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New Report Sheds Light on Workforce Housing in Mountain Communities

Housing affordability for workers has long been an issue in Colorado’s mountain communities. Analyzing the problem, the 2023 Regional Workforce Housing Report, released Nov. 2 by the Northwest Colorado Council of Governments and the Colorado Association of Ski Towns, examines housing programs and projects at 37 rural resort member communities in Colorado and six other communities in the West. 

READ: New Approaches to Affordable Housing in Resort Communities

Noted in the report’s Executive Summary is the persistent wage disparity between part-time residents and/or newcomers, and full-time residents. 

“Seventy percent of newcomers and a greater percentage of part-time residents to the high country arrived job-attached with wages averaging over $150,000 per year, while 60 percent of full-time residents, most of whose earnings are tied to the local economy, earn notably less than that amount per year,” the summary points out, citing the NWCG’s “Mountain Migration Report,” published in 2021.

“This influx of wealth in a housing-scarce environment, land-locked by geography (and beautiful public lands) drives rents and home prices far beyond attainability of average workers. In other words, the marketplace for attainable housing is broken, and the only way most workers whose wages are tied to the local economy can step into the housing marketplace (even to rent) is with some combination of a hand-up from government-subsidized housing, down-payment assistance and market regulation. Fortunately, this report shows how much is being done. The challenge remains to find the next policy innovations.” 

The full report can be found online at nwccog.org/programs/member-services/reports 

How the Construction Industry is Building a Better Future for Colorado

Colorado’s construction industry is facing a daunting task. The General Assembly’s housing task force estimates that our state will need an additional 325,000 housing units to accommodate new and existing residents over the near term. Fulfilling this mission requires workforce development, technological innovation and smart public policy. 

READ: How Modular Construction Could Ease Colorado’s Housing Affordability Crisis in 2023

Colorado’s shortage of affordable housing has been front and center for years, but the problem has become more acute since the COVID-19 pandemic. Earlier this year, Zillow released a report on housing needs in the 100 largest cities in the U.S. Denver’s housing shortage of 70,000 units ranked 13th in the country. Lawmakers at the state and federal level have responded with millions in public investment and high-profile legislation to address the housing supply deficit.

The mechanical, plumbing and HVAC/R contractors that make up the backbone of Colorado’s construction industry have heard the message loud and clear. 

To ensure that the industry is prepared to meet our state’s housing needs, we are working with our academic partners, including the Western States College of Construction (WSCC), to cultivate the next generation of skilled workers. All WSCC graduates can embark on journeyman education courses, which tee up alumni for a fulfilling — and increasingly lucrative — career in the construction trades. The construction industry is also hard at work to expand the benefits of these institutions to include associate degrees.

READ: The Economics of Housing Inflation in Colorado — Exploring the Supply and Demand Imbalance

Another key priority of Colorado’s construction industry is the development of new technologies to prepare member companies for the challenges that lay ahead. Construction firms across the state are already taking advantage of 3D modeling, virtual and augmented reality, and other tech platforms to improve efficiency and safety in their operations. Improvements in air condition and refrigeration systems, piping systems, drinking water and wastewater systems are becoming more critical as homebuyers and policymakers place more of an emphasis on energy efficiency and water conservation.

Advancements in technology will be happening faster over the next five years than they did in the last century, and we should be doing all that we can to embrace those advancements to support and build our workforce. In the skilled trades industry in Colorado alone, we are projecting a need for over 50,000 new employees by 2030. This comes at a time when the State Demographer is projecting a reduction in the available workforce more generally. Our ability to compete for this workforce will be largely dependent on technological advances and the benefits they provide to broaden our recruitment methodologies. We should be very wary of any legislation and litigation that would impair this industry as this could have a direct effect on our ability to build our next generation of tradespeople.

Colorado’s construction industry is investing heavily in the workforce and technological resources our state needs to tackle our housing supply shortage. Coupled with the support of our academic partners and elected officials, we can help build a future where all Coloradans have access to affordable housing.

 

Dave Davia serves as the Executive Vice President and CEO of the Rocky Mountain Mechanical Contractors Association.

