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HomeMy WebLinkAbout2012-10-23 Agenda and Support Documentation Town Council Special SessionVAIL TOWN COUNCIL SPECIAL MEETING AGENDA VAIL TOWN COUNCIL CHAMBERS 75 S. Frontage Road W. Vail, CO 81657 4:00 P.M., OCTOBER 23, 2012 NOTE: Times of items are approximate, subject to change, and cannot be relied upon to determine at what time Council will consider an item. Public comments on work session item may be solicited by the Town Council 1. ITEM/TOPIC: Resolution No. 31, Series of 2012, a resolution repealing and reenacting the Town of Vail Employee Housing Strategic Plan. (30 Minutes) PRESENTER(S): Nina Timm, Community Development Department ACTION REQUESTED OF COUNCIL: The Community Development Department requests the Vail Town Council listen to the Staff presentation, ask questions and provide feedback. The Community Development Department also requests the Vail Town Council grant a continuance of Resolution No. 31, Series of 2012, to its November 6, 2012, public hearing for further deliberation. BACKGROUND: The Town of Vail adopted its Employee Housing Strategic Plan on September 2, 2008. Since that time market conditions have changed, additional information is available and there has been completion of action items from the current plan. Proposed amendments to the Employee Housing Strategic Plan make it a more current and relevant guide for decision making. STAFF RECOMMENDATION: The Community Development Department recommends the Vail Town Council grant a continuance of Resolution No. 31, Series of 2012, to its November 6, 2012 public hearing for further deliberation. 2. ITEM/TOPIC: Executive Session, pursuant to: 1) C.R.S. §24-6-402(4)(a)(b)(e) - to discuss the purchase, acquisition, lease, transfer, or sale of property interests; to receive legal advice on specific legal questions; and to determine positions, develop a strategy and instruct negotiators, regarding: Ever Vail Redevelopment Agreement; 2) C.R.S. §24-6-402(4)(f) - to discuss personnel matters, regarding: Updateon Town Managers direct reports. (90 min.) PRESENTER(S): Matt Mire 3. ITEM/TOPIC: Adjournment (6:00 p.m.) 10/23/2012 VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: October 23, 2012 ITEM/TOPIC: Resolution No. 31, Series of 2012, a resolution repealing and reenacting the Town of Vail Employee Housing Strategic Plan. PRESENTER(S): Nina Timm, Community Development Department ACTION REQUESTED OF COUNCIL: The Community Development Department requests the Vail Town Council listen to the Staff presentation, ask questions and provide feedback. The Community Development Department also requests the Vail Town Council grant a continuance of Resolution No. 31, Series of 2012, to its November 6, 2012, public hearing for further deliberation. BACKGROUND: The Town of Vail adopted its Employee Housing Strategic Plan on September 2, 2008. Since that time market conditions have changed, additional information is available and there has been completion of action items from the current plan. Proposed amendments to the Employee Housing Strategic Plan make it a more current and relevant guide for decision making. STAFF RECOMMENDATION: The Community Development Department recommends the Vail Town Council grant a continuance of Resolution No. 31, Series of 2012, to its November 6, 2012 public hearing for further deliberation. ATTACHMENTS: Staff Memorandum Resolution No. 31, Series of 2012 Attachment A Economic Indicators EV of Vail Investment in Employee Housing Final Chamonix Market Update Draft Housing Needs Assessment 10/23/2012 To: Vail Town Council From: Community Development Department Date: October 16, 2012 Subject: Resolution No. 31, Series of 2012, a resolution amending the Town of Vail Employee Housing Strategic Plan, and setting forth details in regard thereto. I. SUMMARY The applicant, the Town of Vail, is requesting a work session to discuss proposed amendments to the Town of Vail Employee Housing Strategic Plan (EHSP). The proposed amendments located in Exhibit A of Resolution No. 31, Series of 2012 have been attached for review (Attachment A). On September 25, 2012, the Vail Local Housing Authority forwarded a recommendation of approval to the Vail Town Council for the proposed amendments. As this is a work session, the Community Development Department recommends the Vail Town Council listen to the Staff presentation, asks questions, and provide direction by answering the following: • Does the Current Conditions section that has been added to the EHSP contain all of the information the Town Council would like included? If not, what additional information should be added? • Are there additional objectives the Town Council would like added to the EHSP? • Does the Implementation Matrix for the next three to five year period include the actions the Town Council would like to complete? • Are there items the Town Council would like to add to or remove from the Implementation Matrix? II. DESCRIPTION OF THE REQUEST WHY UPDATE THE EMPLOYEE HOUSING STRATEGIC PLAN? The applicant is proposing amendments to the Employee Housing Strategic Plan at this time due to the following: • Real estate market changes • Economic and housing analysis/data updates 1 - 1 - 1 10/23/2012 Town of Vail Page 2 • Policy shifts toward for-sale employee housing development • Completion of action items from the current plan WHICH SECTIONS OF THE EMPLOYEE HOUSING STRATEGIC PLAN ARE PROPOSED TO BE AMENDED? The applicant is proposing amendments to update the following sections of the Employee Housing Strategic Plan: • Background • Current Conditions • Threats and Weaknesses, Strengths & Opportunities • Objectives • Action Steps • Implementation Matrix • Glossary • Attachments WHICH SECTIONS OF THE EMPLOYEE HOUSING STRATEGIC PLAN ARE NOT PROPOSED TO BE AMENDED? • Purpose • Planning Time Frame • Policy Statements • Roles and Responsibilities WHAT ARE THE CURRENT OBJECTIVES AND POLICY STATEMENTS OF THE EMPLOYEE HOUSING STRATEGIC PLAN AND WHAT AMENDMENTS ARE PROPOSED? The following is a list of the current objectives of the Employee Housing Strategic Plan. OBJECTIVES (in part) A. Provide housing to address needs generated by new development or redevelopment. B. Respond to the existing affordable housing shortfall by pursuing a number of identified programs and development opportunities. C. Call for any deed-restricted housing that is required as a condition of development to be constructed at the time new development occurs. D. Creation and maintenance of housing in Vail for emergency and key service workers. 1 - 1 - 2 10/23/2012 Town of Vail Page 3 E. Actively address affordable housing for Vail workers to ensure that the community remains competitive in economic terms. F. Increase and maintain deed-restricted housing within the Town to encourage the efficient use of resources by placing employees closer to their place of work. G. Planning for new employee housing will take jobs and wages into account. H. Provide and plan for housing along with local and regional public transportation. The following is a list of the current policy statements of the Employee Housing Strategic Plan. The applicant is proposing no changes to the current policy statements. POLICY STATEMENTS (in part) The Town of Vail will pursue three broadly described methods to achieve the Town’s housing goal. The Town will Impose Regulatory Requirements • Development will be required to address a portion of its housing demand within the Town of Vail; and • New development and redevelopment will be required to address a portion of its housing demand at the development site. Development and Acquisition Initiated by the Town • To address employee housing needs beyond the regulatory requirements for new development; and • To respond to the desire to promote a more diverse and vibrant local community. Form Regional Partnerships • These efforts will address employee housing needs beyond the regulatory requirements by actively seeking partnerships, including: o Public / Private, and o Multi Jurisdictional. ARE THERE ACTION ITEMS THE TOWN COUNCIL WOULD LIKE TO ADD OR REMOVE FROM THE IMPLEMENTATION MATRIX? A. Action items for 2013 to 2016 – For Sale Development Focus a. Chamonix Commons b. New financing for Timber Ridge Village Apartments c. Eagle River Water & Sanitation District partnership 1 - 1 - 3 10/23/2012 Town of Vail Page 4 i. Snowberry – up to 4 new for-sale units ii. East Vail – up to 4 new for-sale units d. Partner with Eagle County e. 2507 Arosa Drive redevelopment f. Develop new zoning incentives to incent private sector EHU development i. Amend the EHU Exchange Program to allow for administrative approval of proposed exchanges ii. Allow certain retirees to live in EHUs iii. Work with private sector to develop additional incentives B. Action Items for 2017 to 2022 – to be updated as needed a. Gore Range Condo redevelopment b. Timber Ridge Redevelopment c. Evaluate Town owned properties for development opportunity (i.e., parking structures, etc.) d. Buy Downs e. Partner with Vail Resorts to develop EHUs f. Partner with Cascade Resort to develop EHUs C. Action Items for 2023 and Beyond – to be updated as needed a. Partner with Sonnenalp Resort to develop additional EHUs b. When Red Sandstone Elementary redevelops add EHUs c. Building second building at Buzzard Park – Town Shops d. Acquire underdeveloped properties for redevelopment e. Partner with Vail Valley Medical Center to develop EHUs III. BACKGROUND The Town of Vail Employee Housing Strategic Plan was established on September 2, 2008 through the Town Council’s adoption of Resolution No. 20, Series of 2008. On August 21, 2012, the Vail Town Council held a work session to discuss the proposed amendments to the Employee Housing Strategic Plan. The Vail Local Housing Authority had discussed these proposed amendments to the Employee Housing Strategic Plan at its August 23, August 28, September 6, and September 25, 2012, public meetings. On September 25, 2012, the Vail Local Housing Authority forwarded a recommendation of approval to the Vail Town Council for the proposed amendments. Since the Town adopted the Plan in 2008 market conditions have changed throughout Eagle County. The proposed Implementation Matrix does not ask the business community or new development to take any new or additional actions to provide employee housing. Proposed action items for the next five-year period focus on developing new for-sale housing units rather than rental units. Today, 90% of current EHUs are renter-occupied and focusing on for-sale units will provide a greater diversity in housing opportunities and residents. 1 - 1 - 4 10/23/2012 Town of Vail Page 5 The Plan indicates a planning time frame of five to ten years and acknowledges the Implementation Matrix should be updated more frequently. The proposed Implementation Matrix provides action steps for the Town of Vail to take to help achieve the goal of ensuring 3 out of 10 employees a housing unit in Vail. Today, commercial linkage and inclusionary zoning are designed to conjunctively ensure there is deed restricted employee housing for at least 30% of new employees generated by new development and redevelopment. The regulatory requirements provide multiple methods of mitigation and do not require employee housing be provided for a specific type of wage earners. The goal is for development to provide the type(s) of employee housing most suited to the needs of that development’s future employees. Catch Up is a portion of the Town’s goal that is exclusively within the purview and control of the Town of Vail. Based on the Town’s goal and existing deed restricted properties in Vail, the deed restricted employee housing unit gap is currently 677 beds. With an average occupancy of 2.04 people per unit, the 677 bed gap equates to 332 new deed restricted employee housing units (EHU). Today there are 725 deed restricted EHUs in Vail. EHUs are an effective means to continue to increase the total number of full-time households living in the Town of Vail. Full-time households are the cornerstone to Vail remaining a vibrant resort community. There are successful resorts that do not have communities and Vail has chosen to be the premier international resort community! BBC Research & Consulting completed a study in Vail quantifying the Economic Value of the Town of Vail’s Investment in Employee Housing, dated March 29, 2012. The study enumerated the economic benefits as well as benefits that go beyond direct economics of having EHUs in Vail. Including: • Improved guest experience – the most basic product sold by Vail; • Better positioning against other resorts competing for a quality workforce; • Reduction in the seasonality of local businesses; • Increased vitality, diversity and “real town” authenticity for the town; • Increased community participation (volunteers, board members, etc.); and • Enhanced ability for younger workers to stay in Vail and grow into higher-level employment and community leadership positions. • Opportunities for families to remain in Vail and raise a generation of new Vail residents, support local schools and create a critical mass of residents, which would all be jeopardized without the Town’s support of deed-restricted for-sale housing in addition to rental units. Today, 64% of Vail’s dwelling units are partially occupied or vacant. Based on existing trends, over time the percentage of partially occupied or vacant dwelling units is likely to increase. Having a critical mass of homeowners live in a community: 1 - 1 - 5 10/23/2012 Town of Vail Page 6 • gives residents a greater stake in the community, • increases the number and diversity of businesses in neighborhoods, and • stimulates economic investment. This furthers the Town Council’s Key Goals to: 1) Improve economic vitality, 2) Grow a balanced community, 3) Improve the quality of the experience, and 4) Develop future leadership. IV. ACTION REQUESTED OF THE COUNCIL As this is a work session, the Community Development Department recommends the Vail Town Council listen to the Staff presentation, asks questions, and provides direction on how to proceed with amendments to the Employee Housing Strategic Plan by answering the following: 1. Does the Current Conditions section that has been added to the EHSP contain all of the information the Town Council would like included? If not, what additional information should be added? 2. Are there additional Objectives the Town Council would like added to the EHSP? 3. Does the Implementation Matrix for the next three to five year period include the actions the Town Council would like to complete? 4. Are there items the Town Council would like to add to or remove from the Implementation Matrix? V. RECOMMENDATION The Community Development Department recommends the Vail Town Council grants a continuance of Resolution 31, Series of 2012, to its November 6, 2012, public hearing for further deliberation. VI. ATTACHMENTS A. Resolution No. 31, Series of 2012, a resolution amending the Town of Vail Employee Housing Strategic Plan with Attachment A (Employee Housing Strategic Plan) 1 - 1 - 6 10/23/2012 1 Resolution No. 31, Series of 2012 RESOLUTION NO. 31 Series of 2012 A RESOLUTION REPEALING AND REENACTING THE TOWN OF VAIL EMPLOYEE HOUSING STRATEGIC PLAN; AND SETTING FORTH DETAILS IN REGARD THERETO. WHEREAS, the Town of Vail (the "Town"), in the County of Eagle and State of Colorado is a home rule municipal corporation duly organized and existing under the laws of the State of Colorado and the Town Charter (the "Charter"); and WHEREAS, the Town has determined that no less than thirty percent (30%) of Vail's workforce should be provided deed restricted employee housing within the Town limits; and WHEREAS, the Council has determined that in order to achieve the established goal it is critical to create an employee housing strategic plan establishing and clarifying the objectives and action steps essential to achieve the stated goal; and WHEREAS, the Vail Local Housing Authority and Council developed the Employee Housing Strategic Plan over a period of six months that outlines the goal, objectives and action steps; and WHEREAS, the Vail Economic Advisory Committee provided input and direction on the Employee Housing Strategic Plan at their May 13, 2008, and June 10, 2008, meetings; and WHEREAS, the Planning and Environmental Commission provided input and direction on the Employee Housing Strategic Plan at their August 25, 2008, Public Hearing; and WHEREAS, the Council supports the implementation of the Vail Employee Housing Strategic Plan; and WHEREAS, the Employee Housing Strategic Plan will direct policy and budget decisions in order to achieve the community's stated goal; and WHEREAS, it is the intention of the Council and the Housing Authority to implement the Employee Housing Strategic Plan over the next three years; and WHEREAS, market conditions have changed since the Employee Housing Strategic Plan was adopted, additional information now exists about housing in Vail and Eagle County, and certain action items from the current plan have been completed; and 1 - 2 - 1 10/23/2012 2 Resolution No. 31, Series of 2012 WHEREAS, the Vail Local Housing Authority discussed proposed amendments to the Employee Housing Strategic Plan at their August 23, August 28, September 6 and forwarded a recommendation of approval at their September 25, 2012, public meetings; and WHEREAS, the Vail Town Council finds and determines that the amendments are consistent with the applicable elements of the adopted goals, objectives and policies outlined in the Vail Comprehensive Plan and is compatible with the development objectives of the town; and WHEREAS, the Vail Town Council finds and determines that the amendment to the Town of Vail Employee Housing Strategic Plan furthers the general and specific purposes of the plan; and WHEREAS, the Vail Town Council finds and determines that the amendments promote the health, safety, morals, and general welfare of the town and promote the coordinated and harmonious development of the town in a manner that conserves and enhances its natural environment and its established character as a resort and residential community of the highest quality. NOW THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF VAIL, COLORADO THAT: The Town Council repeals and reenacts the Town of Vail Employee Housing Strategic Plan, dated November 6, 2012, attached hereto as Exhibit A. INTRODUCED, PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Vail held this 6th day of November, 2012. __________________ Andrew P. Daly, Mayor ATTEST: _________________________ Lorelei Donaldson, Town Clerk 1 - 2 - 2 10/23/2012 To w n o f V a i l C o m m u n i t y D e v e l o p m e n t D e p a r t m e n t 20 1 2 U p d a t e Em p l o y e e H o u s i n g S t r a t e g i c P l a n To ensure there is deed restricted housing for at least 30% of Vail’s workforce within the Town of Vail 1 - 3 - 1 10/23/2012 1 - 3 - 2 10/23/2012 In recognition of the commitment to ensure deed-restricted housing options for at least 30% of Vail’s workforce within the Town of Vail Vail Town Council Vail Local Housing Authority Andy Daly, Mayor Steve Lindstrom, Chair Ludwig Kurz, Mayor Pro-Tem Scott Ashburn Kerry Donovan Mary McDougall Kevin Foley Kim Newbury Greg Moffet John Rediker Margaret Rogers Susie Tjossem Town of Vail Community Development Department George Ruther, Director Nina Timm, Housing Coordinator 1 - 3 - 3 10/23/2012 Table of Contents Background 1 Purpose Current Conditions Time Frame Threats, Weaknesses, Strengths & Opportunities Objectives Policy Statements Action Steps Implementation Matrix Roles and Responsibilities Appendix New text in bold italics. Text to be deleted has a strikethrough. 