The Grand County Board Of County Commissioners (BOCC) has again returned to the issue of housing, both long and short-term. They were recently updated on the Housing Needs Assessment, completed for the Grand County Housing Authority and presented by Housing Authority Director Sheena Darland– an assessment that shows a lack of affordable housing for permanent residents and numerous challenges in the long-term housing market. They then heard staff recommendations on the County’s year-old Short-Term Rental program, just barely reaching an uneasy and temporary agreement on fee-structures for the coming year.
Darland presented highlights from the recently completed Housing Needs Assessment during her regular quarterly update to the Board. The study was conducted by an independent third-party contractor and looked at the Kremmling, Hot Sulphur Springs, Granby, and Grand Lake areas and their housing needs. The Fraser Valley communities have been working on addressing their own housing needs, including the new development of affordable housing in downtown Winter Park.
Among the primary findings of the assessment are that the median annual income of a two-person household in the area is $60,800, which would allow them to afford a $238,000 home, well below the current median sale prices in all but the Kremmling area. Given the current market costs of housing in the area, a two-person household would have to earn $56,000 a year for the median rental to be termed “affordable” and $120,000 a year for the median home price to be “affordable.” Further, affordable homes on the market were indicated to be undersupplied in all areas for households making less than 80 percent of the median income, or under $48,000 a year. — Affordable housing is generally considered to cost no more than 30 percent of a household’s income.
The study found that about 4,800 of the area’s 10,500 housing units, or 46 percent, are inhabited by full-time residents and 72 percent of occupied homes are owned. “The percentage of renter-occupied units is quite small compared to many communities,” according to the final report. It reports that the “inventory” of rental housing is “approaching 0” in an area of rising market prices, while “wages and income are low, compared to the state.” This lack of available housing is “hurting employees and employers,” according to the report.
Additional impacts of the shortage are reflected in the fact that the numbers of those able to benefit from such existing programs as Housing Choice Vouchers are falling as well. According to Darland, while eligible families exist in the county, they are unable to find housing, thereby rendering program assistance futile. County Manager Lee Staab indicated that this results in the loss of the available housing vouchers from the County, so far equalling a loss of $34,000 to the Housing Authority budget, further decreasing the help available to otherwise qualified households..
Final conclusions of the report indicate that 275 additional affordable housing units will be needed in the next five years in order to meet housing needs that will support job growth, sustain businesses, and meet residents’ needs. Recommendations include subsidies, private/public development partnerships, deed-restricted housing, and a coordinated regional response. The full report can be accessed on the Housing Authority website at http://co.grand.co.us/421/Housing-Authority.
This concern about lack of affordable long-term housing was resumed in the discussion about Short-Term Rentals (STR) when, a year into a new regulatory program requiring STR owners to apply for a permit, pay an annual permit fee, and abide by specific zoning regulations, Staff returned to the BOCC with recommendations to increase permit fees in order to pay for a program whose revenue is falling far below program costs.
Manager Staab compared the program’s 2018 revenues of $78,750 to program costs of nearly $314,000, including $174,000 in personnel costs, $36,000 in software and mailing costs, about $36,000 in facility and administrative costs, and a loss of $68,000 in revenue to the Housing Authority, due to loss of housing vouchers and other home ownership assistance funds. He stressed that these numbers did not include more difficult to quantify tax-payer costs, such as an increased demand of public services, such as police and emergency responders; increased maintenance of road and bridge resources; and the rising costs and decreasing availability of housing for permanent residents.
He supported this last concern with a letter and some graphs from the Colorado Association of Ski Towns, stating that “while revenue collection [from STRs] still remains an issue, the Association’s focus has shifted to include the impacts that [STRs] are having on our communities in terms of loss of long-term rental housing, community character, zoning, safety, parking, noise, etc.”
He indicated that not all possible revenues have been collected as about 175 of the currently 750-ish advertising homeowners are still non-compliant and unpermitted. However, best-case scenario, if all STR owners became compliant with no additional legal or collection costs, the program’s total revenue for the year will only reach $105,000, still leaving a significant gap in funding.
Staab presented three recommended options to the Board, all maintaining the current zoning regulations, continuing assessment and problem-solving for issues of public access for some addresses, and an increased and variable fee structure. Those recommended options each included a base permit fee of $100 and $500 plus a “pillow-count” fee of between $0 and $35, pillow-count to be determined by the number of possible guests advertised on an STR listing.
As seen at all of the previous hearings on the subject, the public was present with much discontent on the proposal. STR owners gave various objections to the proposal, with permanent residents, such as Kathy Gilbertson of Tabernash, calling the increased fees an unjust taxation on people who are already paying annual property taxes and sales taxes on each STR transaction. Other STR business operators, such as Laurie Dempsey, part-time resident of Grand Lake, indicated that as an STR operator she was motivated to provide ongoing upkeep and maintenance on a home, further benefiting the community through wages and aesthetic. And still others, like Eric Richards, vacation home-owner in Tabernash, said he’s “doing very well” with his STR, he’s fine with paying any fees, and he is willing to pay Gilberson’s fees as well. Still others protested the fee increases with one individual stating that perhaps the program should look to cutting costs rather than resorting to, again, “increased taxation.”
Other community leaders seemed concerned as well, with Catherine Ross, Director of the Fraser-Winter Park Chamber of Commerce and former Chair of the Housing Authority, directly asking the BOCC to delay any change in the program until a more thorough assessment could be done. She indicated that none of the budget numbers presented included any revenue increase from lodging taxes, sales taxes, and general spending that accompanied the increase in STR usage and regulation. She offered her own willingness to participate in a working group to assess these potential benefits. The question of missing revenue numbers was not addressed by either the County Manager or program staff, though it was the primary motivation behind Commissioner Rich Cimino suggesting a fully-regulated program in early 2017.
In the end, Commissioners were not in agreement about even immediate steps to be taken. While Cimino and Chair Merrit Linke recognized they thought the program was operating in the red, Commissioner Kristen Manguso was reluctant to do so without information on tax and spending revenues. Manguso wished to avoid making temporary changes now that may change again in one year, citing concerns over stability, public understanding, and changing messages. Linke suggested a three-tiered proposal, but indicated his preference to be a flat fee of $250 (up from the current $150 a year) to help cover program costs. And Cimino voiced a preference for a variable fee structure.
Finally, Cimino motioned for a standard $25 pillow fee for the coming year. He argued that, while the average advertised availability was 9.6 people, if rounded to 10, that would equate to the $250 that Linke was pushing for. It would also provide a variable fee rate for those just renting a sofa or a room in their permanent home versus those renting entire 5-bedroom homes.
The Board voted 2-1, with Linke opposing, to pass the pillow-fee only structure. The vote included an effective date of August 1, against staff recommendation that pushing it back even one more month would only result in more lost revenue. Under the new structure, if the number of unincorporated STRs remains at the seemingly stable 750 advertised units, it would mean a revenue in the coming year of $187,000. Still below the reported program costs of over $300,000, but well above the $78,000 collected so far this year.