The Economics of Homelessness: A Potential Win-Win-Win-Win 

The most fulfilling job I ever had was working for a mental health agency developing housing and job opportunities for its clientele. Many of the clients were, or had been, homeless and my team was tasked with providing them with a bridge to recovery, which meant being housed and largely self-sufficient in an environment with wrap-around support. The medical and clinical staff helped clients deal with their disorders through therapy and dispensing psychotropic drugs that were becoming more effective. Unfortunately, we all had to deal with the tendency of some clients to self-medicate with drugs and alcohol and had to learn the skills of de-escalation.

Given my role of creating jobs for people suffering from mental illness, I chose to hand out business cards instead of spare change to the “homeless” I encountered on the street. During the month I tried this approach, only one young woman accepted the offer. Unfortunately, she called on her start date telling me she would not be coming to work as her boyfriend threatened to beat her if she did.  

The economics of homelessness are complex. According to the Colorado Coalition for the Homeless (CCH), only 1 percent of homeless individuals live unhoused by choice. Fifty-three percent have jobs and simply cannot afford housing. Other sources indicate most of the homeless are over the age of 25 and male with a rapidly growing age cohort being 50 to 64 who need access to more affordable health care in addition to housing.

The majority of homeless women escaped domestic violence. Thirty percent of the homeless are part of a family. Less than a third are addicted to drugs and alcohol, approximately 14 percent are veterans, and 25 percent suffer from some sort of mental illness. With more resources dedicated to veterans in the last decade, the number of homeless veterans has been cut in half. Unfortunately, the affordable housing crisis is having a negative impact across the board and the legalization of sports betting promises to exacerbate addiction problems, pushing more young people into homelessness.  

Development of more supportive housing programs holds promise to assist those experiencing long-term homelessness. The CCH reports the cost of supportive housing and services to be $13,400 per person annually compared to $21,000 to $40,000 spent for a range of services delivered on more of a revolving-door basis such as health care, incarceration, detox treatment and shelter services.

Unfortunately, false narratives on negative impacts of supported housing on surrounding communities are often exaggerated. The biggest concern centers on criminalized vagrants or abnormal behaviors such as loitering, which can escalate with poorly trained responders. A recent study of Colorado inmates found former homeless inmates are less likely to be incarcerated for violent crimes and more likely to have drug offenses and trespassing convictions. Such narratives combined with a lack of funding hinder expansion of such programs. 

Summit Economics recently documented the socio-economic impacts of the Fort Lyon supportive housing facility on Bent County. Systematic higher crime levels resulting in arrests were not evident in the data. There is greater demand for health services as the homeless moving into supportive housing have often gone years with inadequate medical care except at expensive emergency rooms. We found many local residents appreciate supportive housing given the positive impact on individual lives and the surrounding community. Community engagement among those who graduated from Fort Lyon and stayed in Bent and Otero counties is impressive. In fact, the local American Legion Post is the first in the country established by formerly homeless individuals.  

READ: Housing Affordability Crisis in Colorado: Denver, Colorado Springs and Grand Junction See No Signs of Improvement

The strongest support in Bent County came from local businesses that, like most businesses today, struggle to find enough reliable workers. There were numerous accounts of Fort Lyon residents, present and past, filling jobs across the skills spectrum, and I sensed the potential for an emerging entrepreneurial culture among graduates. The only problem was similar to what I encountered when developing vocational opportunities years ago. The need for labor results in employers wanting recovering individuals to work full-time. This is not necessarily beneficial to people in early recovery as job stressors and money can trigger negative behaviors that took them to homelessness in the first place.  

Visiting with supported housing residents and graduates at Fort Lyon took me back to my days working in the mental health agency, giving people a place to live and more money that comes from even part-time employment. We found dramatic declines in the need for therapeutic and medical treatment for clients engaged in work or volunteerism who had a roof over their head. Dramatically reducing homelessness through supportive residential programs is a win-win-win-win for the individual, businesses, communities and society as a whole.  