1 - 3 - 4 10/23/2012 1 Employee Housing Strategic Plan TOWN OF VAIL EMPLOYEE HOUSING STRATEGIC PLAN BACKGROUND In 2006, through the Vail 20/20 Focus on the Future process the community established a housing goal. It is as follows: “The Town of Vail recognizes the need for housing as infrastructure that promotes community, reduces transit needs and keeps more employees living in the town, and will provide enough deed-restricted housing for at least 30 percent of the workforce through policies, regulations and publicly initiated development.” Based upon the community’s work, the Vail Town Council has confirmed the Town of Vail recognizes deed restricted employee housing as basic infrastructure. This type of housing allows employees to live within the town, promoting community, and improving the quality of our local workforce, thereby supporting the local economy, and reducing regional transit needs. The Employee Housing Strategic Plan seeks to meet the expectations established by the community and confirmed by the Town Council and provide enough deed-restricted housing for at least 30 percent of the community’s workforce to live in the Town of Vail through a variety of policies, regulations and publicly initiated development projects. The Town of Vail adopted its Employee Housing Strategic Plan in September, 2008, at the height of the global real estate market boom. As market conditions have changed throughout Eagle County and numerous action items from the Employee Housing Strategic Plan (EHSP) have been completed the Town of Vail is amending the Implementation Matrix and is adding new information to the EHSP to ensure the EHSP continues to achieve the Town’s employee housing goal that was established in 2006 and adopted in 2008 as part of the Employee Housing Strategic Plan. In Vail today, approximately 90% of existing deed restricted employee housing units (EHU) in Vail are renter occupied. Based on the Vail Town Council’s adopted goals of: improve economic vitality, grow a balanced community, improve the quality of the experience, and 1 - 3 - 5 10/23/2012 2 Employee Housing Strategic Plan develop future leadership and that having a critical mass of homeowners live in a community: gives residents a greater stake in the community, increases the number and diversity of businesses in neighborhoods, and stimulates economic investment amendments to the EHSP and specifically the Implementation Matrix will focus, at least in the next five-years, on developing new for-sale EHUs with the goal of achieving the community’s stated goal of providing enough deed-restricted housing for at least 30% of the workforce through policies, regulations and publicly initiated development. Achieving the goal is critical for Vail’s long-term success as a resort community. It is also recognized that housing needs follow economic growth and recession cycles. Successful implementation of the EHSP will provide 3 out of every 10 employees an EHU in Vail and the remaining 7 out of 10 employees will rely on the private sector for their housing. PURPOSE The EHSP is a decision-making guide for the implementation of employee occupied housing programs. The EHSP documents the Town’s current approaches to ensuring employee housing. It identifies the goal, outlines methods and defines action steps the Town will pursue. In addition, the Appendices provide background information on Town housing definitions, policies, and initiatives. The appendices also include relevant reports to support EHU development and policy decisions in Vail. This information is provided as an additional resource. The EHSP also recognizes and affirms the importance of Vail constantly serving as a regional partner in the provision of employee housing. The EHSP is meant to lead the actions of Staff, the Vail Local Housing Authority and the Vail Town Council in future decisions regarding funding and development of employee housing in Vail. CURRENT CONDITIONS Dwelling Units As of 2010 there are approximately 7,230 dwelling units in the Town of Vail, this is an almost seventy percent (70%) increase in the number of dwelling units than existed in 1980. From 1980 to 2010, Vail’s population increased nearly forty three percent (43%). Vail has always been and continues to be a highly desirable 1 - 3 - 6 10/23/2012 3 Employee Housing Strategic Plan location to own a vacation home and this is clearly evident based on the increase in the number of dwelling units at nearly twice the pace the number of full-time residents has increased. According to the 2010 US Census sixty four percent (64%) of Vail’s dwelling units are partially occupied or vacant. Town of Vail 1980 1990 2000 2010 Dwelling Units 5029 6167 5389* 7230 Number of EHUs 198 205 389 725 % EHUs 3.9% 3.3% 7.2% 10% Number of Households 1680 2165 2604 Vail’s Population 2261 3659 4531 5305 % Population Increased 62% 24% 17% (Source: 1980, 1990, 2000 & 2010 US Census and Town of Vail Community Development Dept) *As reported in the 2000 US Census Since the Town adopted its EHSP there is been highest median price per square foot for Vail real estate in its history. Following 2008, there was a significant decrease in the median price per square foot for real estate and since then it appears to be more level. The spike in 2010 is likely related to unit sales at Solaris that went under contract in 2007/2008. (Source: Eagle County Assessor’s Office) The major redevelopment that Vail experienced from 2004 to 2012 also more than doubled (229% increase)from 376 existing dwelling units to 1,238 dwelling units today in Vail Village and Lionshead associated with 33 major projects. During this same period of time, the number of EHUs associated with 33 of the major redevelopment projects increased from 95 EHUs to 164 EHUs (72% increase). $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 20072008200920102011 $596 $897 $503 $596 $460 Vail's Median Price Per Square Foot 1 - 3 - 7 10/23/2012 4 Employee Housing Strategic Plan (Source: Town of Vail Community Development Department) There are 2,604 full-time occupied dwelling units in the Town of Vail. 725 of the 2,604 full-time occupied dwelling units in Vail are EHUs. As evidenced by the data, EHUs are an effective means to continue to increase the total number of full- time households living in Vail. Full-time households are the cornerstone to Vail remaining a vibrant resort community. (Source: Town of Vail Community Development Department) Existing EHUs breakdown as follows: Timber Ridge Village Apartments 198 Units Rental, Seasonal Middle Creek Apartments 142 Units Rental, Affordable 376 95 46 546 862 69 105 100 0 200 400 600 800 1000 1200 1400 Dwelling UnitsEmployee Housing Units Fractional Fee Units Accommodation Units Development Statistics for 33 Major Redevelopment Projects Net New 2004-2012 Prior to Redevelopment in 2004 0 198 205 389 725 0 200 400 600 800 19701980199020002010 Deed Restricted EHUs 1 - 3 - 8 10/23/2012 5 Employee Housing Strategic Plan Required Mitigation 132 Units Rental, Seasonal Privately Owned Units 127 Units Rental Owner-Occupied, Price Capped Units 81 Units For-Sale, Affordable Town of Vail Owned Units 45 Units Rental, Seasonal The affordability of existing EHUs generally breakdown as follows: Timber Ridge Village Apartments 60% of Area Median Income Middle Creek Apartments 60% of Area Median Income Owner-Occupied, Price Capped Units • 53 units at Vail Commons 80% 2-Person Area Median Income • 18 units at Red Sandstone Creek 100% 2-Person Area Median Income • 6 units at North Trail Townhomes 110% 2-Person Area Median Income • 2 units at Arosa Duplex 140% 2-Person Area Median Income • 2 Buy Down Units 100% 2-Person Area Median Income Town of Vail Owned Units 60% of Area Median Income (average) (Source: Town of Vail Community Development Department) Jobs and Wages • According to the 2000 and 2010 US Census, Vail had a 43% or a 506 household decrease in the number of households earning $50,000 to $200,000 annually (likely local wage earners) from 2000 to 2010. • During the same time period Eagle County had a 25% or 2,206 household increase in the number of households earning between $50,000 and $200,000 annually. $0$200,000$400,000 Vail Commons 3-Bedroom Red Sandstone 3- Bedroom North Trail 3-Bedroom Arosa Duplex 3-Bedroom $245,000 $285,000 $295,000 $425,000 2012 Average 3-Bedroom Max Sale Price -Appreciation Capped 1 - 3 - 9 10/23/2012 6 Employee Housing Strategic Plan 2000 HH Income Ranges in 2010 $ 2000 2010 2010 HH Income Ranges in 2010 $ $12,500 to $31,249 238 212 $10,000 to $24,999 $31,250 to $62,499 545 68 $25,000 to $49,999 $62,500 to $93,749 541 122 $50,000 to $74,999 $93,750 to $124,999 253 162 $75,000 to $99,999 $125,000 to $187,499 283 274 $100,000 to $149,999 $188,000 to $250,000 98 111 $150,000 to $200,000 Over $250,000 133 165 Over $200,000 (Source: US Census 2010 and 2000) The following chart shows the percent of Vail households by income. As part of the major redevelopment projects that took place in Vail Village and Lionshead from 2004 to 2012 the amount of commercial square footage has more than doubled (131% increase). This outcome was intentional and is based on the adopted goals of the Lionshead Redevelopment Master Plan as well as the Vail Village Master Plan. While an increase in commercial square footage generally Up to $24,900 19% $25,000 to $49,999 6% $50,000 to $74,999 11% $75,000 to $99,999 14% $100,000 to $149,999 25% $150,000 to $200,000 10% Over $200,000 15% Vail Household Income as Reported in the 2010 US Census For Reference: Annual Household Income Maximum Purchase Price $62,500 $187,500 $87,500 $375,000 $125,000 $625,000 $175,000 >$625,000 * Assumes 4.125% interest, 20% down payment, limited household debt or installment loan payments (Source: Town of Vail Community Development) 1 - 3 - 10 10/23/2012 7 Employee Housing Strategic Plan equates to higher sales tax collections it also increases the number of service sector jobs that exist in the Town of Vail, many of which are seasonal. (Source: Town of Vail Community Development) Consistent with commercial development and job creation in Vail, throughout Eagle County the largest employment industry is Accommodations and Food Services, employing 26% of all employees. 206,836272,191 479,027 0 200,000 400,000 600,000 Prior to Redevelopment in 2004 Net New 2004-2012Post Redevelopment 2012 Commercial Square Footage for 33 Major Redevelopment Projects 1 - 3 - 11 10/23/2012 8 Employee Housing Strategic Plan PLANNING TIMEFRAME The EHSP is based on a five-to-ten year planning horizon; it looks well into the future anticipating the needs for employee housing over time. The EHSP also contains identified “action steps” targeted for a one to three year period. These action steps will need to be evaluated annually and it is anticipated that they will be updated at least every three years as market conditions change. THREATS, WEAKNESSES, STRENGTHS & OPPORTUNITIES It is important to recognize and plan for the threats, weaknesses, strengths and opportunities that exist in the Town of Vail as well acknowledge the broader trends that impact Vail. Threats • Increasing Competition For Employees o Within the next ten-years estimates predict 2,000 new jobs will be created by development and redevelopment within the Town of Vail The majority of these jobs will be service sector o Eagle County job growth is predicted at 1.5% annually through 2013 and 2.5% annually from 2013 to 2015 (DOLA) o From 2015 to 2020 annual average job growth is likely to be higher, in the range of 3% - 4% or more (DOLA) o It is estimated that at least 7,500 new jobs will be created between Eagle Vail and Gypsum in the next ten years o The majority of the these jobs will be service sector o It is estimated the Ginn Development will add 1,000 new jobs o Lake County and Garfield County are both experiencing job growth o The oil and gas industry and mining generally pay substantially more than the service jobs being created in Eagle County o State of Colorado predicts overall job growth of 23% (DOLA) • State Demography Office shows a modest decline (0.5%)in population from 2010 data for Eagle County • Employee housing demand will increase due to demand from replacement workers of retirees (Eagle County Housing Needs Assessment Update, 2012) 1 - 3 - 12 10/23/2012 9 Employee Housing Strategic Plan • Data indicates 46.5% of all renters in Eagle County are cost burdened (paying more than 30% of their income for housing) (Eagle County Housing Needs Assessment Update, 2012) • 64% of Vail’s dwelling units are either partially occupied or vacant (2010 US Census) • Real Estate Trends o Real estate in the Town of Vail is expensive as compared to the rest of the region as well as compared to the national market o The conversion of locally occupied housing to second homes o The free market focuses on the housing desires of second homeowner o Increasing cost of construction o Vail real estate values continue to trend upward o Regional real estate values continue to be more affordable o The gap between what locally earned wages can afford and free market housing prices continues to increase, particularly in Vail • Unique Geographic Constraints o Vail Pass on the East o Dowd Junction on the West o Limited undeveloped land within the Town of Vail o Surrounded on the north and south by National Forest and Bureau of Land Management lands o Farthest employment center from the Eagle County population base • Cost of Commuting o The cost of gas continues to increase o Public transportation does not provide a viable alternative to all communities o The availability and cost of parking is prohibitive Weaknesses • Politics o Historical lack of political will for developing new employee housing o Previously, no clear policy direction for the provision of employee housing o Lack of Town owned land zoned for employee housing o There is not dedicated funding for employee housing o At the beginning, failure to plan for the housing needs of Vail employees 1 - 3 - 13 10/23/2012 10 Employee Housing Strategic Plan • Real Estate Market o Lack of free market homes affordable to local employees o Potential home buyers get less “bang for the buck” in Vail as compared to the region o Deed restricted housing developed does not provide a full spectrum of housing types (i.e., single family homes and seasonal rental units) • Lack of permanent employees hired by local businesses o The jobs being generated by redevelopment are predominately lower paying seasonal service jobs o Added challenge to establishing a diverse community Strengths • Vail has produced or caused to be produced 725 EHUs without requiring any ongoing general fund support and very little general fund expenditures • Community support for creating new employee housing • Clarity around the Town’s adopted housing goal • Regulatory requirements o Commercial Linkage o Inclusionary Zoning • Vacant land owned by the Town • Strong local financial conditions o Bonding capacity o Strong local tax base o Potential to invest in employee housing • Regular private reinvestment in development • Expanding partnership opportunities with local businesses and governments • Current deed restricted housing stock • The “Vail” brand 1 - 3 - 14 10/23/2012 11 Employee Housing Strategic Plan Opportunities • Town Initiated o Employee Housing Strategic Plan o Town owns significant vacant land o Rezoning of Town owned vacant land o Land Use Plan amendments o Annexation of land adjacent to the Town o Ability to reallocate existing revenue o Bonding capacity o Ability to go to the voters for a dedicated funding source o Partnerships with local employers o Public-Private partnerships for development o Potential United States Forest Service Land Swaps • Regional Opportunities o Other local governments are addressing the housing need as well o Significant vacant land o Partnerships with local employers o Public-Private partnerships for development o “The Valley Home Store” • Current stagnation in real estate values OBJECTIVES A. Provide housing to address needs generated by new development or redevelopment. It is documented and understood that new development will require additional employees and a goal of the EHSP is to provide for that housing. This goal is also referred to as “ Keep Up” in the EHSP; going forward the Town will attempt to address the increase in demand from new employees by requiring deed-restricted housing as a condition of new development or redevelopment. The Town will encourage developers to provide a range of housing choices for the entire spectrum of jobs that are being created by the new development. B. Respond to the existing affordable housing shortfall by pursuing a number of identified programs and development opportunities. 1 - 3 - 15 10/23/2012 12 Employee Housing Strategic Plan This goal is also referred to as “Catch Up” in the EHSP; it describes efforts to address deficiencies in the available housing inventory that have arisen over a period of years. C. Call for any deed-restricted housing that is required as a condition of development to be constructed at the time new development occurs. By dispersing year-round housing multiple objectives are met: neighborhoods are occupied throughout the year enhancing security and encouraging activity. Economies are achieved by having developers integrate deed-restricted housing at the time they are constructing other uses, and construction of new residences occurs at the time the demand is first triggered. D. Creation and maintenance of housing in Vail for emergency and key service workers. In Vail, where weather and the regional road system create periodic strains, this is especially important. The Town will also work with other businesses that provide services essential to municipal operations to encourage they have critical employees living within the Town of Vail. The Town will offer partnership opportunities to these types of employers. E. Actively address affordable housing for Vail workers to ensure that the community remains competitive in economic terms. With the number of Down-Valley jobs continuing to increase, there will be competition for workers; Vail will work to provide appropriate housing to ensure that the Town remains attractive in the regional job market. F. Increase and maintain deed-restricted housing within the Town to encourage the efficient use of resources by placing employees closer to their place of work. It is understood there is a reduced need for personal automobiles and reduced transit costs when home and work are in close proximity to one another. Also, there may be changes in workforce demographics that result in opportunities to reduce parking associated with affordable housing in selected locations. To the extent these opportunities can be realized, without negative impacts on the overall community, they will be explored. G. Planning for new employee housing will take jobs and wages into account. It is recognized that wages associated with a particular job influence housing demand. In both catch-up and keep-up programs the Town will work toward 1 - 3 - 16 10/23/2012 13 Employee Housing Strategic Plan providing a range of housing types at price points appropriate to the varying incomes of workers in Vail. It is recognized the free market provides limited opportunity for even the highest wage earners to live and work in Town and it is necessary to have a full range of employees in the community. Diverse housing opportunities for the broadest range of employees will enhance the community. H. Provide and plan for housing along with local and regional public transportation. The EHSP recognizes that these functions are intertwined and where deed- restricted housing exists, there will be a demand for transportation services. It is the goal of the Town to minimize overall transportation costs by housing employees in proximity to their jobs, and to also anticipate the projected costs of transportation (due to fuel and other scarce resources) in the provision of deed- restricted housing elsewhere in the region. POLICY STATEMENTS The Town of Vail will pursue three broadly described methods to achieve the Town’s housing goal. The Town will Impose Regulatory Requirements • Development will be required to address a portion of its housing demand within the Town of Vail; and • New development and redevelopment will be required to address a portion of its housing demand at the development site. Development and Acquisition Initiated by the Town • To address employee housing needs beyond the regulatory requirements for new development; and • To respond to the desire to promote a more diverse and vibrant local community. Form Regional Partnerships • These efforts will address employee housing needs beyond the regulatory requirements by actively seeking partnerships, including: o Public / Private, and o Multi Jurisdictional. These broad methods are further addressed in the Action Steps that are described in the following section. ACTION STEPS 1 - 3 - 17 10/23/2012 14 Employee Housing Strategic Plan The Town will continue to use tools already in place including: Regulatory Requirements: The “Linkage” or Commercial Jobs Generation Program Commercial Linkage The Town will review the current linkage program to evaluate whether it has been meeting the objectives of ensuring that new housing is being created to house a portion of the employee demand that is being generated by new commercial uses in the Town. At this time, no immediate changes in the overall requirements of the program are anticipated. However, the current requirement for new commercial development to provide employee housing for at least twenty percent (20%) of the employees generated may be reevaluated and the required percentage may be changed as a result of the review, the areas of impact may be modified, and the formulas for calculating job generation rates may be further refined. Additionally, an updated Rational Nexus will need to be completed on a periodic schedule. The Linkage Program provides housing to “keep up” with new demand as it is generated. Recognizing developable land in Vail as a limit on the community’s ability to provide EHUs, the Town amended its Commercial Linkage requirements to require all new construction and demo/rebuilds to provide at least one- half of their required mitigation on-site. Achieves Objectives A, C, E, F, and G. The “Inclusionary” Program Inclusionary Zoning The Town does not anticipate major changes to the Inclusionary Housing program at this time. However, the current requirement to restrict 10 percent (10%) of new residential square footage in high density areas to be employee housing with deed restrictions, may be reevaluated and the required percentage may be changed as a result of the evaluation, and/or the areas (zone districts) of impact may be modified. The Inclusionary Program provides housing to “keep up” with new demand as it is generated. Recognizing developable land in Vail as a limit on the community’s ability to provide EHUs, the Town amended its Inclusionary Zoning requirements to require all new construction and demo/rebuilds to provide at least one- half of their required mitigation on-site. 1 - 3 - 18 10/23/2012 15 Employee Housing Strategic Plan Achieves Objectives A, C, E, F, and G. Housing District Zoning Designation The Town currently has a “Housing District” zoning designation. As an action step to implement the Housing Plan, the Town will review the requirements of this district to ensure that it is fully meeting its intended purposes. That review will address the procedural requirements for the Housing District, land use provisions including density, parking and design standards, and provisions for density bonuses. The evaluation of the Housing District will ensure the Housing District provides optimal employee housing development. Achieves Objectives B, D, E, F, and G. Town Initiatives: Buy-Downs to Generate Deed-restricted Units The Town will actively pursue purchase of attractively priced units for imposition of an appreciation capped deed restriction, and subsequent resale. This technique for increasing the supply of permanently affordable housing is known as a “buy down.” It is recognized that this program will be highly market dependent, with limited applicability when the local residential market is surging, and becoming more attractive at times when there is a plateauing of prices. The Town will need to increase the allocation of funds to underwrite the costs associated with purchasing, deed restricting and reselling for-sale units. This is an opportunity to provide diverse housing, to serve the full spectrum of employees. It is important to update the parameters by which buy down units are considered so each buy down unit meets the established goals. Further, it is expected that there will be active involvement by the Housing Authority in overseeing this program. The Buy-Downs program provides housing to “catch up” with existing deficiencies and reduce market leakage. Achieves Objectives B, D, E, F, and G. Employee Housing Units Exchange Program The Town will conduct a review of the “dispersed housing units” that have been created under the density bonus provisions allowed by Town Code since 1982. It is estimated that 123 units were created under the existing program, typically ranging in size from 300 to 500 square feet. It is believed that many of these units are not being used to house employees as anticipated by the program. Although these units are covered by various types of deed restrictions, the 1 - 3 - 19 10/23/2012 16 Employee Housing Strategic Plan requirements are not uniform and in many cases are not meeting the objective of providing long-term dispersed employee housing. The Town will evaluate the current program and will consider a “deed restriction exchange program” as a part of this overall effort. The program would likely permit, at the initiation of the landowner, the exchange of small rental units for a larger for-sale, price appreciation capped employee housing unit. Guidelines for the program will be developed. It is expected that these standards will address recommended size of units, location, homeowner’s fees and other aspects of the program. Such a program has been recently tried in Vail. It is believed that other dispersed employee units, not currently in use, could be leveraged into permanently restricted units by using this technique; it could represent an important element of this overall plan. The Units Exchange Program is to increase the quality and the total quantity