the structure for $8.9 million, using bonding authority approved by voters last year and a $300,000 subsidy from the town’s affordable housing fund. With its rental income, the building is easily meeting its bond payments, McDonald said.

“If this is as successful as it appears, we can do another one right there,” he says, pointing to a wooded slope above storage units built into a concrete avalanche barrier.

The city also built several 290 square-foot tiny homes at the base of the Boarding House. The houses rent for $700 a month and are easy to unplug from utilities and roll to different locations. Down the street is a new 18-unit apartment complex. The entire campus — dorm, tiny homes and apartments, together known as Virginia Placer — opened last fall and quickly filled with local workers.

It’s one of the more innovative projects in Colorado’s resort landscape, where the lack of affordable housing has reached crisis level. The dearth of homes for locals is threatening economies and small-town cultures in every Colorado valley that hosts a ski area, where home prices, rents, and construction costs are soaring.

In Telluride, a constricted canyon of about 2,600 residents, housing programs in the past 15 years have focused on diversification, with options from dorm-style rentals and tiny homes to stand-alone single-family homes and four-bedroom apartments.

“I think housing everywhere is changing, and what housing means to people is going to be evolving even more,” McDonald said. “People may be moving around more than they have in the past. So in a place like this, with such high demand for housing, when we build a community asset that we want to have for many, many years, we really want to have it be as flexible and diverse as possible.”

Housing deficit is real — and documented

Here are some statistics from the 2018 San Miguel Housing Needs Assessment that reveal the county’s affordable housing crunch around the resort community of Telluride and Mountain Village:

• Average price of a home sold in 2018: $1.5 million
• Average annual wage: $40,000
• Rental rates in 2018: $1,560 per bedroom to $2,500 per unit.
• Percent of workers commuting from out of the county: 30
• Number of affordable housing units needed to meet unfilled jobs: 64
• Number of housing units needed for commuters traveling into the county for work: 377
• Additional housing units needed by 2026 if county grows by 1 percent a year: 325

These housing deficits are mirrored across the Colorado high country, where assessments reveal the same looming shortfalls if communities don’t start erecting new homes for local residents. Nearly every community is prowling for ideas that can help grow rental units and foster ownership. Becky Gray, director of the year-old Chaffee County Office of Housing, toured Telluride’s affordable projects last month with members of the San MIguel’s housing policy advisory board.

Her office is funded by a population-based intergovernmental agreement with the county and its towns, Salida, Buena Vista and Poncha Springs. Telluride, which has a housing authority, has more lucrative funding streams, including a sales tax and a recently approved mill levy increase and bond financing measure that supports an affordable housing fund that last year was at about $2.7 million.

The cost of constructing single-family housing in Chaffee County is high, so making those homes affordable is a challenge, Gray said.

MORE: Aspen’s workers are hitting retirement age. And that’s made the resort town’s employee housing program a ticking time bomb.

“We are looking at other housing types and Telluride’s Boarding House was one approach to help educate us,” Gray said. “The Boarding House is a great first, immediate intervention to put a tourniquet on the affordable housing crunch. But to build one of those is going to take significant dollars, particularly when it comes to the cost of the land.”

Salida has tried to push the innovation envelope of affordable housing. The city in 2016 inked a deal with Pueblo-based Sprout Tiny Homes to develop the nation’s largest tiny-home community on a riverside parcel at the edge of town. Sprout planned to built 200 rental homes — ranging from 200 square feet to 800 square feet — on 19 acres the company owned along the Arkansas River. The community would have offered rents from $750 to $1,400 with about a third of the miniature homes available as short-term rentals.

But that plan foundered and Sprout is selling the land to a developer who plans to build an RV park. The city and the developer have reached a deal to provide long-term rental space for local workers living in RVs. The agreement meets the city’s inclusionary housing ordinance passed last fall that requires developers to set aside 12.5 percent of new projects for affordable housing.

“We are getting a lot of questions from other communities about our inclusionary housing ordinance,” said Salida Mayor P.T. Wood. “We are lucky in that a lot of the folks doing development around here are locals and they really care about the community and they need to hire folks as much as anybody. They recognize the need for affordable housing here.”

Most workforce housing is in Mountain Village

About half of San Miguel County’s deed-restricted and workforce housing — more than 535 units — is in Mountain Village, the population 1,450 town above Telluride.

The town council last fall waived all planning, development and building fees for deed-restricted housing, hoping to spur construction on Mountain Village’s inventory of deed-restricted homesites. The town has set aside room for 130 deed-restricted units, which could be single-family homes, condos or higher density projects.

Mountain Village’s 222-unit Village Court Apartments is the largest local housing development in the county, and the the town is adding 49 new units to the workforce housing complex this year.

Telluride ski area owns the Big Billie’s apartment complex in Mountain Village, offering 147 units to its employees. The ski area — which employs about 1,200 workers — last year purchased and rehabbed another 30-unit apartment complex in Mountain Village. The resort also is seeking county approval to develop more than 30 single-family homes on a parcel the company purchased last year in nearby Ilium.

“We initially thought about doing duplexes and triplexes, but now we are going back to the county and saying we think small single-family is better for the long term,” said Telluride ski area chief Bill Jensen, who expects to spend about $11 million on the Ilium project and offer a mix of ownership and rental units in the new community. “If I can put year-round employees in a house, am I willing to subsidize that for 10 percent of the cost of the house? Absolutely. If I have to do 20 percent, we will look at that.”

MORE:Affordable housing crisis threatens vitality of Colorado’s high-country economies

Another unique effort in Telluride’s development of affordable homes is a new non-profit corralling donors to feed a fund supporting affordable housing. Katherine Borsecnik joined former Telluride mayor Amy Levek last year in creating the nonprofit Trust for Community Housing.

As second homeowners in Telluride, Borsecnik said she and her husband “had concerns that we were part of the problem but there was no way to be part of the solution.”

So she joined Levek and enlisted 61 local families in Telluride to establish a housing social-venture fund that delivers grants to first-time renters and buyers of San Miguel’s affordable housing.

The trust also explores potential financing plans to prod development of more subsidized housing and works to find ways to open up existing space by offering incentives to second homeowners and short-term rental owners to open their homes for long-term rental.

“There are tons of people here, like me, who really appreciate the opportunities that come with local housing. We think the economics of a person here year-round outstrips someone who is here for only a few weeks a year,” she said, noting that the trust has commissioned a study to quantify the economic impact of year-round residents. “I think sometimes that we have an inability to value the cultural value of community over the obvious economic value of selling a house for nine, ten million or whatever.”

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