 

Tom BinningsTom Binnings is a senior partner at Summit Economics in Colorado Springs. He has more than 30 years of experience in economic and market research for public policy, strategic planning, business analytics and project finance. He can be reached at [email protected]

The Economics of Housing Inflation in Colorado: Exploring the Supply and Demand Imbalance

The lack of affordable housing in Colorado for middle and lower-income households is a lesson in economics. Unlike the healthcare market, which is muddled with third-party payors, the housing market is straightforward supply and demand analysis. Demand has been far outpacing the supply of housing for the last decade in both the ownership and rental markets, driving up housing inflation across Colorado. 

READ: Evergreen Real Estate Group Leads Affordable Housing Development in Globeville

Housing costs have been rising dramatically throughout the state and nation. Since the pandemic, housing has been the greatest driver to our high inflation rates. Even slow- and no-growth areas like the Lower Arkansas River Valley east of Pueblo have experienced dramatic housing inflation even though job growth is minimal in the area. Moderate income Front Range retirees and workers are relocating to the area due to affordability, and investors have followed suit thinking cheap housing assets within a couple of hours of urban areas are a good long-term investment. 

Housing is a basic need where demand is driven by household growth, which is influenced by birth and death rates and urban concentration of economic opportunity pushing migration. In recent decades, relative affluence across much of America has also resulted in housing as an investment through second homes and the acquisition of investment properties. Even the tourism market is increasing housing demand through short-term rentals. Global capital markets, perceiving better potential returns from housing investments, are funneling dollars into the U. S. from around the world. This started after the 2001 dot-com bust and has continued except for the years surrounding The Great Recession. The low-interest rate environment since 2009 added massive fuel to the fire until 2022.

For prices to be increasing so dramatically, demand growth must be far exceeding supply growth – at least supply that meets societal expectations of “suitable housing.” As a result, market adaptation is occurring. More rental households are paying at least 50% of their income in rent. Households are doubling up. Multi-generational households are increasing. Average new unit sizes are decreasing. There is some localized pushback on short-term rentals. RV and van alternative lifestyles are becoming much more prevalent. Innovators are manufacturing tiny homes, pre-fab factories, and even 3-D printed homes.  These substitutes for traditional housing attempt to remain a step ahead of homelessness. 

Our governments, at every level, effectively limit housing supply that could be suitable alternatives to the above market adaptations. They constrain the housing supply growth through adoption of more stringent building codes, planning and zoning limitations, and cumbersome land entitlement processes. A study we did for the Colorado Springs Home Builders Association a few years back found local government requirements equate to 26% of the total price of new housing. Even when local land use policies support new and more affordable housing types being developed, democratic processes are heavily influenced by people who advocate for greater housing opportunity as long as it’s “not in my back yard.” The result is discrimination based on income at the very least. 

READ: New Approaches to Affordable Housing in Resort Communities

It is not just governments and NIMBYs that greatly constrain the housing supply. Great hindrances to the supply side come from insurance companies, fire professionals and environmental groups interested in protecting property, public safety and long-term sustainability, respectively.

Culturally and politically constraining our ability to increase the supply of traditional housing results in housing-costs indices rising much more rapidly than incomes over the last half-century. No wonder the corporate and investment sectors see nothing but long-term opportunity in housing and are funneling money into the market. 

The federal government’s effort to counter the supply constraints through low-income tax credits or direct investment through local housing authorities is absurd. Building enough housing to standard housing codes and socially acceptable sizes probably cannot be done without dramatic cutbacks to Medicare and Medicaid – assuming neighborhoods did not organize to oppose workforce or affordable housing. 

We need to re-engineer our societal constraints on the housing supply. Re-engineering requires radical redesign with targeted cost savings of at least 30%. Throw out the legacy models that hinder us and start over, using new technologies and emerging realities like climate change. Re-engineer building codes, public inspection processes, and land entitlement rules and regulations. There should be six objectives:

  1. Mitigate fire risks where fires are most likely to erupt.
  2. Pursue density.
  3. Allow development generally consistent with current zoning, and reallocate planned land uses to minimize NIMBYism
  4. Encourage existing small property owners to participate through the addition of mother-in-law apartments and accessory dwelling units.
  5. Keep residential areas residential as opposed to commercial tourist zones; 6) embrace new housing designs, materials and production approaches. 