of employee housing within the Town of Vail. The Town adopted an Employee Housing Unit Exchange Program in order to eliminate EHUs that are under-occupied or unoccupied. The Employee Housing Unit Exchange Program requires the square footage of existing EHUs be increased either two or three times depending on the location of the existing EHU. This can improve the livability of EHUs as well as increase the number of EHUs in Vail. It is recognized that allowing EHU exchanges means certain neighborhoods in Vail may no longer have EHUs. While there are a limited number of EHUs eligible to participate in the Employee Housing Unit Exchange Program, the Program should be evaluated from time-to-time to ensure it is achieving its goal. Achieves Objectives B, E, F, and G. Incentive Zoning and Density Bonuses The Town will consider workforce housing objectives in all review processes that permit discretion. This means that the Town will work actively with developers as a part of the Housing District, Special Development District review processes and requested changes in zoning to not only meet the requirements of existing code, but to look for opportunities to go beyond code requirements to encourage additional workforce housing to be created. As a part of these review processes the Town will work actively with developers to create incentives to develop housing that exceeds the minimal requirements contained in the code. Additional density may be granted in selected locations through the appropriate review processes, and fee waivers and subsidies may be considered. The Incentives Zoning and Density Bonuses help Vail to “catch up” with existing deficiencies and add to the overall percent of employees living within the Town of Vail. Achieves Objectives B, D, E, F, and G. 1 - 3 - 20 10/23/2012 17 Employee Housing Strategic Plan Review Rezoning and Vacant Land Opportunities The Town will regularly review existing codes and the vacant land inventory to identify opportunities to modify current programs that further support the goals of this Plan. The Review of Rezonings and Vacant Land provides “catch up” opportunities to address existing deficiencies and add to the overall percent of employees living within the Town of Vail. Achieves Objectives B, D, E, F, and G. Town Participation in Developments Providing Deed-Restricted Housing The Town is prepared to actively participate in, and will seek partners to further the development of deed-restricted housing. Vail Commons, Middle Creek, Buzzard Park and Miller Ranch (located near Edwards in Eagle County) are four relatively large developments that have been completed through active Town participation. The existing developments serve households at different income levels. This has been, and will continue to be an objective of the Town, to serve the broad spectrum of need within the community rather than focusing on just a narrow category of income or household type. The Town participation provides “catch up” opportunities to address existing deficiencies and add to the overall percent of employees living within the Town of Vail. Achieves Objectives B, D, E, F, G, and H. Explore Options for a Dedicated Funding Source for Employee Housing Initiatives The Town will explore options for a dedicated funding source to ensure adequate and ongoing resources for employee housing initiatives. It is recognized the Town will play an integral role in the creation of employee housing and dedicated dollars will aid in these efforts. The Town may pursue any of the following funding alternatives: a dedicated sales tax increase, a dedicated mill levy increase, dedication of the Real Estate Transfer Tax or any other funding source that may be identified. A dedicated funding source would provide “catch up” housing opportunities for Vail workers. Achieves Objectives B, D, E, F, G, and H. Create a Residential Conditions Base Line in the Town of Vail Conduct a comprehensive study of current units. Identify the type of units that exist (i.e. studio, one-bedroom, etc.), each unit’s current use (i.e. employee occupied, short-term rental, etc.), and the ownership of the unit (i.e. owner- 1 - 3 - 21 10/23/2012 18 Employee Housing Strategic Plan occupied, tenant occupied, etc.). Additionally, collect household demographic data to better understand the composition of the community. This information will allow Vail to better target programs to meet the needs of the community. This data will establish the baseline against which future employee housing success will be measured. The baseline conditions will support both “catch up” and “keep up” efforts. Achieves Objectives A, B, C, D, E, F, G, and H. Monitor the Rate of Free Market Employee Occupied Homes The Town will monitor the rate of free market homes occupied by local workers, and deed-restricted homes, on a regular basis. Conversions of free market residential units to second home owner units will be considered in Vail’s evaluation of progress toward the goals identified in this Plan. This monitoring will support both “catch up” and “keep up” efforts. Achieves Objectives B, E, F, and G. Conduct a Demographics Survey of Current Vail Residents In order to better understand the current demographics of the local population it is necessary to conduct a local survey. This will provide the Town with back ground information to consider in future housing policy and development decisions to ensure the Town is maintaining a character that is as diverse as it is today. This may occur in conjunction the Annual Community Survey. This information will support “catch up” efforts. Achieves Objectives A, B, D, E, F, and H. Establish a List of Essential Service Providers in the Town of Vail Establish a list of essential service providers in the Town of Vail to potentially partner with to ensure critical service workers live within the Town of Vail. This information will support “catch up” efforts. Achieves Objective D. Host Personal Finance and/or Home Buyer Education To encourage home ownership and create successful home owners it is important to provide information and educational opportunities to potential residents. This may also provide the encouragement current renters or existing home owners may need to take the next step in the housing market, freeing up 1 - 3 - 22 10/23/2012 19 Employee Housing Strategic Plan their existing unit to house other employees. This education may provide additional “catch up” opportunity. Achieves Objectives B, D, E, and F. Annual Review In order to ensure the EHSP is always current and is responsive to changing conditions, the Housing Authority shall review the EHSP annually and changes shall be periodically recommended to the Town Council. The purpose of these reviews shall be to ensure that progress on topics related to employee housing is being maintained and that adjustments in Objectives, Policies and Action Steps are made in a timely and specific manner. Achieves Objectives A, B, C, D, E, F, G, and H. Regional Efforts: In order to house employees associated with existing and anticipated jobs, workforce housing will be required throughout the County as well as in the Town. Vail will work actively with Eagle County officials and other municipalities to look for regional solutions to providing housing. Further, the need to provide transit services along with housing is also identified. When developing housing for Vail employees in Down-Valley locations, the cost of transit services will be considered in evaluations. While furthering regional housing is an objective of the Town, it will occur in concert with efforts in Vail, and in-Town deed-restricted housing will be a priority. The Town believes that there are a finite number of opportunities within Vail and these will be explored and pursued; Down-Valley development will not be undertaken if it results in not being able to participate in an opportunity within the Town’s boundary. Partnering opportunities for Down-Valley development will occur through partnerships that may include not only the County, but also the Town of Avon, Town of Minturn, Eagle County School District, the U.S. Forest Service, and potentially private developers. The Dowd Junction area and the Village at Avon are identified as particular areas of interest where development opportunities are to be explored. IMPLEMENTATION MATRIX 1 - 3 - 23 10/23/2012 20 Employee Housing Strategic Plan ACTION STEP WHO IMPLEMENTS 2013 to 2016 ESTIMATED COST Vail Market Study Update Community Development Department 2013 – Then every other year or as the market warrants $10,000 Develop New For- Sale Housing at Chamonix Town Council and VLHA 2013 Development loan of approximately $1.3 Million Refinance Timber Ridge Village Apartments TRAHC 2012/2013 $25,000 for consultant Develop New For- Sale Housing with ERW&SD - Snowberry & East Vail Town Council and VLHA 2012/2013 Potential partnership with Open Space & ERW&SD for land – Estimated $10,000 for land planning Partner with Eagle County to develop new EHUs Town Council and VLHA As opportunities are developed Varied based on partnership agreement Redevelop 2507 Arosa Drive Town Council and VLHA 2014 Cost to replace Town's Manager Residence (Estimated at $750,000) Update Fee-in- Lieu for Commercial Linkage & Inclusionary Zoning Community Development Department 2nd quarter of each year In House Annual EHU Compliance Verification Community Development Department 1st quarter of each year In House Annual Master Resale Lottery Community Development Department 2nd quarter of each year $1,000 for postage and advertising Establish Existing Conditions for All Units – Including household demographics Community Development Department and VLHA 2013 – then 1st quarter of every other year $5,000 for survey and mailing – allows the Town to monitor its progress toward adopted goals Monitor Rental and Vacancy Rates Community Development Quarterly In House 1 - 3 - 24 10/23/2012 21 Employee Housing Strategic Plan Establish Incentive Zoning to Ensure No Net Loss of Rental Housing Community Development Department, VLHA, PEC and Town Council 4th quarter 2013 In House Review Housing Zone District Community Development Department, VLHA, PEC and Town Council 1st quarter 2013 In House Review Commercial Linkage to ensure it is achieving the goal Community Development Department, VLHA and Town Council 1st quarter of every year In House Review Inclusionary Zoning to ensure it is achieving the goal Community Development Department, VLHA and Town Council 1st quarter of every year In House Updated Rational Nexus Study Town of Vail As needed $15,000 Monitor Total Number of Jobs in Town of Vail Town of Vail 1st quarter of every year $2,000 to purchase data Review zoning incentives/remove barriers for private development of EHUs Community Development Department, VLHA, PEC and Town Council 1st quarter of every year In House Review EHU Exchange Program Community Development Department, VLHA, PEC and Town Council 1st quarter of every year In House Implement the EHU Exchange Program Community Development Department and VLHA On-going - as proposed exchanges are submitted In House Identify Land/ Development Opportunities Community Development Department, VLHA and Town Council 2nd quarter 2013 In House 1 - 3 - 25 10/23/2012 22 Employee Housing Strategic Plan Prioritize Land/Development Opportunities Community Development Department, VLHA and Town Council 4th quarter 2013 Acquisition of Property ACTION STEP WHO IMPLEMENTS 2017 to 2022 ESTIMATED COST Redevelop Timber Ridge Village Apartments Town Council and TRAHC As market warrants To be determined Propose Development and/or Rezoning Town Council and VLHA Continuous Development Redevelop Gore Range Condos Town Council and VLHA As market warrants Cost of acquisition Pursue a Dedicated Funding Source VLHA Recommendation and Town Council Marketing Dollars Develop EHUs at Parking Structures Town Council and VLHA As market warrants To be determined Partner with Vail Resorts to build new EHUs Town Council and VLHA As market warrants To be determined Partner with Cascade Resort to build new EHUs Town Council and VLHA As market warrants To be determined Buy Down Units Town Council and VLHA Continuous $1,000,000 / year ACTION STEP 2023 and beyond Work with Sonnenalp to develop additional EHUs When Red Sandstone Elementary rebuilds their school - add EHUs 1 - 3 - 26 10/23/2012 23 Employee Housing Strategic Plan Build a second building of EHUs at Buzzard Park Acquire underdeveloped parcels for redevelopment Partner with Vail Valley Medical Center ACTION STEP WHO IMPLEMENTS WHEN ESTIMATED COST PROPOSED PRIORITY Establish and Fund VLHA Operating Budget Town Council and VLHA 4th Quarter 2008 To Be Determined A Establish Baseline "Existing Conditions" for All Units Town Council and VLHA 2009 $20,000 A Monitor Existing Conditions for All Units Town Council and VLHA 1st Quarter of Each Year (2010) $5,000 A Monitor Rental and Vacancy Rates Eagle County Continuous None A Conduct Housing Needs Assessment In conjunction with Eagle County 2010 $10,000 A Update Fee-in-Lieu for Commercial Linkage & Inclusionary Zoning Community Development Dept and Consultant 1st Quarter of Each Year $2,000 A Updated Rational Nexus Study Town of Vail Every Five Years (2011) $15,000 A Monitor Total Number of Jobs in Town of Vail Town of Vail 1st Quarter of Each Year $2,000 A 1 - 3 - 27 10/23/2012 24 Employee Housing Strategic Plan Host Finance/ Home Buyer Education Classes VLHA Two Per Year $500 A Buy Down Units Town Council and VLHA Continuous $1,000,000 / year A Establish Buy Down Unit Criteria Town Council and VLHA 4th Quarter 2008 None A Develop New For- Sale Housing at Chamonix Town Council and VLHA 2010 Potentially more than the value of the land A ACTION STEP WHO IMPLEMENTS WHEN ESTIMATED COST PROPOSED PRIORITY Develop Additional Rental Housing at Timber Ridge Town Council and VLHA 2011 Potentially the value of the land A Establish an EHU Exchange Program Town Council - Com Dev Dept - VLHA Recommendation 4th Quarter 2008 $10,000 for legal review A Implement the EHU Exchange Program Com Development Dept. and VLHA Continuous None A Review & Potentially Modify Commercial Linkage Town Council - Com Dev Dept - VLHA Recommendation 1st Quarter of Each Year None A Review & Potentially Modify Inclusionary Zoning Town Council - Com Dev Dept - VLHA Recommendation 1st Quarter of Each Year None A Identify Land/Development Opportunities Town Council - Com Dev Dept - VLHA Recommendation 2nd Quarter of Each Year None A Prioritize Land/Development Opportunities Town Council - Com Dev Dept - VLHA Recommendation 2nd Quarter of Each Year Acquisition of Property A 1 - 3 - 28 10/23/2012 25 Employee Housing Strategic Plan Propose Development and/or Rezoning Town Council and VLHA 2nd Quarter of Each Year Development B Review Housing Zone District Town Council - Com Dev Dept - VLHA Recommendation 2nd Quarter of Each Year None B Establish Incentive Zoning to Ensure No Net Loss of Rental Housing Town Council - Com Dev Dept - VLHA Recommendation 2nd Quarter of Each Year None B ACTION STEP WHO IMPLEMENTS WHEN ESTIMATED COST PROPOSED PRIORITY Pursue a Dedicated Funding Source Town Council and VLHA Begin 1st Quarter 2009 None in 2009 Marketing in 2010 B Monitor Free Market Real Estate Transactions VLHA and Consultant 1st Quarter of Each Year $5,000 B Establish List of Essential Service Providers Town Council and Town Staff 4th Quarter 2008 None C Create Partnerships with Essential Service Providers Town Council and VLHA Continuous None C ROLES AND RESPONSIBILITIES Roles and Responsibilities – The provision of deed-restricted housing is viewed as a partnership between various boards within the Town, each having important roles and responsibilities. As such, it is imperative that communications be established and maintained between boards to achieve the goal and objectives that are stated in this Plan. Efforts will be made to define, and periodically refine, the roles and associated communications between the bodies identified below. The Town Council shall act in accordance with Town codes and shall fulfill their decision-making functions as identified by local ordinances. Land Use Regulations 1 - 3 - 29 10/23/2012 26 Employee Housing Strategic Plan typically stipulate the review procedures to be followed in reviewing a proposed development. Ultimately, most reviews require an affirmative decision by the Town Council. Therefore, the Council will be the ultimate decision-making body for developments that require Council review. The Planning and Environmental Commission and the Design Review Board also play an important development review role. These two boards will review development proposals, consistent with the requirements of codes and ordinances, to ensure that development is in compliance. The Vail Housing Authority (V.L.H.A.) plays a critical role in ensuring that housing for long-term residents and seasonal employees is available in the Town. This in turn, enhances the quality of life for local residents, and improves the economic viability of the area. The V.L.H. A. mission: The V.L.H. A. will play an advisory role to the Town Council and the Planning and Environmental Commission on matters related to housing policy and development. The Authority will use this Housing Plan as a working document to guide future efforts. As identified in the EHSP, the Authority will work to carry out the Action Steps over the next three years. The Authority’s priorities will be those contained in the EHSP as it is adopted, and as it may be modified following subsequent annual reviews. GLOSSARY The following definitions are applicable for the terms used in this Plan. Area Median Income (AMI) Limits – most communities establish income limits for the programs they administer based on the area median income (AMI) for the area according to household size, which are adjusted annually by the Department of Housing and Urban Development (HUD). Four different income categories are defined for various programs and policies: 1. Extremely low-income, which is less than 30 percent of the median family income; 2. Very low-income, which is between 30 and 50 percent of the median family income; 3. Low-income, which is between 50 and 80 percent of the median family income; 4. Middle income, which is between 80 and 120 percent of the median family income; and 5. Above middle income, which is over 120 percent of the median family income. Eagle County Area Median Income % of Median Income for Area No. of Persons 200% 140% 120% 100% 80% 50% 30% 1 - 3 - 30 10/23/2012 27 Employee Housing Strategic Plan 1 $118,800 $83,160 $71,280 $59,400 $47,520 $29,700 $17,820 2 $135,700 $94,990 $81,420 $67,850 $54,280 $33,925 $20,355 3 $152,700 $106,890 $91,620 $76,350 $61,080 $38,175 $22,905 4 $169,600 $118,720 $101,760 $84,800 $67,840 $42,400 $25,440 5 $183,200 $128,240 $109,920 $91,600 $73,280 $45,800 $27,480 6 $196,800 $137,760 $118,080 $98,400 $78,720 $49,200 $29,520 1 Person 2 Person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person 30% $17,050 $19,500 $21,900 $24,350 $26,300 $28,250 $30,200 $32,150 50% $28,400 $32,450 $36,500 $40,550 $43,800 $47,050 $50,300 $53,550 60% $34,080 $38,940 $43,800 $48,660 $52,560 $56,460 $60,360 $64,260 80% $41,900 $47,900 $53,850 $59,850 $64,650 $69,450 $74,200 $79,000 100% $56,800 $64,900 $73,000 $81,100 $87,600 $94,100 $100,600 $107,100 120% $68,160 $77,880 $87,600 $97,320 $105,120 $112,920 $120,720 $128,520 140% $79,520 $90,860 $102,200 $113,540 $122,640 $131,740 $140,840 $149,940 160% $90,880 $103,840 $116,800 $129,760 $140,160 $150,560 $160,960 $171,360 Catch-Up Housing – Housing needed to “catch-up” to current deficient housing conditions. In this Plan, catch-up housing needs are defined by current resident households reporting housing problems (overcrowded, cost-burdened and/or living in substandard housing conditions), current renters and owners looking to purchase a home and in-commuters that would like to move to Vail. Catch-up housing is generally addressed through local city development initiatives, non-profits and housing groups and public/private partnerships. Housing Continuum, The – As illustrated below, it is possible to estimate the number of resident households in the Town of Vail at various income levels. Vail’s planning is based on addressing the needs of households of different incomes, recognizing that there is a need to ensure housing for a diversity of households. 1 - 3 - 31 10/23/2012 28 Employee Housing Strategic Plan EXISTING DEED RESTRICTED EMPLOYEE HOUSING Inclusionary Zoning – requires a minimum percentage of residential development be provided to serve local employees as part of new residential developments (10 percent in Vail). Inclusionary zoning is a housing production obligation based on the community’s need for employee housing as related to many factors, including a decreasing developable supply of land, rising home values, insufficient provision of housing affordable to residents by the market, etc., in addition to any direct employee generation impacts of development. Keep-Up Housing – Housing units needed to keep-up with future demand for housing. In this Plan, keep-up housing needs focuses on new housing units needed as a result of job growth in Vail and new employees filling those jobs. Keep-up housing is often Over 140% AMI 31.8% <=50% AMI 401 HH/16.4% 50-80% AMI 345 HH/14.1% 80-100% AMI 425 HH/17.4% 100-140% AMI 496 HH/20.3% <=50% AMI Max Rent $913 Max Price $124,796 50-80% AMI Max Rent $1,346 Max Price $180,238 80-100% AMI Max Rent $1,825 Max Price $241,432 120-140% AMI Max Rent $2,738 Max Price $334,741 2007 Vail Households 50% AMI $36,500 80% AMI $53,850 100% AMI $73,300 140% AMI $109,500 Over 140% AMI Rent Over $2,738 Price Over $334,741 <=50% AMI Max Rent $913 Max Price $124,796 50-80% AMI Max Rent $1,346 Max Price $180,238 80-100% AMI Max Rent $1,825 Max Price $241,432 100-140% AMI Max Income $109,500 Max Rent $2,738 Max Price $334,741 2007 Vail Households Over 140% AMI Income Over $109,500 Rent Over $2,738 Price Over $334,741 Middle Creek Rent 142 Units Less than 60% AMI Buzzard Park Rent 24 Units Town Employee Typically less than 120% AMI Vail Commons, Red Sandstone, North Trail For Sale 77 Units 100% AMI or less Miller Ranch For Sale 282 Units 60-120% AMI 50% AMI $36,500 80% AMI $53,850 100% AMI $73,300 140% AMI $109,500 1 - 3 - 32 10/23/2012 29 Employee Housing Strategic Plan addressed by the existing free-market, as well as regulatory requirements or incentives to produce housing that is needed and priced below the current market. Levels of Homeownership – When discussing affordability of properties by Area Median Income (AMI) level (defined above) and the types of homes households among different AMI groups are seeking; reference is made to a couple different stages of homeownership. This includes: 1. Entry-level ownership/first-time homebuyers: These are households typically earning in the lower to middle income range. In Vail, these are households earning 50 to 100 percent of the AMI. These include households that currently rent (or otherwise do not own a home) and are looking to purchase their first home. 2. Move-up buyers: These are households earning in the middle to upper income range (about 100 to 120 percent AMI or higher) that may currently own a home and are looking to purchase a new or different home for a variety of reasons (relocating, growing family (e.g., having children), shrinking family (e.g., empty- nesters), etc.). Mean – the average of a group of numbers, which is the sum of all the data values divided by the number of items. Median – the middle point in a data set. ATTACHMENTS A. The Economic Value of the Town of Vail’s Investment in Employee Housing, dated March 29, 2012. Prepared by BBC Research & Consulting. B. Economic Indicators: 2012 dated August 2012. Prepared by Economic Council of Eagle County. C. Chamonix Market Update, dated February 28, 2011. Prepared by Economic & Planning Systems, Inc. D. Eagle County Housing Needs Assessment Update, draft dated 2012. Prepared by Venturoni Surveys & Research, Inc. and Economic Council of Eagle County. (The final version will be added as an attachment to the EHSP.) 1 - 3 - 33 10/23/2012 30 Employee Housing Strategic Plan RESOLUTION NO. 20 Series 2008 A RESOLUTION ADOPTING THE TOWN OF VAIL EMPLOYEE HOUSING STRATEGIC PLAN; AND SETTING FORTH DETAILS IN REGARD THERETO. WHEREAS, the Town of Vail (the “Town”), in the County of Eagle and State of Colorado is a home rule municipal corporation duly organized and existing under the laws of the State of Colorado and the Town Charter (the “Charter”); and WHEREAS, the Town has determined that no less than thirty percent (30%) of Vail’s workforce should be provided deed restricted employee housing within the Town limits; and WHEREAS, the Council has determined that in order to achieve the established goal it is critical to create an employee housing strategic plan establishing and clarifying the objectives and action steps essential to achieve the stated goal; and WHEREAS, the Vail Local Housing Authority and Council developed the Employee Housing Strategic Plan over a period of six months that outlines the goal, objectives and action steps; and WHEREAS, the Vail Economic Advisory Committee provided input and direction on the Employee Housing Strategic Plan at their May 13, 2008, and June 10, 2008, meetings; and WHEREAS, the Planning and Environmental Commission provided input and direction on the Employee Housing Strategic Plan at their August 25, 2008, Public Hearing; and 1 - 3 - 34 10/23/2012 31 Employee Housing Strategic Plan WHEREAS, the Council supports the implementation of the Vail Employee Housing Strategic Plan; and WHEREAS, the Employee Housing Strategic Plan will direct policy and budget decisions in order to achieve the community’s stated goal; and WHEREAS, it is the intention of the Council and the Housing Authority to implement the Employee Housing Strategic Plan over the next three years. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF VAIL, COLORADO: 1. The Council hereby approves the Town of Vail Employee Housing Strategic Plan, dated September 2, 2008, attached hereto as Exhibit A. 2. The Council hereby finds: A. That the Employee Housing Strategic Plan is consistent with the applicable elements of the adopted goals, objectives and policies outlined in the Vail Comprehensive Plan and is compatible with the development objectives of the Town; and, B. That the Employee Housing Strategic Plan furthers the general and specific purposes of Zoning Regulations; and, C. That the Employee Housing Strategic Plan promotes the health, safety, morals, and general welfare of the Town and promote the coordinated and harmonious development of the Town in a manner that conserves and enhances its natural environment and its established character as a resort and residential community of the highest quality 3. This Resolution shall be effective immediately upon adoption. INTRODUCED, READ, APPROVED AND ADOPTED this 2nd day of September, 2008. ______________________________ Richard D. Cleveland, Town Mayor ATTEST: Lorelei Donaldson, Town Clerk 1 - 3 - 35 10/23/2012 32 Employee Housing Strategic Plan PROCESS TIMELINE Vail Town Council May 6, 2008 Work Session Affirm housing goal and purpose of the EHSP Review proposed actions and timeline July 1, 2008 Work Session July 15, 2008 Special Work Session Identify and affirm objectives and action steps Confirm overall direction of the EHSP August 19, 2008 Work Session Identify and affirm the SWOT analysis Affirm overall direction of the EHSP September 2, 2008 Adopt the Town of Vail Employee Housing Strategic Plan August 21, 2012 Work Session Review proposed actions and proposed direction Planning and Environmental Commission 1 - 3 - 36 10/23/2012 33 Employee Housing Strategic Plan August 25, 2008 Work Session Provide feedback on the EHSP Vail Local Housing Authority March 24, 2008 VLHA Work Session Met with consultant (Chris Cares) Dusted off previous work towards a TOV Strategic Plan April 10, 2008 VLHA Work Session Review and update proposed actions and timeline April 24, 2008 VLHA Work Session Further refine actions and timeline for Council meeting May 13, 2008 Vail Economic Advisory Council Discussion of Housing Objectives May 15, 2008 VLHA Work Session June 10, 2008 Vail Economic Advisory Council Further discussion of Housing Objectives June 10, 2008 VLHA Work Session June 24, 2008 VLHA Work Session July 8, 2008 VLHA Work Session July 22, 2008 VLHA Work Session SWOT Analysis August 12, 2008 VLHA Work Session SWOT Analysis August, 2008 Meet with Local Employers August 26, 2008 VLHA Work Session Review Planning Commission feedback Implementation Matrix Review August 23, 2012 VLHA Work Session August 28, 2012 VLHA Work Session Implementation Matrix Update September 6, 2012 VLHA Work Session Implementation Matrix Update 1 - 3 - 37 10/23/2012 34 Employee Housing Strategic Plan September 25, 2012 VLHA Work Session 1 - 3 - 38 10/23/2012 1 - 4 - 1 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 2 Eagle County Population Growth 1980-1990: 65% Growth 1990-2000: 90% Growth 2000-2010: 25% Data Source: Colorado State Demographer September 2011 Projected Growth 2010-2020: 37% 1 - 4 - 2 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 3 Population by Town Data Source: Colorado State Demographer 1 - 4 - 3 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 4 An Aging Population Eagle County is aging. While the younger population (under 24) remains at about a third of WKHSRSXODWLRQWKH³IDPLO\ DJH´JURXSRI-59 is projected to drop from 60% to RIWKH&RXQW\¶VUHVLGHQWV from 2000 to 2020. While all age groups gain population by 2020, the real growth comes in the older adult segment. Adults 60 and older were about 5% of the population in 2000, and that segment is expected to make up 17% of the total in 2020. Aging in place and by in- migration contribute to growth in the older age groups. Data Source: Colorado State Demographer September 2011 estimates 1 - 4 - 4 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 5 Eagle County Households Data Source: Colorado State Demography Office 2012 Households Total Households 2010 19,209 Household Population 2010 52,071 Average Household Size 2.71 Housing Units Total Housing Units 2010 31,333 Vacant Household Units 12,124 Household Vacancy rate 0 1 - 4 - 5 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 6 Demographics/Race & Ethnicity The Hispanic population continues to grow in Eagle County. Two- thirds of the County (67%) is white, non- Hispanic. Other races make up less than 4% of the population. Data Source: Colorado State Demographer 1 - 4 - 6 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 7 Demographics/Education Data Source: 2006-2008 American Community Survey 1 - 4 - 7 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 8 Demographics/Income Data Source: 2010 Census Small Area Income and Poverty Estimates 7% drop from 2009 Estimate 1 - 4 - 8 10/23/2012 1 - 4 - 9 10/23/2012 1 - 4 - 10 10/23/2012 1 - 4 - 11 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 12 Eagle County Retail Sales (in thousands) Data Source: Colorado Department of 1 - 4 - 12 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 13 Eagle County: State Sales Tax Collections (in thousands) Data Source: Colorado Department of Revenue 1 - 4 - 13 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 14 Top Employers EMPLOYER # Employees (Range) INDUSTRY Vail Resorts > 1500 Recreation, Real Estate, Accommodations & Food Services Eagle County School District 500-1000 Education Vail Valley Medical Center 500-1000 Medical Eagle County 400-500 Government Vail Cascade Hotel 300-400 Accommodations & Food Services Ritz Carlton Hotel 300-400 Accommodations & Food Services WalMart 300-400 Retail Sonnenalp Resort 200-300 Accommodations & Food Services Town of Vail 200-300 Government Vail Marriott 200-300 Accommodations & Food Services Data Source: Quarterly Census of Employment & Wages 1 - 4 - 14 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 15 Real Estate Values - Eagle County Data Source: Land Title Guarantee 2008 2009 2010 2011 2012 through June Number Sold 1,606 938 1,250 1,357 692 Total Dollar Volume ¶V $2,234,919 $898,444 $1,497,172 $1,158,049 $662,734 Mean Sales Price Single Family: $1,455,774 $1,159,484 $1,264,591 $1,003,971 $1,220,924 Multi-Family $1,509,830 $831,688 $1,150,597 $859,243 $878,256 Vacant Res. Land $562,779 $393,903 $409,575 $350,346 $308,260 Commercial $1,262,929 $1,168,416 $1,228,594 $851,585 $825,394 1 - 4 - 15 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 16 Residential Real Estate - Local Markets Data Source: Land Title Guarantee Company Gypsum Eagle Avon Vail Village Number Sold January - June 2010 41 72 104 39 January - June 2011 59 67 66 31 January - June 2012 95 89 49 44 Total $ Volume January - June 2010 $27,395,300 $36,421,900 $56,753,834 $129,239,600 January - June 2011 $13,811,395 $25,011,200 $29,846,900 $115,559,100 January - June 2012 $21,121,088 $29,767,800 $28,105,700 $139,427,400 1 - 4 - 16 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 17 Residential Real Estate Values - Local Markets Data Source: Land Title Guarantee Company Gypsum Eagle Avon Vail Village Mean Sales Price January - June 2010 $668,178 $505,860 $545,710 $3,313,836 January - June 2011 $234,091 $373,301 $452,226 $3,727,713 January - June 2012 $222,327 $334,470 $573,586 $3,168,805 Median Sales Price January - June 2010 $330,000 $315,750 $397,250 $2,162,000 January - June 2011 $210,000 $305,000 $399,999 $2,500,000 January - June 2012 $200,000 $280,000 $275,000 $1,975,000 1 - 4 - 17 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 18 Enplanements Data Source: Eagle County Airport 218,105 232,250 214,715 182,673 204,889 194,190 134,309 thru July 1 - 4 - 18 10/23/2012 Economic Council of Eagle County 2012 Economic Indicators 19 Eagle County School Enrollments Data Source: Colorado Depa rtment of Education 5,724 5,824 6,185 6,181 6,344 1 - 4 - 19 10/23/2012 Final Report The Economic Value of the Town of Vail’s Investment in Employee Housing Vail Local Housing Authority 1 - 5 - 1 10/23/2012 Final Report March 29, 2012 The Economic Value of the Town of Vail’s Investment in Employee Housing Prepared for Vail Local Housing Authority 75 South Frontage Road Vail, Colorado 81657 Prepared by BBC Research & Consulting 1999 Broadway, Suite 2200 Denver, Colorado 80202-9750 303.321.2547 fax 303.399.0448 www.bbcresearch.com bbc@bbcresearch.com 1 - 5 - 2 10/23/2012 Table of Contents BBC RESEARCH & CONSULTING i INTRODUCTION Background ............................................................................................................................... IN–1 The Employee Housing Issue ..................................................................................................... IN–1 Report Objectives ...................................................................................................................... IN–2 Report Organization .................................................................................................................. IN–2 EXECUTIVE SUMMARY: The Economic Value of the Town of Vail’s Investment in Employee Housing Vail Employee Housing ............................................................................................................. ES–1 Approach ................................................................................................................................. ES–2 Other Perspectives .................................................................................................................... ES–4 The Vail Community ................................................................................................................. ES–5 I. Vail Demographic Data and Employee Housing Inventory Vail Demographics ...................................................................................................................... I–1 Vail Employee Housing Market Considerations ............................................................................ I–2 Vail Employee Housing Rental Rates ............................................................................................ I–6 II. The Economic Value of Employee Housing Methodological Options ............................................................................................................. II–1 BBC Approach ............................................................................................................................ II–2 Direct Economic Value of Employee Housing ............................................................................. II–5 Other Perspectives ...................................................................................................................... II–9 Vail—A Resort Economy ............................................................................................................ II–10 1 - 5 - 3 10/23/2012 EXECUTIVE SUMMARY: The Economic Value of the Town of Vail’s Investment in Employee Housing 1 - 5 - 4 10/23/2012 BBC RESEARCH & CONSULTING EXECUTIVE SUMMARY, PAGE 1 EXECUTIVE SUMMARY The Economic Value of the Town of Vail’s Investment in Employee Housing This study documents the current inventory and use of employee housing in Vail and calculates the cost and benefits of this investment from multiple community perspectives. Vail Employee Housing Over the past 25 years, the town of Vail has mandated or incentivized the creation of 727 employee housing units. These units have enjoyed high levels of occupancy even during periods of slow economic activity. Vail employee units house an estimated 1600 employees, approximately 75 percent of which (1200 persons) work in the town of Vail. Because individuals often hold multiple jobs, these 1200 Vail employees fill over 1500 jobs, nearly 20 percent of Vail’s estimated 9100 positions. The majority of Vail’s employee housing attracts entry level, seasonal employees but the town also supports a number of deed-restricted, for-sale units that house longer term residents and families. Remarkably, the Vail community has produced this housing inventory without requiring any ongoing general fund support and very little general fund expenditures. This experience is in marked contrast to other mountain resorts that often use ongoing sales, real estate transfer or property taxes revenues to supporting employee housing. The projects’ mortgage debt is about $18.0 million (net of cash reserves), but all operating costs and debt service are covered by annual rents and lease revenue. The majority of the current housing stock was created by opportunistic investment, development requirements, or partnership by the town over a period of multiple decades. Deed-restricted housing is not the only component of local employee housing. Many workers, roughly 43 percent of persons who live and work in Vail, live in private rental housing or own their own homes. Nevertheless the disparity between Vail housing costs and local salary levels makes ownership an unrealistic option for the vast majority of residents. Many resident homeowners purchased their units years ago and it is likely that these units will eventually be sold and transfer into temporary occupancy use—further exacerbating the town’s housing /jobs imbalance. From a Vail community perspective the quantifiable economic value of employee housing lies in three areas: the costs avoided by businesses of having to induce workers from considerable distance; the additional town retail spending by employee-local residents; and the public costs avoided in not having to find a local parking solution for additional commuting workers. 1 - 5 - 5 10/23/2012 PAGE 2, E XECUTIVE S UMMARY BBC RESEARCH & CONSULTING The employee housing benefits calculated in this report are summarized in Exhibit ES-1 below. Figure ES-1. Summary: Valued Vail Employee Housing Source: BBC Research & Consulting. There are additional, non-economic benefits associated with employees being housed within Vail, ranging from lessoned seasonality to the invigoration of the community’s public life. These benefits are also described in this report. Approach Placing a value on the provision of employee housing presents the predictable challenges of valuing a public service where there is an uneven distribution of costs and benefits—the same challenge one faces in attempting to value public parks, public parking or even general public services. Assumptions. This study incorporates certain assumptions and understandings regarding Vail employee housing and its role in the unusual economy of a mountain resort community. These points are described fully in Section II of this report and are summarized below.  Without employee housing Vail businesses would likely still attract workers, particularly in the current economic environment, but attraction and retention would be more expensive; employee turnover would be higher; and employee flexibility to work irregular hours or multiple jobs would be diminished.  The provision of affordable employee housing requires some form of public investment, which implies that tax payers—or some subset of tax payers—are in some degree supporting this amenity. This support can be direct, such as public acquisition of land, or indirect, such as regulatory requirements.  The provision of employee housing can displace other forms of development, which under many circumstances may be of higher economic value.  The economic value of employee housing varies depending upon the nature of the individual, business interest or taxpayer considering the issue. Similarly, the economic value of employee housing is not consistent from year to year—it varies considerably depending upon background economic conditions.  Employee housing enhances the Vail community’s ability to provide high levels of guest services. Deed-restricted, for-sale housing is particularly valuable in allowing Vail residents to stay in Vail and participate in civic life. CategoryValue Business costs avoided$12.6 million per year New retail spending $6.0 million in annual retail sales ($240,000 in sales tax @ 4.0%) Parking expansion $9.0 million 1 - 5 - 6 10/23/2012 BBC RESEARCH & CONSULTING EXECUTIVE SUMMARY, PAGE 3 Business Savings. The existence of a substantive amount of employee housing means that Vail businesses are relieved of the costs associated with compensating employees for lengthy and costly commutes. In essence, Vail businesses are competitively advantaged when seeking employees, not disadvantaged by the difficult and time consuming commute from down valley residences. Vail businesses also save on employee training and turnover expenses and are more likely to attract a reliable workforce with the availability of appropriate local housing. Figure ES-2 summarizes employee housing associated cost savings for each segment of the Vail economy. Vail government is a significant beneficiary for the same reasons that businesses benefit from employee housing, but also for the avoided costs of finding parking options for the 1200 additional workers who would be commuting into town. Figure ES-2. Direct Impacts of Vail Employee Housing Source: BBC Research & Consulting BBC estimates that the business community benefits in the amount $10,530 per worker/year for each of the 1200 Vail housed/ and Vail employed individuals using employee housing. This amounts to $12.6 million per year in cost-of-business savings. In addition, employees residing in Vail are expected to add roughly $6.0 million in additional retail sales as a result of increased local spending. Even with effective bus transit, many workers commute to Vail jobs by automobile. By housing workers locally, the town of Vail avoids capital spending for parking of approximately $9.0 million and the accompanying annual management costs associated with parking operations — even presuming some form of parking solution was a prospect. Community risks. Although Vail operates its current employee housing stock without annual costs to the community, it should be noted that the community has potential indirect risk for an $18.0 million debt obligation associated with the largest housing project. It should also be noted that the provision of employee housing represents a lost opportunity to develop additional private market units on the same land. Direct Impacts of Vail Employee Housing Vail Businesses Positive: Employee cost savings –Wages and salaries –Training/turnover –Skills and quality of labor force –Eco bus pass Additional local spending by employee residents Vail Employees Positive: Reduced cost of living –Rents –Commute time –Commute costs Ability to hold multiple jobs Town Government Positive: Employee cost savings –Wages and salaries –Training/turnover –Skills and quality of labor force Reduced parking, construction and operational costs –Capital investment/risk –Bond risk –Lost opportunity for higher valued development on town- owned property Negative: 1 - 5 - 7 10/23/2012 PAGE 4, E XECUTIVE S UMMARY BBC RESEARCH & CONSULTING Other Perspectives The provision of employee housing has broad economic consequences, beyond the immediate economic values described above, for all Vail property owners, guests and residents. These are summarized in Figure ES-3. Figure ES-3. Perspectives on Vail Employee Housing  Residential property owners. As noted above in Figure ES-3, property owners seeking to rent privately owned residential units currently have to compete with employee housing. Currently, the presence of over 700 units of lower priced housing likely dampens the potential rental value of individually owned rental units. Conversely, all residential property owners also benefit from employer housing because exaction requirements on new or remodeled housing drive up the cost of new units, effectively pulling up the price of all units.  Commercial property owners. Commercial property owners are generally benefited by community investment in employee housing as it increases the costs of potential new competition, because of the inclusionary zoning and commercial linkage requirements, and reduces the labor costs of operations for commercial tenants.  