Unfortunately, re-engineering requires we quit being our own worst enemy – something much easier said than done. It’s time to fight housing inflation in Colorado, once and for all.

 

Tom BinningsTom Binnings is a senior partner at Summit Economics in Colorado Springs. He has more than 30 years of experience in project management, economic and market research, real estate development, business analytics and strategic planning. He can be reached at (719) 471-0000 or [email protected].

New Approaches to Affordable Housing in Resort Communities

Many cities within the U.S. are currently experiencing an affordable housing crisis. Nowhere is that more apparent than resort communities where unprecedented increases in the cost of housing have brought significant challenges to both current and future residents. Sperling’s Best Places finds housing in Aspen costs 707.4% more than the national average; while Vail housing costs 397% more than the average; Glenwood Springs, 215.7% more; Steamboat Springs, 257% more; and Telluride 391% more.

To maintain the employees that make tourism possible in these mountain communities, workers need affordable places to live. Without resort staff, service professionals, government workers, or first responders, visitors and residents may not be able to enjoy the amenities and activities that make these areas so special. Local governments in tourism-centric communities, such as Breckenridge, Vail and Aspen, are working to find creative ways to ensure that the local workforce can afford to live where they work. While this process can take time, innovative ideas are yielding positive results and making an immediate impact on how affordable housing is funded and provided.

READ — Evergreen Real Estate Group Leads Affordable Housing Development in Globeville

Breckenridge

The Town of Breckenridge employs a variety of policies, strategies and incentives to combat the affordable housing crisis. Many of the programs are funded through a combination of voter-approved county-wide taxes, development impact fees, grants and short-term rental fees.

The town’s Housing Helps program incentivizes homeowners and real estate investors to deed-restrict their property to help maintain and sustain affordable homes. The program provides funds to local homeowners and apartment developers to permanently deed-restrict their homes or units, incorporating workforce requirements and income caps. The program can also be used by locals looking to buy a home, with Housing Helps funds available for around 15% of the purchase price of the home in exchange for a deed restriction. As of summer 2022, the Housing Helps program produced 58 deed-restricted market-rate units for the community.

In a combined effort with their deed-restriction efforts, the town has acquired land for the purpose of constructing new rental and for-sale affordable housing. Both rental and for-sale affordable housing have been built on town land and are under construction on the Block 11 and McCain subdivisions.

Finally, the town’s Lease to Locals program, a partnership between the town and a private organization called Landing Locals, provides cash incentives to property managers and property owners to convert their short-term rentals into seasonal and long-term rentals. The cash incentives can range up to $20,000 per property depending on unit size and the length of the lease.

Vail

The Vail InDEED program was developed in 2017, with the goal of acquiring 1,000 additional residential housing units by the year 2027. The program required the town to view housing as infrastructure, which resulted in a shift in both thinking and funding. The program has seen $12 million in investment from the town through the General Fund, and in its first four years resulted in the deed restriction of 165 units, including two full multifamily developments. In 2021 alone, the town invested more than $900,000 in the InDEED program which resulted in the conversion of 12 market-rate units to deed-restricted units.

Aspen

The City of Aspen’s Certificates of Affordable Housing Credits Program was originally established in 2010 through a citizen-initiated code amendment, creating a new system to encourage the private development of affordable housing. The city has long required affordable housing mitigation for most development, and this program created a mechanism for developers to build affordable housing without a mitigation requirement.

Based on the principles of a transferable development rights program, the credits program allows a private developer to build new affordable housing units and sell a “certificate of affordable housing credit” to another developer who has a separate housing mitigation requirement. This program enables the housing developer to rent or sell the housing units to qualified local working residents and to separately sell the housing credit, creating an additional revenue stream for the project that would help make it financially viable.

The housing credits created from these units have been used to mitigate single-family homes, lodges, commercial spaces and multi-family units instead of those projects building one-off housing units or providing a cash-in-lieu payment.