Undeveloped or underdeveloped land owners. Land owners, properties with redevelopment potential, and developers are burdened by inclusionary zoning, commercial linkage and employee housing requirements which represent an immediate development expense that must be factored into development feasibility calculations. Other Perspectives on Vail Employee Housing Private Rental Property Owners Negative: •Subsidized Competition All Residential Property Owners Positive: •Increased cost of competitive new developments All Commercial Property Owners Positive: •Increased cost of competitive new development Land Owners and Developers Negative: •Increased cost of competitive new development Positive for all:Increased functionality of the resort Improved visitor experience 1 - 5 - 8 10/23/2012 BBC RESEARCH & CONSULTING EXECUTIVE SUMMARY, PAGE 5 The Vail Community Finally, and perhaps most importantly, employee housing presents widespread general benefit to all property owners, residents, visitors and second home owners who have a stake in the success of Vail. Generally, an improved quality of life for employee residents, reduced commuting times, year round presence of residents and housing cost savings, all add to a more stable employee base and a better functioning community, which results in:  An improved guest experience—the most basic product sold by Vail;  Better positioning against other resorts competing for a quality workforce and the most discriminating guests;  Reduction in the seasonality of local businesses;  Increased vitality, diversity and “real town” authenticity for the town;  Increased community participation (e.g., volunteer activities, town boards); and  Enhanced ability for younger residents to stay in Vail and grow into higher-level employment and community leadership positions. It is not a conceptual leap to assume that a better community with a more stable and participatory workforce translates into better guest services. Visitors value their interaction with local residents and workers who enjoy their town and communicate pride in their community help create the experience that differentiates engaging resort towns from simply undifferentiated commercial resorts. As the Vail community matures, many long time residents will retire and their homes will likely transfer into second home status, further eroding the town’s private housing stock. The economic value of employee housing will grow as the private ownership stock is diminished and the diversity of employee housing, including additional deed-restricted, family and for-sale units, expands. In sum, over a two decade period, the town has created an enviable employee housing stock with very modest costs to the general taxpayers. Operation of the town’s 727 units puts no burden on the general fund. The Timber Ridge project, the town’s largest investment, has been a time consuming effort but it is still operated under contract by a private entity and current rents cover all operating costs and debt service. The town of Vail has been remarkably successful in creatively stimulating the development of employee housing without incurring substantive public expense. Vail’s employee units save the business community about $12.6 million per year in operating expense, generate nearly a quarter million in sales taxes for the general fund, and allow the town to avoid a burdensome investment in finding parking solutions for 1200 employees. Employee housing has provided the town a valuable insurance policy during tumultuous economic times and demonstrated value during both rising and declining economies. No other mountain resort can claim this level of benefit with so little direct cost. 1 - 5 - 9 10/23/2012 INTRODUCTION 1 - 5 - 10 10/23/2012 BBC RESEARCH & CONSULTING INTRODUCTION, PAGE 1 INTRODUCTION This study quantifies the economic costs and benefits of the town of Vail’s investment in employee housing. Background The majority of Colorado resort communities have some form of employee housing stimulation or development program. Some resorts marshal very aggressive housing efforts, offering multiple forms of employee housing with financial support from ongoing general tax revenues as well as exactions and fees placed on new development. Other communities support more modest programs, including third-party efforts by not-for-profit organizations and grants or loans from state housing authorities or federal programs. Employee housing provision comes by many names, including affordable housing, workforce housing, community housing and deed-restricted housing. Over a 30 year period, the town of Vail has constructed or caused to be constructed nearly 750 units of deed-restricted, employee housing. In 1991, the town of Vail established the Vail Local Housing Authority to better support, manage and promote Vail employee housing efforts. The town acknowledged the community benefits of maintaining deed restricted housing with its adoption of the 2008 Employee Housing Strategic Plan and in its ongoing commitment to employee housing provision. For a number of years, the town has pursued a goal of providing deed restricted housing for 30 percent of the community’s workforce through both public and private sources. As of December 2011, the town of Vail managed, or otherwise assisted, 727 employee units, providing in-town housing for approximately 1,600 employees. In addition, some local businesses provide their own housing assistance privately, some Vail workers own their own homes and many private owners rent units long-term to local employees. Employee Housing Trends During the mid 2000’s, a period of very strong resort economic expansion, employee housing was largely viewed as a highly valued asset and a fundamental infrastructure requirement for the functioning of the Vail resort community. This view is widely shared among Vail’s peer communities. With the downturn in the economy, the production of employee housing associated with new development has slowed, employment demands have diminished and private owners have increased the supply of private rental units. Concurrently, as long time residents exit the workforce, their personal housing is most often sold into the second home market. And, although housing rental and ownership costs have declined in recent years, Vail’s private housing values remain unobtainable for the great majority of local workers. Throughout the mountain resorts, policy makers are revisiting the question of what constitutes an appropriate level of the community investment and what form of housing represents the most valued community investment. 1 - 5 - 11 10/23/2012 PAGE 2, INTRODUCTION BBC RESEARCH & CONSULTING Report Objectives The objective of this analysis is to characterize and quantify the economic costs and benefits of Vail’s employee housing for the community’s residents, property owners and businesses. It is recognized that the benefits and costs of providing public investment in employee housing do not fall evenly across all parties in the Vail community. As a result, it is difficult to make simple pronouncements or calculations about the value of this type of housing. This report offers a conceptual framework for identifying the community costs and benefits of housing, and ultimately attempts to quantify the economic costs and benefits from multiple community perspectives. The intention here is to bring objective information to ongoing community discussion about the value of this investment and the issue as to whether employee housing remains an appropriate town investment with acceptable community returns. Report Organization This analysis has three sections. An Executive Summary follows this introductory section. Section I provides background data on Vail socioeconomic conditions and describes the current employee housing situation, including a derivation of the number of local workers generated by Vail’s employee housing infrastructure. Section II offers a methodological discussion and calculations of employee housing value from different perspectives within the community. 1 - 5 - 12 10/23/2012 SECTION I. Vail Demographic Data and Employee Housing Inventory 1 - 5 - 13 10/23/2012 BBC RESEARCH & CONSULTING SECTION I, PAGE 1 SECTION I. Vail Demographic Data and Employee Housing Inventory This section provides basic economic, demographic and employment data for the town of Vail, which are used for cost and benefit calculations developed in Section II. An inventory, description and accounting of Vail’s employee housing is also provided. Vail Demographics Based on the 2010 U.S. Census, the town of Vail has 7,230 housing units and a population of 5,305 residents. Approximately 2,604 units are occupied by full time residents Tenancy of these units is in near even division between renters (1341 rental units) and owner occupants (1263 owned units). The remaining units (4,626) are held for seasonal or occasional use, available for sale or rent, recently sold or unoccupied. A significant share of Vail resident households are occupied by retirees or persons employed elsewhere in the country—skewing traditional worker per household ratios and similar measures. A 2008 presentation entitled “Shaping the Future of Eagle Valley,” prepared by the Eagle County Economic Development Council calculated that 1,500 households in Vail have at least one locally employed individual, which is in line with estimates derived from the town’s periodic household surveys. Housing and population data from the town of Vail, U.S. Census Bureau and American Community Survey are shown below. Figure I-1. Vail Housing and Population Data Note: ^ Census 2010. ^^ Town of Vail. * ACS 2006-2010. ** ACS 2005-2009. Source: Vail PowerPoint Presentation, “Shaping the Future of Eagle Valley”, January 17, 2008; Eagle County Economic Development Forum ; U.S. Census 2010; and American Community Survey 5-year estimates. Category Population5,305^ Dwelling units in Vail Full-time occupied units2,604 ^ Owner-occupied (1,263) Renter-occupied (1,341) "Vacant" housing units4,626 ^ Seasonal units (3,840) For rent or sale, sold or unoccupied (786) Total dwelling units in Vail7,230 ^ Employee households in Vail1,500^^ Median household income$64,859* Median rent$1,266* Percent of renters paying >30% of income48.7%** Data It is noted that U.S. Census resort data—largely because of the April (off season) counting period and the difficulties in determining tenancy characteristics of individual units—are often of questionable accuracy. 1 - 5 - 14 10/23/2012 PAGE 2, SECTION I BBC RESEARCH & CONSULTING Figure I-2 shows additional economic and demographic data that have been drawn from local surveys and other town sources. Figure I-2. Vail Employment Source: Town of Vail PowerPoint Presentation, “Shaping the Future of Eagle Valley”, January 17, 2008. Category Data Number of jobs in Vail9,100 Average number of jobs per person1.3 Individuals employed in Vail7,000 Employees living in Vail30% Employees living between Vail and Edwards34% Employees living outside of Vail to Edwards36% There is very little statistical data that fully captures socio-demographic changes occurring with the recent economic downturn and Vail’s apparent economic resiliency in comparison with the rest of Eagle County. The Eagle County Economic Development Council (ECEDC) reports that county- wide employee counts declined 20 percent between 2008 and 2010. It is likely that the number of jobs and the number of individual employees have declined from the levels suggested above, although the strength of winter and summer tourism markets in 2010 and 2011 has likely helped Vail sustain its employment base more effectively than the remainder of Eagle County. The data in the above Figure I-2 suggests that roughly one-third of jobs in Vail are filled by Vail residents and similar proportions are filled by persons either living between Vail and Edwards (34%) or living elsewhere down valley (36%). Multiple job holdings are common and a large share of the jobs in town pay entry level wages. Vail Employee Housing Market Considerations Vail employees live in private rental and private employee-owned housing units as well as a variety of deed-restricted employee units. In addition, a number of businesses own or control rental housing that they reserve for their own employees. As noted above, approximately 30 percent of Vail jobs, or roughly 2800 positions, are filled by persons working and living in Vail. The remaining positions are filled by employees residing elsewhere in Eagle or surrounding counties. Deed-restricted employee housing. Figure I-3 on the following page documents the individual projects that comprise Vail’s deed-restricted employee housing inventory. In total, the community supports about 603 employee units and recent private development has added an additional 124 dedicated units for a total of 727 deed-restricted employee units created by town actions or regulations. When full, these units support an estimated 1,600 employees, approximately 75 percent of which (1200 employees) work in Vail.1 Timber Ridge is the largest employee project with 198, two bedroom units, often accommodating three or four workers per unit. Conversely, some smaller projects are family oriented, with two or more bedrooms per unit but supporting only one or two workers. The town added about 124 employee dedicated units through development requirements associated with recent growth. 1 In 2007, the town of Vail surveyed a sample of housing residents, indicating that about two-thirds of housing residents worked in Vail. Anecdotal data indicates that the loss of construction jobs has concentrated the percentage of Vail employee housing residents who are also employed by Vail. This analysis assumes 75 percent of persons living in Vail employee housing also work within the town of Vail. 1 - 5 - 15 10/23/2012 BB C RES E A R C H & CON S U L T I N G SECTION I, PAGE 3 Fi g u r e I - 3 . Va i l E m p l o y e e H o u s i n g I n v e n t o r y Co m m u n i t y P r o j e c t s De s c r i p t i o n Co s t / R e t u r n Ti m b e r R i d g e V i l l a g e 19 8 A l l 2 / 1 u n i t s ; 1 1 5 a r e m a s t e r - l e a s e d by V a i l R e s o r t s Re n t a l 1 9 8 1 , 2 0 0 3 (r e n o v a t e d ) Ye s T o w n o f V a i l ( T O V ) p a i d $ 2 0 m i l l i o n i n 2 0 0 3 ; r e n t a l r e v e n u e s p a y b o r r o w e d co s t o f p u r c h a s e & m a n a g e m e n t ; p r i v a t e l y m a n a g e d , p e r m a n e n t d e e d re s t r i c t i o n ; $ 2 2 M b o r r o w e d i n c l u d i n g c l o s i n g c o s t s ; T O V l e n t $ 1 . 9 M t o T R A H C $18,000,000 Va i l C o m m o n s 71 Ow n e r s h i p U n i t s : 24 2 / 1 . 5 c o n d o s ; 13 2 / 2 t o w n h o m e s ; 6 t h r e e b e d r o o m to w n h o m e s ; 1 0 3 / 2 w i t h 2 - c a r g a r a g e s Re n t a l U n i t s : 1 8 o n e b e d r o o m s Re n t an d Ow n 19 9 7 Y e s T O V b o u g h t l a n d f o r $ 4 . 5 M o u t o f G e n e r a l F u n d , a n d C i t y M a r k e t f u n d e d th e d e v e l o p m e n t . T O V r e c e i v e s a n n u a l r e s i d e n t i a l l a n d r e n t o f $ 4 9 , 0 0 0 , a n d co m m e r c i a l l a n d r e n t o f $ 9 9 , 0 0 0 f r o m t h e h o m e o w n e r s a s s o c i a t i o n ($ 1 4 8 , 0 0 0 t o t a l a n n u a l T O V r e v e n u e ) . L a n d r e n t s s h o u l d c o v e r t h e $4 . 5 M l a n d c o s t b y 2 0 2 7 . None Re d S a n d s t o n e C r e e k 18 2 1 / 1 t o w n h o m e s ; 1 0 2 / 1 t o w n h o m e s ; 2 2 / 2 c o n d o s ; 4 3 / 2 c o n d o s Ow n 1 9 9 9 N o D o n a t e d s m a l l ( o t h e r w i s e u n d e v e l o p a b l e ) 1 / 3 a c r e t o w a t e r d i s t r i c t w h i c h o w n e d ad j a c e n t p r o p e r t y . T O V a n d w a t e r d i s t r i c t b u i l t u n i t s a n d s o l d f o r th e c o s t o f d e v e l o p m e n t . C o n v e y e d l a n d t o h o m e o w n e r s a s s o c i a t i o n . N o lo s s o r i n c o m e c r e a t e d . None Mi d d l e C r e e k 14 2 M i x o f s t u d i o s ; 1 / 1 ; 2 / 1 a n d 3 / 2 u n i t s R e n t a l 2 0 0 5 N o $ 2 3 M , $ 8 5 0 K i n s t a t e g r a n t s , $ 1 5 M i n p r i v a t e a c t i v i t y b o n d s = $ 7 . 1 5 M pr i v a t e d e v e l o p e r c o s t . L a n d l e a s e d t o h o u s i n g a u t h o r i t y f o r $ 1 0 / y e a r . TO V g e t s l a n d a n d i m p r o v e m e n t s w i t h n o d e b t o b l i g a t i o n i n 2 0 5 3 . None Bu z z a r d P a r k 24 2 1 s t u d i o s a n d  3 o n e b e d r o o m u n i t s R e n t a l 1 9 9 8 Y e s $ 2 M c o s t , T O V b u i l t a n d m a n a g e d . N o n e No r t h T r a i l T o w n H o m e s 6 4 2 / 2 t o w n h o m e s ; 2 3 / 2 t o w n h o m e s O w n 2 0 0 1 N o B o u g h t p r o p e r t y f o r $ 1 5 0 , 0 0 0 . D e v e l o p e d b y T O V f o r $ 1 m i l l i o n . C o s t s re c o v e r e d a f t e r u n i t s w e r e s o l d . None Ar o s a D u p l e x 2 2 f a m i l y d u p l e x e s O w n 2 0 1 0 N o T O V b o u g h t p r o p e r t y f o r $ 1 5 0 , 0 0 0 . B u i l t d u p l e x s a n d s o l d t h e m f o r co n s t r u c t i o n c o s t s . None Cr e e k s i d e A p a r t m e n t s 12 A l l o n e b e d r o o m u n i t s R e n t 2 0 0 0 Y e s T O V b o u g h t a p a r t m e n t p r o p e r t y f o r $ 1 . 2 M f r o m t h e g e n e r a l f u n d . T O V g e t s r e n t a l re v e n u e , w i l l b e p a i d o f f i n 2 0 2 0 . None Bu y - D o w n P r o g r a m 5 T w o 2 / 1 u n i t s ; 3 1 / 1 u n i t s 3 f o r s a l e , 2 r e n t a l -Y e s f o r re n t a l s TO V b u y s u n i t s ; a p p l i e s d e e d r e s t r i c t i o n a n d s e l l s f o r D e e d R e s t r i c t e d Va l u e . None Ca r e t a k e r U n i t s 12 5 V a r y i n t y p e R e n t a l - N o H o m e o w n e r s p r o v i d e a c c e s s o r y d w e l l i n g u n i t s f o r w o r k e r s i n e x c h a n g e fo r s q u a r e f o o t a g e a l l o w a n c e s . None Su b t o t a l 6 0 3 Fo u r S e a s o n s R e s o r t 2 8 O n - s i t e u n i t s ; 5 6 t o t a l b e d s R e n t a l 2 0 1 0 N o Bu i l t a s p a r t o f t h e r e q u i r e d e m p l o y e e h o u s i n g c o m p o n e n t . - Fi r s t C h a i r ( A r r a b e l l e c o m p o n e n t ) 3 2 L i o n ' s H e a d V i l l a g e ; 1 2 4 t o t a l b e d s R e n t a l 2 0 1 1 N o B u i l t a s e m p l o y e e h o u s i n g c o m p o n e n t f o r t h e A rr a b e l l e p r o j e c t . - Ri t z - C a r l t o n 3 2 O n - s i t e u n i t s ; 5 3 t o t a l b e d s R e n t a l 2 0 1 0 N o B u i l t a s p a r t o f t h e r e q u i r e d e m p l o y e e h o u s i n g c o m p o n e n t . - So l a r i s 1 3 O f f - s i t e u n i t s ; 2 2 t o t a l b e d s R e n t a l 2 0 1 0 N o B u i l t a s p a r t o f t h e r e q u i r e d e m p l o y e e h o u s i n g c o m p o n e n t . - Se b a s t i o n 1 9 O n - s i t e u n i t s ; 2 8 t o t a l b e d s R e n t a l 2 0 1 0 N o B u i l t as p a r t o f t h e r e q u i r e d e m p l o y e e h o u s i n g c o m p o n e n t . - Su b t o t a l 1 2 4 To t a l E m p l o y e e H o u s i n g U n i t s 7 2 7 u n i t s To t a l C u r r e n t D e b t O b l i gation Wo r k e r s P e r U n i t 2 . 2 w o r k e r s To t a l E m p l o y e e s H o u s e d i n U n i t s 1 , 6 0 0 e m p l o y e e s Em p l o y e e s w o r k i n g i n V a i l ( 7 5 % ) 1 , 2 0 0 e m p l o y e e s Ye a r Co m p l e t e d $18,000,000 Un i t s Pr i v a t e P r o j e c t s w i t h R e s t r i c t e d E m p l o y e e U n i t s Re n t or O w n Current Debt Obligation Re v e n u e Ge n e r a t i n g fo r T O V No t e : T o t a l e m p l o y e e s h o u s i n g i n e m p l o y e e u n i t s i s b a s e d o n 1 . 6 5 e m p l o y e e s l i v i n g i n e a c h u n i t . So u r c e : T o w n o f V a i l , R R C A s s o c i a t e s a n d B B C R e s e a r c h & C o n s u l t i n g . 1 - 5 - 16 10/23/2012 PAGE 4, SECTION I BBC RESEARCH & CONSULTING Vail does not restrict its employee housing to Vail employees, although most residents who choose to live in Vail employee housing are also employed at Vail businesses. The key data drawn from the housing inventory, and used to calculate employee housing benefits, are:  The town of Vail owns, supports or maintains 727 employee dedicated units, housing approximately 1,600 workers—about 1200 of which are employed in Vail.  Vail workers hold 1.3 jobs per worker,2 thus the 1200 Vail workers living in Vail employee units will fill about 1,600 Vail positions (jobs), roughly 18 percent of the town’s estimated 9000 total positions.  Approximately 90 percent of Vail deed-restricted employee housing are rental units. The remaining 10 percent are deed-restricted for-sale units, which are often larger, multi-bedroom projects designed for families and longer term workers. Both forms of housing are included in this analysis.  Timber Ridge carries about $18.0 million in net long-term debt3. Rents from Timber Ridge currently cover all operating costs and debt service. It is most notable that Vail taxpayers have no ongoing out-of-pocket costs associated with the development and operation of Vail employee housing. Individual projects are managed by contractors and costs are covered by project rents. The modest administrative costs of supporting the Vail Local Housing Authority are paid out of the town general fund. The current housing associated debt service—approximately $18.0 million dollars, which is associated only with the Timber Ridge Project—is technically an obligation of the Timber Ridge Affordable Housing Corporation. The corporation continues to make all required monthly payments. Vail’s experience with deed-restricted employee housing is in notable contrast to many resorts that more often rely on on-going sales or property taxes to support community housing operations or to cover debt service and operational obligations. Vail private market housing. As noted previously, about 70 percent of individuals employed in Vail live outside of the town. About 30 percent of persons employed in Vail live in the town (some 2100 workers). Of these Vail employed and Vail housed workers, approximately 1200 individuals (57%) live in Vail employee units, while the remaining 900 persons (43%) live in owner occupied or rented units. The availability of private residential units, whether for sale or for rent, is subject to many market forces. The dynamics of the Eagle County and Vail private housing markets is complicated by the shifting economics of long-term (employee) versus short-term (overnight guests) housing rentals and the long standing disconnect between local wage and salary levels and Vail housing costs. 2 RRC Associates; Nexus Study, 2006 3 The Timber Ridge project has about $20.2 million in debt and nearly $2.0 million in available cash reserves. The town manager reports that Timber Ridge revenues are covering all monthly debt service obligations but the project is below certain debt to cash reserve requirements. 1 - 5 - 17 10/23/2012 BBC RESEARCH & CONSULTING SECTION I, PAGE 5 Private housing in Vail for employees is a critical element of the employee housing provision system but also a very uncertain component of the long term employee housing stock. Some of the forces narrowing the availability of Vail owner occupied and private rental housing include:  Some Vail workers live in their own privately-owned homes. In many instances these units were purchased many years ago when prices were lower. As these residents leave Vail and sell the residence it is likely that these units will convert to second homes and will be lost to the local employee housing stock.  Despite the economic downturn and the general decline of housing values, Vail homes are still far outside of the price range of local employees. The median price of a unit solid in Vail in 2011 was over $1.8 million. Even in most affordable Vail neighborhoods, the median sale price in 2011 was over $400,000 and that would only purchase an older, one-or two bedroom condominium unit. Even in challenging economic times, the private housing market can not readily provide affordable housing for Vail employees.  The recent economic decline and the decline in resort home values were expected to produce many new year-round rental units, effectively expanding the local employee housing stock. Instead, changes in the cost of offering units to transient guests, the result of VRBO-like (Vacation Rental by Owner) web access made transient rentals in many cases a more attractive rental alternative and muted the transfer of units to long term worker rentals. In sum, the private market is providing about 43 percent of the housing used by Vail residents who are both working and living in Vail. This housing stock is likely to decline in number overtime as owner occupied units are sold and transferred to second home use. Despite lowered prices, acquisition of private homes by Vail workers is still largely infeasible. The recent economic downturn undoubtedly added to the local housing rental stock, but it did not dramatically increase the market or significantly change rental prices, as many owners chose to rent to transient guests rather than long term employee residents. The town of Vail and the Vail Local Housing Authority reports strong demand for family oriented, for-sale units that would allow workers and their families to stay in Vail and maintain the community’s family presence, fill volunteer positions and support a diverse, year round community, Nearly 60 percent of Vail worker-residents are housed in deed-restricted units and Vail’s deed- restricted units, both rental and for-sale projects, have maintained high occupancy rates, which is evidence of their value and desirability. In essence Vail’s deed-restricted housing has proven an effective insurance policy for worker availability during both periods of both prosperity and decline. The town policy to expand the supply of more family and deed-restricted for-sale units is likely the next evolutionary step of this program. 1 - 5 - 18 10/23/2012 PAGE 6, SECTION I BBC RESEARCH & CONSULTING Vail Employee Housing Rental Rates The majority of Vail employee units are designed to serve a transient rental workforce and to provide clean, safe, convenient and functional housing. Employee housing is generally less expensive than open market housing but formal comparisons are difficult because the wide variation in size, location, capacity and finish in private market units. Most Vail employee housing does not have limits on resident income, although the Vail Middle Creek project is a private development using state and federal mortgage funds that require occupancy by moderate income households. The most recent Vail employee housing rental rates for Middle Creek and qualification criteria are shown below. Figure I-4. Rental Rates and Income Restrictions, Effective July 15, 2011 Note: * Combined incomes. Source: Middle Creek Village, Vail Local Housing Authority Unit Type Studio:883$ 1,500$ One bedroom:941$ 1,600$ Two bedroom:1,122$ 1,800$ Three bedroom:1,969$ 3,000$ 2,093$ 3,000$ 2,160$ 3,000$ 1 person, living alone 36,360$ 2 persons sharing unit *41,580$ 3 persons sharing unit *46,740$ 4 persons sharing unit *51,960$ RentDeposit Income restrictions for studio, one and two bedroom units (60% of AMI): Generally, Vail employee units are in high demand and have low vacancy rates, suggesting units are scarce and highly valued in the market place. In summer, vacancies rise but even over the last few years, the units have remained at or near capacity during ski season and have continued to meet financial requirements. All of the for-sale, deed-restricted housing is occupied. Representatives of Polar Star Properties, which manages a number of Eagle County rental complexes, reports that average rents on a per square foot declined 16 percent (Eagle County) between 2007 and 2011.4 The project management company also indicated that summer 2011 vacancy rates, elsewhere in the Valley, were high. Conversely, the town of Vail representative reports that all available Vail employee housing are fully occupied for the 2011-12 ski season. 4 Gerry Flynn, Eagle County Economic Development Council, Quarterly Newsletter 2011. 1 - 5 - 19 10/23/2012 SECTION II. The Economic Value of Employee Housing 1 - 5 - 20 10/23/2012 BBC RESEARCH & CONSULTING SECTION II, PAGE 1 SECTION II. The Economic Value of Employee Housing This section describes analytical options considered for this analysis. Methodological assumptions used in the Vail analysis are documented and calculations presented describing the economic value of Vail’s investment in employee housing. Methodological Options There is no generally accepted methodology for calculating the economic value of affordable housing. BBC’s investigations uncovered only a few studies that attempted to measure the economic impact of employee housing and most were conducted in traditional urban settings with very different economic conditions. A few illustrative examples are highlighted below. Minneapolis & Saint Paul Studies  A 2001 report by Maxfield Research Inc. and GVA Marquette Advisors on the Twin Cities of Minnesota estimated the economic value and return on investment in workforce housing by calculating the increased consumer spending, business income and construction activity associated with the subject households. The analysts considered all workforce households employee housing as new residents to the community and then multiplied this new household figure by the average gross income for the workforce household. This figure was then multiplied by the percent of income each household spent in the local economy and the share spent in the Twin Cities.  The Twin Cities study explains that the lack of workforce housing negatively impacts the productivity of the local businesses. The study assumes that each additional worker will add a certain additional business production value to the local economy. To find the increase in business income added by new workforce households, the report multiplies the number of new workers by the business income per worker. Finally, the report adds in the projected gains related to the construction of the workforce housing units. The projected increase in local construction wages added to the projected increase in government fees and tax assessments contribute to the positive economic impact due to new construction of the units. When the figures of consumer spending, business income and construction gains are added together, the report finds the total economic benefit of adding new workforce housing units to the market. The model calculates the projected economic return over 15 years and divides this figure by the total estimated development cost to build the units to determine a return on investment (ROI). The calculations suggest an ROI ranging from 2.22 to 8.13. Portland and Oregon state workforce studies  The Workforce Housing Report of Central City, Portland by GVA Marquette Advisors takes a similar approach towards valuing the economic impact of workforce housing as the Twin Cities study. However, instead of assessing the value of consumer spending and business income, the Portland report uses IMPLAN software to measure the direct, indirect and induced impacts of construction activity and the impact of the addition of new households. The model divides this economic return by the public cost of constructing the workforce units, with and without subsidies, to calculate the return on investment in workforce housing. 1 - 5 - 21 10/23/2012 PAGE 2, SECTION II BBC RESEARCH & CONSULTING  The study finds that the 20-year return on each dollar spent is $2.73 when the city is paying the full cost of development. When the city provides a subsidy to private developers, the 20-year return on investment is $12.55 for each dollar invested.  Using a similar IMPLAN methodology, the Oregon Housing and Community Services (OHCS) studied three housing developments in Oregon to indentify the economic impacts of project investment. The study used IMPLAN to calculate the associated impacts of constructing the housing developments. The figure does not illustrate the potential of private investment coupling with the public funds, typically $5-$7 per state agency dollar. This private investment boosts the economic impact of $10 to $15 per OCHS dollar invested. Although IMPLAN modeling and similar business activity measure analysis are legitimate approaches, the other housing studies identified failed to acknowledge that absent employee housing other beneficial development might occur. This potential substitution issue is one characteristic that sets Vail apart from most traditional economies. Similarly, a Vail study should acknowledge that Vail workers still have other options for housing even if those options are more expensive or less convenient. In our view, the practical value of Vail housing is best expressed as the savings incurred by housing residents and local businesses because Vail businesses did not have to incur the additional costs of luring new workers from remote housing. BBC Approach Vail has invested in employee housing as a means of ensuring the availability of a functional and reliable workforce in an area where private land and construction costs limit the private market’s ability to produce affordable worker housing. This study incorporates six key assumptions regarding employee housing and its impact on the unusual economies of mountain resorts. (1) The economic value of employee housing in Vail will vary by the perspective of the individual, business interest or taxpayer considering the issue. The economic value of employee housing to a worker, who is relieved of a lengthy and costly up- valley commute, is different than the value received by an adjacent home owner with concerns about neighborhood congestion. Similarly, the value of employee housing to a tax-paying second home owner may be perceived very differently than the value of the same units to a local employer, who might otherwise be unable to secure a necessary work force. All of these varying perceptions of value are reasonable and valid. Employee housing has costs and benefits that are not evenly distributed throughout the Vail or Eagle County community. This disparate distribution of costs and benefits is true for most public investments, including parks, recreation, public parking and basic services such as police and fire protection. The objective of this report is to fully represent costs and benefits of the community’s employee housing investment and the distribution of costs and benefits among various communities of interest within the broader Vail community. (2) Without employee housing, Vail businesses would still attract workers but attraction and retention would be more expensive, employee turnover would be higher, and employee flexibility and willingness to work irregular hours or multiple jobs diminished. 1 - 5 - 22 10/23/2012 BBC RESEARCH & CONSULTING SECTION II, PAGE 3 Many studies calculate the value of employee housing with an assumption that without such housing, workers would be unavailable. This study assumes that, “but for Vail housing,” workers could still be found but employees would require higher wages to compensate them for at least the lost time and new commuting expenses. In addition, businesses would incur higher costs for retention and training of employees, and to provide full services despite reduced multiple job holding by local employees. (3) The provision of affordable employee housing requires some form of public investment, which implies that tax payers—or some subset of tax payers—are, in some degree, paying for this amenity. Employee housing requires some form of public or private subsidy in order to produce housing below private market costs. Although Vail has done a notable job at stimulating employee housing with very little general public expense, any public subsidy implies that some community interests pay and other interests benefit. For instance, if the town were to buy land and donate it toward the creation of employee housing, the local taxpayers in the community would subsidize the project in proportion to each taxpayer’s local tax contribution and a separate set of employee residents and commercial businesses would be the direct beneficiaries. Sometimes that subsidy is direct and clear—e.g. the town’s acquisition and donation of land. Sometimes that subsidy is less obvious—when the community attracts state or local financial support or housing is exacted from new development. (4) The presence of employee housing alters the local housing market with implications for the provision of a high level of guest services and Vail’s position in the larger competitive resort marketplace. Vail is a successful resort in part because employee housing contributes to the ability of public and private enterprises to attract and retain a high quality, stable workforce at reasonable wage levels. Employees value local housing because it reduces travel time and costs and reduces the uncertainty, cost and difficulties of procuring housing in the Vail Valley and generally improves the quality of life. The economic value of employee housing is also represented in part by the day to day enhanced quality of service that distinguishes the Vail guest experience. Additionally, with the provision of workforce housing, Vail is better able to compete against other resorts, some of which have very extensive housing programs, for the best workers. The presence of employee housing has value to Vail businesses and thus indirectly benefits visitors, second homeowners and residents who use public and private services, ski on Vail Mountain or dine in area restaurants. These benefits are largely unquantifiable. Conversely, the provision of housing alters the local private housing market. Arguably, public investment in housing in part shifts the cost burden of attracting workers away from those enterprises that require a large workforce and thus makes a private expense a shared community costs. This is the dilemma of all public services. Economic purists would suggest that inaccurate pricing inevitably leads to misplaced investment. Arguably, the presence of lower cost employee housing reduces overall wages and damages those property owners who would otherwise put private rental units on the market. Similarly, inclusionary zoning, and the requirement of new development to provide housing, contributes to the higher costs of development, which distorts land values, raises the cost of new projects and reduces development innovation and experimentation. 1 - 5 - 23 10/23/2012 PAGE 4, SECTION II BBC RESEARCH & CONSULTING (5) The provision of employee housing can displace other forms of development, which under many circumstances may be of higher economic value. In recent instances, employee housing in Vail is required of new development and thus the town foregoes the potential benefits of additional private accommodations and thus the visitor spending and tax receipts associated with private residential accommodations. Resort towns are unusual in that high value private housing induces a high level of retail sales and thus any reduction in private market development, or substitution of high value for lesser valued residential units, can be a costly “investment”. A share of existing Vail employee housing was developed by way of zoning requirements placed on new development. Arguably, if not for town housing requirements, some employee units would likely have been replaced by private units, which would have produced higher levels of town tax income, increased the original value of the underlying land, and increased developer profit and/or reduced the cost of the other private units in each development. On the other hand, the town requirements that require on-site employee units most often also afford the developer additional density to accommodate those employee units, thus employee and open market units are not readily transferable. The economic loss suffered by developers because of employee requirement varies based on other site constraints and decisions about on-site versus off-site development. (6) The economic value of employee housing is not consistent from year to year—it varies considerably depending upon background economic conditions. By way of example, in 2007-08, there were more Vail jobs than available workers and the lack/cost of housing might have been the weakest link in the local resort economy. Although consumer demand was strong, the local business community was hamstrung by the lack of available workers and service quality diminished. Private housing was largely unavailable and/or very expensive. Under these circumstances, dedicated employee housing was extremely valuable. Two years later, in 2009-10, the situation reversed and jobs were scarce and public and private housing was relatively plentiful. Additional private units came into the rental market. Yet, in 2011, Vail employment demand rebounded, summer business was strong and there was virtually no vacancy in Vail employee housing for the 2011-2012 winter season. In sum, there is no single perspective or single value that can be placed on a public investment in a shared good, such as employee housing. It is a complicated equation. Nevertheless, faced with ongoing community investment decisions, exploring the question and attempting to illuminate the issue, is a necessary exercise. 1 - 5 - 24 10/23/2012 BBC RESEARCH & CONSULTING SECTION II, PAGE 5 Direct Economic Value of Employee Housing Considering all of the varying perspectives on employee housing and the many trade-offs that come with public intervention into the private market, BBC offers the following cost benefit calculations. Figure II-I shows the conceptual economic impacts of Vail employee housing as experienced by the three major components of the Vail economy: Employees, Business, and Government. Figure II-1. Direct Impacts of Vail Employee Housing Source: BBC Research & Consulting, 2012 As noted previously, the value of employee housing is best measured by the reduced costs of business associated with a flexible, available and reasonably priced workforce. Vail employees and businesses. Resident employees enjoy the most immediate and direct benefits from the availability of Vail employee housing, by the avoidance of the more costly alternative of a lengthy down valley commute. Cost of living savings include: reduced costs of housing, reduced costs of travel and the value of increased time availability. Many resort workers hold more than one job allowing increased earnings, a practice that is facilitated by convenient, local housing. Vail businesses benefits in the same manner as employees. If, hypothetically, the 1,200 Vail housed and Vail employed workers1 were forced to live down valley and commute, Vail businesses would have to increase compensation to re-attract these workers. The attached Figure II-2 shows the assumptions and values underling the calculation of Vail’s employee housing investment as experienced by Vail workers and Vail businesses. These calculations demonstrate that each Vail housed Vail worker represents an economic benefit of about $10,530 per year for a total annual economic benefit of about $12.6 million dollars per year ($10,530 x 1,200 workers). This benefit is shared between Vail businesses, which enjoy lower labor costs and Vail workers who have lower operating costs, increased time and increased flexibility. 1 Figure I-3 Section I Direct Impacts of Vail Employee Housing Vail Businesses Positive: Employee cost savings –Wages and salaries –Training/turnover –Skills and quality of labor force –Eco bus pass Additional local spending by employee residents Vail Employees Positive: Reduced cost of living –Rents –Commute time –Commute costs Ability to hold multiple jobs Town Government Positive: Employee cost savings –Wages and salaries –Training/turnover –Skills and quality of labor force Reduced parking, construction and operational costs –Capital investment/risk –Bond risk –Lost opportunity for higher valued development on town- owned property Negative: 1 - 5 - 25 10/23/2012 PAGE 6, SECTION II BBC RESEARCH & CONSULTING Figure II-2. Employee Cost Assumptions and Calculations Source: BBC Research & Consulting, 2012 Additional benefits, but of a lesser value, accrue to workers who reside in Vail housing but are employed elsewhere in the county. Anecdotally, it is reported that many of these workers started with Vail jobs but eventually took promotions or new positions elsewhere in the county. Others have summer jobs outside of Vail, often in construction, and retain their Vail housing with the expectation of returning to a Vail position in the following winter. Because these workers are not immediately contributing to the Vail economy they are not considered a return on Vail’s housing investment. Vail businesses. Without employee housing, Vail businesses would have to raise employee compensation levels to cover the higher costs of remote employee housing and employee commuting expenses2. In practice, local businesses experience additional benefits. BBC has identified three categories of business operational savings associated with local employee housing.  Savings associated with reduced pressure on wage and salary levels. Vail businesses save the cost of providing higher wages that would otherwise be necessary to attract Vail’s workforce from more removed communities where housing is available. These savings are already counted as an employee benefit. 2 This calculation assumes a reasonable equilibrium between supply and demand for employees. In years where job opportunities are plentiful, such as 2007, employees would have to raise wages more to entice down valley workers to Vail jobs. In years when jobs were scarce, such as 2010, far less inducement would be necessary. Additional travel time:45 min. per day @ $12 per hour $9.00 per day X 200 days $1,800 per year, per employee Additional travel costs:20 miles per day @ 52¢ per mile$10.40 per day X 200 days $2,080 per year, per employee Additional housing costs $75per month, per employee $900 per year, per employee $2,000 per year, per employee $2,000 per worker $1,750 per worker Employee Savings = = Eco bus pass = Additional Employer Costs At a minimum, Vail employers would have to raise wages and salaries to compensate employees for the additional costs associated with living down valley. Total Employee and Employer Savings = $10,530 per employee New Employee Compensation = $4,780 per employee New Employer Costs = $5,750 per employee Employee turnover/ training/quality Reduces multiple job holding; increases employee hiring requirements Employers relying on a commuting work force would face additional training and hiring costs and would likely share in the additional cost of ECO bus passes. = = = = = 1 - 5 - 26 10/23/2012 BBC RESEARCH & CONSULTING SECTION II, PAGE 7  Savings associated with reduced requirements for public and private investment in parking and transportation. Commuting workers experience higher travel costs and must be able to access local parking or functioning mass transit. In addition, most businesses would pay for an ECO bus pass, or at least subsidize that pass, in order to enhance worker reliability. Monthly bus pass costs range up to $200 per month depending on the residence destination. We assumed partial subsidy by employees of $1750 per year per pass.  