As resort communities in Colorado and nationwide struggle to provide affordable housing options to their residents, governments must continue to develop and test a suite of solutions to build and secure additional affordable units. While valuable lessons can be learned from the success of Breckenridge, Vail and Aspen’s affordable housing programs, new solutions must continue to be pursued. With the passage of Proposition 123 and the dedication of $300 million annually to affordable housing projects, local governments must develop a comprehensive housing strategy to identify how funds will most effectively be used to solve the housing needs of their communities.

Even as interest rates rise, housing prices in tourism-centric communities are anticipated to remain well above the national average in 2023. If additional affordable housing is not purchased and/or developed, resort communities will continue to struggle with maintaining an adequate workforce to support the amenities and activities that make them wonderful places to visit. Addressing affordable housing through targeted programs and policies is no longer an optional endeavor, but rather a critical first step in protecting the long-term economic well-being and character of so many resort communities.

 

Eric KrohngoldEric Krohngold is an associate with Design Workshop, an international landscape architecture, planning and urban design firm in Denver. He can be reached at, [email protected].

Evergreen Real Estate Group Leads Affordable Housing Development in Globeville

Chicago-based Evergreen Real Estate Group recently announced that it has opened a satellite office in Denver and was named development partner for the redevelopment of a city-owned lot at 4995 Washington St. in the Globeville neighborhood.

The new office – Evergreen’s first in Colorado – is spearheaded by Javonni Butler, who joined the firm in 2020 and currently serves as a project manager. In that capacity, he will oversee Evergreen’s involvement in Globeville Redevelopment Partners, a partnership involving Rocky Mountain Communities and the GES Coalition that was selected by Denver’s Department of Housing Stability (HOST) and Department of Finance as part of an RFP process. The group’s winning proposal for the 2.7-acre site, a former car dealership, calls for approximately 170 units of income-restricted rental housing and 20,000 square feet of community-serving commercial space.

READ — Colorado is Seeing More Inbound Moves in 2022 Than Most Other States in the U.S.

“Globeville is an underserved area of Denver, and we are honored to be working with the City and County of Denver, our project partners, and local stakeholders who understand the site’s potential as a catalyst for future investment,” said Butler. “We look forward to applying best practices learned from nearly 25 years of affordable housing development – including projects that co-locate apartments with other community-focused uses – and contributing to the broader revitalization of Washington Street as critical infrastructure improvements are made that, together, enhance livability.”

Pending City Council approval, Globeville Redevelopment Partners will enter into a 99-year ground lease with the City and County of Denver, which acquired the property in 2019 and will retain ownership. The apartments will be reserved for households earning between 30% and 80% of the area median income (AMI), with approximately half of the units offering three- and four-bedroom floor plans.

READ — 2022 Trends in Colorado Residential Homes

“With this project, we’re not only creating quality rental housing where none previously existed, but also ensuring its long-term affordability,” said Butler. “We believe the inclusion of larger units will help meet the housing needs of area families who have few options available to them, particularly as living costs continue to rise. We look forward to bringing this important project to life along with our dedicated partners, Rocky Mountain Communities and GES Coalition, who both have strong track records of successful community development.”

In addition to the Globeville development, Evergreen is exploring additional investments in Denver and throughout Colorado.

 

About Evergreen Real Estate Group:

Founded in 1999, Chicago-based Evergreen Real Estate Group is a fully integrated multifamily company that develops, acquires, and manages affordable and market-rate multifamily apartments for both seniors and families across 11 states. Evergreen specializes in thoughtful, creative residential development solutions — from adaptive reuse of historic buildings to new development in cities and towns facing a shortage of affordable housing. The firm is led by a passionate, cross-disciplinary team of developers, architects, urban planners and attorneys who have come together to create high-quality apartment communities, often in collaboration with local municipalities and financial partners who share its vision of investing not just in real estate, but also the people who call our communities home. Evergreen currently owns and manages more than 10,000 units of multifamily housing. For more information, visit www.evergreenreg.com.