Savings associated with enhanced worker availability, quality and reliability. A lengthy commute to what is often poor housing contributes to absenteeism and worker dissatisfaction, especially in a challenging environment where traffic conditions and travel times can be uncertain. Vail businesses save by experiencing reduced worker turnover, reduced business disruption due to delayed or absent workers, greater business flexibility because of worker ability to commit to part time positions or irregular hours and reduced employee training costs. We assume that local employee housing saves $2,000 per resident worker in reduced turnover and training costs. As noted above, BBC estimates that each Vail-based worker using Vail employee housing represents a savings to Vail businesses of about $10,530 per employee or $12.6 million per year. Increased spending by employee-residents. Employees residing in town also tend to purchase daily goods and services in town and frequent Vail restaurants, bars and entertainment. The value of this local spending can be derived by calculating the percent of worker income spent on local goods and services, and estimating a Vail capture rate. Local employee spending in Vail as a result of Vail employee housing is documented below. Figure II-3. Vail Retail Spending by Employees Lodged in Vail Employee Housing Source: BBC Research & Consulting. BBC estimates that in addition to the savings realized by Vail businesses, Vail retailers would garner approximately $6.0 million in additional retail sales, which represents an additional $240,000 in annual sales tax receipts (at 4.0%). Categor Employees in Vail employee housing1,600 Average annual income 30,000$ Total employee income 48,000,000$ Percent spent on retail 25% Amount spent on retail12,000,000$ Percent spent in Vail50% Amount spent in Vail 6,000,000$ Amount of retail spending per employee$3,750 Value 1 - 5 - 27 10/23/2012 PAGE 8, SECTION II BBC RESEARCH & CONSULTING Vail Government. It should be noted that the town is also a business with the same employee cost and challenges as a private entity. To the degree that workers housed at Vail employee housing are also town workers, cost avoidance benefits will be roughly the same for both public and private sectors. More problematic, if employee housing were unavailable, there would be pressure on the town to create additional parking to accommodate the 1,200 or so additional workers who would have to commute into the community each work day or evening. Assuming 50 percent of these workers would take the ECO bus, or utilize parking provided by employers, and that then new bus riders could be accommodated without significant cost to the community, about 600 new workers would drive to town. Further, assuming two workers per car and .75 parking spaces per vehicle (assuming job time shifts), the town would require 225 new parking spaces in order to maintain current parking standards. Structured parking in Vail costs about $40,000 per space. Assuming a physical solution could be devised, accommodating additional parking demand would cost at least $9.0 million. Operating costs of the structure would be in addition to capital costs and employees are unlikely to pay the kind of rates currently in effect, thus suggesting an ongoing operating loss. Currently some businesses provide employee parking (e.g. town offices, hospital) but on-site parking options have largely been exhausted and new employees would have to be accommodated in new public parking facilities or compete for existing parking spaces. Avoiding pressures on parking is a strong argument in favor of employee housing but in all practicality, developing new structured parking for employees is an unlikely practical solution. In a reasonable “no-housing” hypothetical, rather than create parking, the town would be more likely to press Eagle County to increase bus service and perhaps expand in-town operations. As described above, employers would be saddled with the additional costs of attracting workers and all the attendant problems of employee turnover and decreased service levels associated with a lengthy bus commute. In sum, we see three measures of employee housing value, as shown in Figure II-4. Figure II-4. Summary: Valued Vail Employee Housing Source: BBC Research & Consulting. CategorValue Business costs avoided$12.6 million per year New retail spending$6.0 million in annual retail sales($240,000 in sales tax @ 4.0%) Parking expansion$9.0 million 1 - 5 - 28 10/23/2012 BBC RESEARCH & CONSULTING SECTION II, PAGE 9 Other Perspectives The provision of employee housing also has broad economic consequences for all Vail property owners, visitors and residents. These are summarized in Figure II-5. Figure II-5. Perspectives on Vail Employee Housing Residential property owners. As noted in the above Figure II-5, property owners seeking to rent privately owned residential units currently have to compete with employee housing, although that public subsidy is arguably small. Currently, the presence of 727 units of lower priced housing probably dampens the potential rental value of individually owned rental units. Conversely, all residential property owners benefit because exaction requirements on new or remodeled housing drives up the cost of new units, effectively pulling up the price of all units. Further, all property owners benefit from a well functioning resort and positive guest experience. Commercial property owners. All commercial property owners are generally benefited by community investment in employee housing as it increases the costs of potential new competition, because of the inclusionary zoning and commercial linkage requirements, and reduces the labor costs of operations for commercial tenants. Land owners. Land owners, properties with redevelopment potential, and developers are burdened by inclusionary zoning and commercial linkage and employee housing requirements as they bear an immediate cost for maintaining the town’s housing stock. Other Perspectives on Vail Employee Housing Private Rental Property Owners Negative: •Subsidized Competition All Residential Property Owners Positive: •Increased cost of competitive new developments All Commercial Property Owners Positive: •Increased cost of competitive new development Land Owners and Developers Negative: •Increased cost of competitive new development Positive for all:Increased functionality of the resort Improved visitor experience 1 - 5 - 29 10/23/2012 PAGE 10, SECTION II BBC RESEARCH & CONSULTING Vail—The Resort Economy Finally, and perhaps most importantly, employee housing presents wide spread general benefits to all property owners, residents, visitors and second home owners who have a stake in the success of Vail. Generally, a reasonable quality of life for residents, the possibility of professional advancement and homeownership, reduced commuting times, year-round presence of residents and cost savings, all add to a more stable employee base and a better functioning community, which results in:  An improved guest experience—the most basic product sold by Vail;  Better positioning against other resorts competing for a quality workforce;  Reduction in the seasonality of local businesses;  Increased vitality, diversity and authenticity for the town;  Increased community participation (e.g., volunteer activities, town boards); and  Enhanced ability for younger residents to stay in Vail and grow into higher-level employment and community leadership positions.  Opportunities for families to remain in Vail and raise a generation of new Vail residents, support local schools and create a critical mass of residents, which would all be jeopardized without the town’s support of deed-restricted for-sale housing in addition to rental units. A better community with a more stable and participatory workforce translates into better guest services. Visitors value their interaction with local residents. Workers who enjoy their town and communicate pride in their community help create the experience that differentiates engaging resort communities from branded commercial resorts. As the community matures many long time residents will retire and their homes will likely transfer into second home status, further eroding the town’s private housing stock. The economic value of employee housing will grow as private ownership stock is diminished and the diversity of employee housing, including additional deed-restricted family and for sale units, expands. In sum, over a two decade period, the town has created an enviable employee housing stock with very modest costs to the general taxpayers. Operation of the town’s 727 units puts no burden on the general fund. The Timber Ridge project, the town’s largest investment has some remaining financial risk, but it is still operated under contract by a private entity and current rents cover all operating costs and debt service. The town of Vail has been remarkably successful in creatively stimulating the development of employee housing without incurring substantive public expense. Vail’s 727 employee units save the business community about $12.6 million per year in operating expense, generate nearly a quarter million dollars in sales taxes for the general fund, and allow the town to avoid a burdensome investment in finding parking solutions for 1200 employees. 1 - 5 - 30 10/23/2012 M EMORANDUM To: Nina Timm, Housing Coordinator, Town of Vail From: Andy Knudtsen and David Schwartz, Economic & Planning Systems Subject: Chamonix Market Update Date: February 28, 2011 Background The Town of Vail considers the Chamonix site in West Vail a component of a larger strategy to address affordable housing needs in the community. The site has the potential to hold approximately 58 dwelling units and would expand the inventory of affordable housing within the Town. The elected officials believe that additional housing will enhance the sense of community by providing homeownership opportunities to local residents and improving economic vitality by expanding the pool of employees available to local businesses. In 2008, Economic & Planning Systems (EPS) provided a market analysis of the conceptual development plans for the site. The report included an evaluation of the market trends, an assessment of the position the site holds within Eagle County market, and a review of the site’s competitive advantages and disadvantages. The market, however, has changed since that time. This memorandum provides an overview of updated market findings relevant to supply and demand conditions of the Eagle County market. Methodology EPS conducted its analysis by focusing on the broader market trends and focusing in on specific relevant market segments. The following methodology was used and outlines the content of this memorandum: 1 - 6 - 1 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 2 20908-DM-030111 • 3 Geographies: EPS identified areas within the County as having the following sales locations: o Upper Valley: Booth Creek, Cascade Village, East Vail, Highlands Meadows, Lionshead, Potato Patch, Sandstone Lionsridge, Spraddle Creek, Valley Ridge at Vail, Vail Golf Course, Vail Village, and West Vail. o Mid Valley: includes Arrowhead, Avon, Bachelor Gulch, Beaver Creek, Berry Creek Ranch, Cordillera, Eagle Vail, Edwards, Homestead, Lake Creek Valley, Minturn, Mountain Star, and Wildridge and Wildwood. o Lower Valley: includes Cotton Ranch, Eagle, and Gypsum. • 3 Time Periods: EPS identified periods of time over the past six years that represent distinct periods: o 2004-2008: During this period in Eagle County, the market continued its upswing in average sales prices and maintained its volume: o 2009: Generally, 2009 saw a major decrease in average sales prices and a contraction in volume of activity; o 2010: During this year, the market began to recover and stabilize. Average prices in parts of Eagle County climbed again, and volume increased over 2009, but did not return to the volume before 2008. • 3 Price Bands: Within the geographies and periods of time, three price bands are relevant to understanding where the market is today: o Under $438,000: was identified as the conforming loan limit of approximately $418,000 plus an estimated five percent that a buyer would have available for a down payment; o Between $438,000 and $600,000: was identified as the next band of price points, which identifies an upper threshold for other local buyer products; and o Sales above $600,000: was identified as a separate price band to isolate products purchased by second-homeowners or out-of-state buyers. Demand Conditions Employment and wage information comes from the Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA). The BLS data identify trends and conditions of wage and salary positions through the second quarter of 2010. Data from the BEA identify counts of both wage and salary jobs and sole proprietors through 2008. Due to the comprehensive nature of BEA data, the lag time is greater. EPS has used the most comprehensive data available from these sources for this report. 1 - 6 - 2 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 3 20908-DM-030111 Employment & Wages Major losses in employment have been sustained nationally, regionally, and locally. In resort economies, such as Vail’s, significant losses have occurred in the construction industry. • Total wage and salary employment in Eagle County as of 2nd Quarter 2010 is 28,000 jobs. This is a 13 percent contraction from its peak in 2008. In 2008, as illustrated by Figure 1, wage and salary positions totaled more than 32,000 jobs. • While construction has lost 2,500 jobs since 2007, approximately 2,500 jobs were gained since 2000 netting out the losses. Although employment levels have returned to their 2000 level, the losses of the construction industry have been netted out by the gains in other industries. Industries with the largest gains since 2000 were: o Health Care and Social Assistance industry added 600 jobs; o Arts, Entertainment, and Recreation added 700 jobs; and o Accommodation and Food Services, though it sustained losses off its 2008 peak, added nearly 700 positions. • From 2000 to 2008, while wage and salary employment increased at an annual rate of 1.7 percent, the number of sole proprietors increased at a rate of 4.4 percent. In Eagle County, sole proprietors account for approximately 23 percent of the total workforce, as illustrated in Figure 2. In 2000, there were approximately 8,700 proprietors, and by 2008, the total had increased to more than 12,200, an increase of more than 40 percent. o Though data will not be available for nearly two years, it is likely that the number of proprietors also contracted from 2008 to 2010. Assuming a uniform 13 percent contraction, the estimated 2010 total of proprietors would still be 23 percent higher than it was in 2000. • Adjusted for inflation, average county wages have fallen 12 percent since 2008 and are 1.7 percent lower than real wages were in 2000.Similar to the wage and salary job trends; overall wages for the County have contracted since 2008 as illustrated by Figure 1. • Future economic trends must be tracked closely. While some data show that the economic recovery has been established in some markets across the country, the trends are not evident in Eagle County at this time. EPS research conducted for higher-priced inventory shows that a correction occurred in mid-2010. This correction may signify the return of higher income buyers and part-time residents, and may signify a return to a normalized Eagle County economy. The Town of Vail should track a range of metrics and measure the rate of recovery and the degree to which the market indicators move into historic ranges, when performance was strong. If the market does not continue to solidify, the Town is advised to proceed with this development slowly and with clearly identified exit strategies. 1 - 6 - 3 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 4 20908-DM-030111 Market Conditions Housing market conditions and trend data come from the regional Multiple Listings Service (MLS). Data have been analyzed from the first quarter 2004 through the fourth quarter 2010. Sales Volume As described previously, the construction industry contracted approximately 50 percent from its peak in 2007. Similarly, the volume of housing sales contracted 48 percent after 2007, as illustrated in Figure 3 and in Table 1. • Sales volume in 2010 was 757, or 54 percent of average annual volume from 2004 to 2008. From 2004 to 2008, average annual activity was 1,412 units. In 2009, volume decreased more than 64 percent to 504 units sold, or 36 percent of previous levels. In 2010, sales volumes have increased most in the Upper Valley, followed by the Mid Valley and Lower Valley respectively. o In 2010, there were 243 sales in the Upper Valley. A majority of the increase in activity was due to increased activity at prices above $600,000. The volume for units priced below $438,000 was 37 units. o In 2010, there were 354 sales in the Mid Valley. A large increase in volume came from the sale of units priced below $438,000. Sales volume at this price point was 93 units. o In 2010, there were 160 sales in the Lower Valley. Most of the activity is due to units priced below $438,000. Volume at this price point was 107 units. Price Trends Sales price trends in Eagle County have fluctuated widely in the past few years. On a per- square-foot basis, average prices peaked in late 2008 in each of the geographies, as illustrated by Figure 4. • Average prices in the Upper Valley are currently $900/sqft. This is a contraction of 34 percent from their 1stquarter 2009 peak to the 1stquarter 2010. Average prices (of attached and detached product) in the 1stquarter 2009 had increased to $1,100/sqft, or 155 percent over their 1st quarter 2004 average of $430/sqft. In 2010, Upper Valley sales have increased by 23 percent above the 1st quarter 2010. • Average prices in the Mid Valley are currently $430/sqft. This is a contraction of 25 percent from their 3rd quarter 2008 peak. In the 3rd quarter 2008, prices had escalated to $574/sqft or nearly 60 percent above the 1st quarter 2004 average of $365/sqft. • Average prices in the Lower Valley are currently $190/sqft. This is a contraction of 26 percent from their 2nd quarter 2008 peak. In the 2nd quarter 2008, average prices had increased 46 percent to $255/sqft over the average of $175/sqft in 2004. 1 - 6 - 4 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 5 20908-DM-030111 Units Priced Under $438,000 Using the conforming loan limit of $417,500 and assuming a five-percent downpayment, EPS assessed the market for units priced at $438,000 or lower, as shown in Figure 5. • Sales volume in 2010 was 237, or 31 percent of the total market. Today’s volume is 54 percent of the average annual volume at this price point for the period 2004 to 2008. During the contraction in 2009, volume dropped to 154 units. o In the Upper Valley, there were 37 sales in 2010 at this price point. This is a decrease from the average 70 units sold per year from 2004 to 2008, but an increase over the 27 units sold during 2009. o In the Mid Valley, there were 93 sales in 2010 at this price point. This is a decrease from the average 199 units sold per year from 2004 to 2008, but an increase over the 51 units sold during 2009. o In the Lower Valley, there were 107 sales in 2010 at this price point. This is a decrease from the average 203 units sold per year from 2004 to 2008, but an increase in the 76 units sold during 2009. • Sales prices per square-foot in 2010 averaged $237 for all geographies at this price point. From 2004 to 2008, average prices per square foot were approximately $262 at this price point. o In the Upper Valley, prices average $385 per square-foot in 2010.This is a decrease from the average prices in previous years. From 2004 to 2008, prices averaged $393, and in 2009, prices averaged $478 on thin volume. o In the Mid Valley, prices average $266 per square-foot in 2010. This is a decrease from the average of $281 from 2004 to 2008 and a decrease from 2009, which was $292 per square-foot. o In the Lower Valley, prices average $186 per square-foot in 2010.This is a decrease from average prices from 2004 to 2008, which were $198 and $203 in 2009. Conclusions • Absorption. EPS believes the most comparable set of sales reflect those in the lowest price point, located in the mid valley. If the Town can capture 10 percent of this sales volume (93 sales per year), it can sell approximately 9 units annually, based on the performance of this submarket in 2010. If the Town can capture 5 percent of all Eagle County sales at this price point and below (237 sales), annual sales rates translate to approximately 12 units. These capture rates will drop when the Town performs a more refined segmentation analysis and narrows the proposed price banding. As the Town refines its development program and proposed pricing, it should further segment these sales records to understand pricing tolerances of the market and the segment which will receive the greatest demand. • Price Points. Recent sales at this price point indicate that most occur in the Mid Valley between $200/sqft and $350/sqft. This accounts for all ranges of products and all ages of structures. The data indicate that these units are relatively old (built in the early 1990’s) and with an average size of approximately 1,200 square feet. It is recognized that the Town 1 - 6 - 5 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 6 20908-DM-030111 could likely build larger product and the corresponding price per square foot will drop. EPS has established a price and size ratio, as depicted in Figure 7, which provides the parameters for pricing relative to square footage. • Competitive Position. Locations up valley will command a premium toward the higher end of this range, as will new product. Both will make the project compelling. Although a deed restriction will negatively impact the potential price point, it will not outweigh the premiums for location and new structures. 1 - 6 - 6 10/23/2012 Figure 1 Wage & Salary Employment Vail Chamonix Market Study Update Figure 2 Total Employment 1 - 6 - 7 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 8 20908-DM-030111 Vail Chamonix Market Study Update 1 - 6 - 8 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 9 20908-DM-030111 Figure 3 Total Sales Volume by Price Category Vail Chamonix Market Study Update 1 - 6 - 9 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 10 20908-DM-030111 Table 1 Sales Statistics by Time Period Vail Chamonix Market Study Update Upswing:Contraction:Stabilization:Upswing:Contraction:Stabilization:Upswing:Contraction:Stabilization: 2004 to 2008200920102004 to 2008200920102004 to 200820092010 Upper Valley Less than $438,000$393$478$385702737856832953 $438,000 to $600,000$480$458$4235113231,2081,2381,356 Greater than $600,000$933 $826 $1,067 187 86 183 2,465 2,541 2,610 Subtotal$735$714$9023081262431,8892,0402,239 ---97%123%---41%79%---108%119% Mid Valley Less than $438,000$281$292$26619951931,1831,2291,208 $438,000 to $600,000$361$304$29711627421,6681,8142,005 Greater than $600,000$566 $504 $516 447 181 219 3,436 3,817 3,837 Subtotal$461$441$4247622593542,5793,0982,929 ---96%92%---34%46%---120%114% Lower Valley Less than $438,000$198$203$160203761071,6081,6971,947 $438,000 to $600,000$225$180$1787719202,4023,0342,947 Greater than $600,000$262 $249 $276 62 24 33 3,414 4,095 4,644 Subtotal$216$209$1863421191602,1122,3942,628 as % of 2004-2008---97%86%---35%47%---113%124% Source: Eagle County MLS; Economic & Planning Systems H:\20908-Vail Chamonix Market Update\Data\[20908-MLS-2011.xlsx]Table 2 Average Prices / SqFtAverage Annual AbsorptionAvera ge Unit Sizes 1 - 6 - 10 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 11 20908-DM-030111 Figure 4 Overall Average Prices per Square-Foot by Geography Vail Chamonix Market Study Update 1 - 6 - 11 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 12 20908-DM-030111 Figure 5 Prices per Square Foot by Geography under $438,000 Vail Chamonix Market Study Update 1 - 6 - 12 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 13 20908-DM-030111 Figure 6 Volume by Unit Type by Geography under $438,000 Vail Chamonix Market Study Update 1 - 6 - 13 10/23/2012 Memorandum February 28, 2011 Chamonix Market Study Update Page 14 20908-DM-030111 Figure 7 Units Sold under $438,000 by Price/SqFt and Size Vail Chamonix Market Study Update 1 - 6 - 14 10/23/2012 Housing Needs Assessment Update 2012 Venturoni Surveys & Research, Inc. Linda Venturoni, President Jim Westkott, Senior Economist and Demographer Economic Council of Eagle County Kathy Chandler-Henry, Director of Research 1 - 7 - 1 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 2 Eagle County Housing Needs Assessment Update 2012 Table of Contents Introduction . . . . . . . . . 5 2007 Housing Needs Assessment: An Overview. . . . . 7 Housing Needs Assessment: 2012 Update . . . . . 8 Housing Needs Summary . . . . . . 9 Explanation of Housing Needs Estimates: Catch-Up Needs . . 10 Explanation of Housing Needs Estimates: Keep-Up Needs . . 12 Nexus and Proportionality: 2012 Update . . . . . 15 Area Median Income . . . . . . . 15 Income Distribution of Eagle County Households . . . 16 Rental Limits and Affordable Housing Prices . . . . 16 Affordability Gap . . . . . . . 17 Level of Service Estimate: the Mitigation Rate . . . 18 Conclusions and Recommendations . . . . . . 21 Appendices . . . . . . . . . 24 The mission of the Eagle County Housing Department is to provide innovative, affordable housing solutions to the working people, elderly and disadvantaged members of the Eagle County community. 1 - 7 - 2 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 3 Eagle County Housing Needs Assessment Update 2012 Index of Tables Table 1. Eagle County Housing Needs, 2007 Table 2. Population, Jobs and Employment 2007 – 2011 Table 3. Cost Burdened Households in Eagle County 2008 – 2010 Table 4. Eagle County Housing Needs, 2011 – 2020 Table 5. Catch-Up Needs Generated by In-Commuting Employees Table 6. Jobs Forecast in Eagle County, 2010 – 2020 Table 7. Estimate of Housing Needed to Fill New Jobs 2011 – 2020 Table 8. Estimate of Housing Needed to Fill Jobs Vacated by Retirees, 2011-2020 Table 9. Area Median Income by Household Size Table 10. Income Distribution by Housing Tenure Table 11. Affordability Gap Table 12. Level of Service Estimates/Mitigation Rate 1 - 7 - 3 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 4 Eagle County Housing Needs Assessment Update 2012 Appendices Housing Data: Table H-1: Estimate of Housing Needed to Fill Jobs Vacated by Retirees, 2011 - 2020 . . . 24 Economic Data: Table E-1: Total Jobs in Eagle County . . . . 27 Table E-2: Personal Income by Component . . . 29 Population Data: Table P-1: Population by Municipality . . . . 31 Table P-2: Population by Age . . . . . 32 Table P-3: Population, Households and Housing Units . . 33 Table P-4: Households by Type . . . . . 34 1 - 7 - 4 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 5 Eagle County Housing Needs Assessment Update 2012 Introduction Eagle County completed a Housing Needs Assessment in 2007, and a Nexus Proportionality study in 2008. The results of those two analyses were used as a basis for its 2009 Housing Guidelines. Economic conditions in the United States, Colorado, and Eagle County have changed drastically since 2007-2008. Eagle County has gone from full employment (under 3%) to a rate of almost 9% unemployment in 2011. Because 2007 was the height of the pre- recession growth period, the 2007 Housing Needs Assessment defined a need for affordable worker housing at its peak in recent years. Calculations in the 2008 Nexus study targeted ownership housing for workforce families earning 140% of Area Median Income (AMI). The 2009 Eagle County Local-Resident Housing Guidelines Section 1-100 begins with this statement of need: Eagle County faces a substantial County-wide gap in the availability of ownership and rental housing that is affordable for local residents. Households are burdened by high housing payments, and employees are forced to commute long distances. Overcrowding is common. Jobs remain unfilled, negatively impacting business operations, and the vast majority of employers believe that the availability of workforce housing is a critical or major problem in Eagle County. Housing problems have long been recognized in Eagle County. Eagle County commissioned housing needs assessment studies, completed in 1990, 1999 and 2007, that demonstrated these needs. During 2011, Eagle County Housing and Planning Department staff met with private and municipal planners to review and discuss the 2009 Housing Guidelines. Participants in those meetings were in agreement that housing guidelines are still appropriate in Eagle County, that housing needs follow economic growth and recession cycles, and that 2012 is an appropriate time to review, simplify, and possibly modify the guidelines. The purpose of this update is to examine the assumptions made in 2007 and 2008, update the data for current conditions, and make recommendations for possible modifications to the 2009 Housing Guidelines. While traditional needs assessments rely extensively on survey data, which is expensive and time-consuming to collect, this update provides recommendations based on data 1 - 7 - 5 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 6 that is generated or updated annually. Data from public sources including the US Census, State Demographer, Comprehensive Housing Affordability Strategy (CHAS), Bureau of Economic Analysis, Labor Market Information, Economic Council of Eagle County, Eagle County Clerk and Recorder, Eagle County Assessor, and the American Community Survey are used to populate tables. This update was developed to allow timely modifications to the assessment of housing needs, triggered by changes in metrics based on these publically-accessible data sources. The current housing situation in Eagle County is described through demographics, workforce data, and housing units. Current and projected housing gaps by AMI level are identified. A major focus of this analysis is “cost-burdened” households (those paying more than 30% of their income for housing costs). Rental and ownership housing are both included in the analysis. The analysis is completed at the County level, inclusive of municipalities and unincorporated County areas. The report is organized into four sections: an overview of the 2007 Housing Needs Assessment; the 2012 update to the Needs Assessment; an explanation of and update to the 2008 Nexus/Proportionality Study; and a final section that includes recommendations for consideration when revising Housing Guidelines. Data sources are footnoted throughout the report. Additional data tables are provided in the Appendices. The update is intended to be an objective analysis of data that can be used for policy recommendations. This report was researched and prepared as a joint project between Venturoni Surveys & Research, Inc., and the Economic Council of Eagle County. It is presented to the Housing Department of Eagle County for use in development and potential revisions of housing policies and guidelines. 1 - 7 - 6 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 7 2007 Housing Needs Assessment: An Overview The 2007 Needs Assessment, by estimating a housing need of over 12,500 units, established a strong urgency for a wide range of affordable housing initiatives, including the 2009 Guidelines for new development. In addition, a “Nexus/Proportionality Analysis for Commercial Development” was used to create a mitigation formula of units to be built, or fees to be paid in lieu of construction.1 The 2007 report estimated a total number of housing units needed by employees in Eagle County, both to fill existing gaps in the market at the time (“catch-up” needs) and to accommodate future needs (“keep-up” needs). These future needs were based on economic and population growth projections through 2015. “Catch-up” needs included demand from unfilled jobs in 2007, workers commuting to Eagle County from other counties, and units needed to address overcrowding. “Keep-up” needs included housing demand from job growth and from replacement of retirees. The estimates of each of these components of the total needed units are shown in Table 1 below. Table 1. Eagle County Housing Needs, 20072 Type of Need Catch - Up Needs: 2007 Demand from Unfilled Jobs in 2007 1,420 In - Commuters 2,469 Units Needed to Address Overcrowding 557 Total Catch - Up Needs 4,446 Keep - Up Needs: 2015 Housing Demand from Job Growth 4,776 Demand from Replacement of Retirees 3,284 Total Keep - Up Needs 8,060 Total Housing Needs 12,506 1 See “Eagle County Nexus / Proportionality Analysis for Commercial Development / Workforce Housing Linkage”, prepared by RRC Associates, Inc./Rees Consulting, Inc., January 2008. 2 Eagle County Housing Needs Assessment, 2007 prepared by RRC Associates, Inc./Rees Consulting, Inc., December 2007, pp. 7 – 8, and 80 – 85. 1 - 7 - 7 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 8 Housing Needs Assessment: 2012 Update Since the peak housing demand generated by the workforce in 2007, the number of jobs has dropped dramatically (a decline of 12% from 2007 to 2011). Rather counter- intuitively, the population continued to increase through 2010, albeit quite slowly compared to recent decades. Demographers3 believe that this divergence in the number of jobs and people has been accompanied by a considerable drop in labor force participation rates, as discouraged workers – those not seeking work – have not left the county. The loss in jobs of 12% is matched with a drop in the civilian labor force of only 6% over the same time period. Total population in the County grew about 5.1% from 2007 to 2011. Table 2. Population, Jobs and Employment 2007 - 20114 YEAR County Population Jobs Civilian Labor Force Employment Unemployment Unemployment Rate 2007 49,284 41,727 31,161 30,267 894 2.9% 2008 50,301 40,449 31,851 30,721 1,130 3.5% 2009 51,520 37,230 30,666 28,269 2,397 7.8% 2010 52,057 35,750 29,724 26,897 2,827 9.5% 2011 51,777 36,605 29,425 26,884 2,541 8.6% In spite of the slow population growth in the County, the drop in jobs has caused a corresponding drop in the need for employee housing. It is reasonable to assume that the demand for unfilled jobs is much less (there are more people, and fewer jobs). In addition, because of the dramatic decline in the county economy and persistent problems in the national and international economies, short- and middle- term expectations of job growth are significantly lower. Along with the drop in the number of units needed for employees in the County (caused by the recession) is a decline in the household income of workers and non- workers. This drop in income has made it difficult for many families to pay for housing. Recent data released by the U. S. Census Bureau show that approximately 45% of all households, (43.8% of owners and 46.5% of renters) in the county pay more than 30% of their income for housing-related expenses (see Table 3, below). 3 Staff, State Demography Office of Colorado Department of Local Affairs. 4 State Demography Office and Labor Market Information. 1 - 7 - 8 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 9 Table 3. Cost Burdened Households in Eagle County 2008 - 20105 The estimate of the need for affordable housing (see Table 4, below) does not include any estimate of the number of units needed to overcome the problems of households that are “cost-burdened”. However, this is probably the largest and most evident part of the affordable housing problem in Eagle County. The number of cost-burdened households is high, and affects people who are already living in the county. This objective measure of cost-burdened households is provided through the American Community Survey on a three-year rolling basis, and is a good marker of success or distress in the affordable workforce housing market. Housing Needs Summary To provide a current estimate of “catch-up” and “keep-up” housing needed in Eagle County, a number of factors were considered. Table 4, below, shows the updated estimate of the components included in the 2007 Needs Assessment. The methodologies for preparing these new estimates are contained in the following paragraphs explaining Tables 5 – 8. The cumulative housing needs in 2015 are estimated at 4,572, which is only 37% of the need for 12,506 units predicted in 2007. By 2020, approximately 2,768additional housing units(for a ten-year total of 7,340)will be needed according to current projections. American Community Survey, 2012. 50.7% 19.6% 46.5% Owners with Mortgage Owners without mortgage Renters 1 - 7 - 9 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 10 Table 4. Eagle County Housing Needs, 2011 – 2020 Type of Need 2007 Est. 2011 Est. 2015 Est. 2020 Est. Catch - Up Needs Demand from Unfilled Jobs in 2007 1,420 200 In - Commuters 2,469 1,708 Units Needed to Address Overcrowding 557 600 Total Catch - Up Needs 4,446 2,508 Keep - Up Needs Housing Demand from Job Growth 4,776 994 1,400 Demand from Replacement of Retirees 3,284 1.070 1,368 Total Keep - Up Needs 8,060 2,064 2,768 Total Housing Needs 12,506 4,572 (2011+2015) 7,340 (2015+2020) Explanation of Housing Needs Estimates: Catch-Up Needs Demand from Unfilled Jobs In 2007, researchers estimated that Eagle County needed 1,420 housing units to attract employees to fill vacant positions. This was based on an employer survey regarding unfilled jobs, estimated at 4,089, and a combination of assumptions (including that of a tight labor market) “concerning the number of unfilled jobs and the number of employees living in Eagle County and available for work”6. These factors have all changed now, considerably lowering this need: the number of unfilled jobs is much lower and the labor market is less tight. The annual Workforce Survey conducted by the Economic Council7 indicates that while workforce housing is still a need for area employers, it is much less of an issue than in 2007. For this update, it is assumed that this number of housing units needed for unfilled jobs is quite small (200 units). In-Commuters The 2007 Assessment also estimated a catch-up need of housing for in-commuters. This was based on an estimate by the State Demography Office/Department of Local Affairs (SDO/DOLA) of the percentage of workers who were in-commuters (18.3%). Eagle County Housing Needs Assessment, 2007, p. 80. Economic Council of Eagle County, 2011-2012 Workforce Survey. 1 - 7 - 10 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 11 An in-commuter survey indicated that 70% of these workers would prefer to live in Eagle County. The 2011 SDO/DOLA updated its estimate of the percent of the workforce that are in- commuters to 12%. However, there is no new estimate of the percent of these who would move into the county if affordable housing were available to them. Using the same percentage as the 2007 survey result, the number of employees who would move into the county is 2,562 and the number of housing units needed for them would be 1,708 (see Table 5). Table 5. Catch-Up Needs Generated by In-Commuting Employees 2007 2011 Total Jobs 41,727 36,605 Average Jobs per Employee 1.2 1.2 Total Employees 34,773 30,504 In-Commuters 6,351 3,661 % of Total Employees 18.3% 12.0% # who would move to Eagle County (70%) 4,446 2,562 Employees per household 1.8 1.5 TOTAL HOUSING UNITS NEEDED 2,469 1,708 Units Needed to Address Overcrowding The 2007 Household Survey found that 9.8% of Eagle County households lived in overcrowded conditions (defined as having more than 1.5 residents per bedroom). This equated to 1,855 households. Assuming that “an increase in the supply of workforce housing equal to about 30% of the number of overcrowded units will largely address overcrowding to the extent practical”8, the 2007 report estimated that 557 units were needed at that time for this purpose. Applying the same percentage to the total number of occupied housing units (households) in 2011 yields an estimate of 1,889 overcrowded units. Multiplying this number by 30% produces an estimate of 567 units needed to address the problem of overcrowding. However, given the effects of the recession, it is likely that the percentage of occupied overcrowded housing units is currently somewhat higher. Using an estimate of just under 32% produces a total of 600 units needed to address overcrowding in 2011. Eagle County Housing Needs Assessment, 2007, p. 83. 1 - 7 - 11 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 12 Explanation of Housing Needs Estimates: Keep-Up Needs Housing Demand from Job Growth The 2007 Needs Assessment used a jobs forecasts developed by SDO/DOLA. This forecast predicted a net gain of 4,400 jobs from 2007 to 2010 and an additional 10,316 jobs from 2010 to 2015. Because of the recession, the increase of 4,400 jobs never materialized; the number of jobs actually declined by almost 6,000 (5,977) from 2007 to 2010. Furthermore, the forecasts of increases from 2010 to 2015 and beyond are significantly reduced. Current SDO/DOLA forecasts show job growth occurring at average annual growth rates of 4.0% to 2013, 3.5% to 2015, and 3.0% to 2020. Even these forecasts may be too high, and revisions later in 2012 will show lower numbers. The forecasts provided below in Table 6 provide a basis for an initial set of estimates of housing demand from job growth. The assumptions of this revised forecast are that job growth in the national economy will continue to grow at a slow pace (0.8%) through 2013 and then at the rate of 1.5% to 2015. During this period, Eagle County’s annual average rate of job growth can be expected to be somewhat higher, 1.5% through 2013 and 2.5% from 2013 to 2015. In the five years after that, 2015 – 2020, annual average job increases are likely to be higher, in the range of 3% - 4% or more. The slow job growth rate in the national economy is the result of both national and international woes, e.g., the U. S. government debt, and the Eurozone bailouts of struggling national economies (Greece, Portugal, Spain). The stronger expected growth in Eagle County jobs is mainly because of strong increases in the number of retirees, particularly in the Colorado metropolitan Front Range, but also in other parts of western United States. These retiree households in one way or another – as day or destination tourists, as second home occupants, or as resident retirees – will make greater use of the scenic and recreational resources of the county. Their presence, in turn, will create greater needs for tourism-related services and household and health care. 1 - 7 - 12 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 13 Table 6. Jobs Forecast in Eagle County, 2011 - 2020 2011 2013 2015 2020 Eagle County Number of Jobs 36,605 37,711 39,620 42,100 Average Annual % Change 1.5% 2.5% 3.9% United State Number of Jobs (x 1,000) 131,360 134,500 140,000 147,000 Average Annual % Change 1.2% 2.0% 1.0% Applying this revised jobs forecast to the 2007 Needs Assessment template for estimating housing needs to fill new jobs results in generated housing demands of 610 in 2013, 1,000 in 2015, and 1,400 in 2020 (see Table 7). Table 7. Estimate of Housing Needed to Fill New Jobs 2011 - 2020 2011 2013 2015 2020 Total Forecasted Jobs 36,605 37,400 39,300 42,100 Increase in Jobs over Prior Period 1,100 1,900 2,800 Jobs per Employed Person 1.2 1.2 1.2 New Employed Persons Needed 920 1,590 2,335 Employed Persons/Housing Unit 1.5 1.6 1.7 Housing Demand Generated (Units) 610 1,000 1,400 Housing Demand from Replacement of Retirees In this update, the demand for affordable housing from the workers required to replace retiring members of the workforce is calculated in a different way than in the 2007 Needs Assessment. In that 2007 report, it was estimated that 40%, or 5,911, of the workers between 57 and 64 in 2007 would retire by 2015. Assuming the number of employees (employed persons) per household was 1.8, this resulted in a housing demand of 3,284 units. In this update, the number of retirees by five-year age groups over 50 is estimated on the basis of declines in their labor force participation (defined as retirement rates) during the periods 2011 - 2015 and 2016 – 2020. These new estimates of housing demand from the replacement of retirees – 1,070 and 1,368 1 - 7 - 13 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 14 respectively – are much lower than in the 2007 Needs Assessment report (for a full explanation of this chart, see Appendix I). Table 8. Estimate of Housing Needed to Fill Jobs Vacated by Retirees, 2011 - 20209 2011 - 2015 AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 3,711 0.81 3,021 0.07 216 0.982 213 1.6 133 55 – 59 3,081 0.76 2,328 0.23 540 0.973 525 1.5 350 60 – 64 2,519 0.58 1,458 0.40 576 0.960 553 1.4 395 65 – 69 1,533 0.35 538 0.24 127 0.936 119 1.3 91 70 – 74 738 0.27 199 0.42 84 0.906 76 1.2 63 75 – 79 408 0.15 63 0.52 33 0.854 28 1.1 25 80 – 84 201 0.07 15 1.00 15 0.749 11 1.0 11 TOTAL 12,191 7,621 1,591 1,525 1,070 2016 - 2020 AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 4,071 0.82 3,343 0.06 206 0.983 202 1.6 127 55 – 59 3,800 0.77 2,930 0.20 583 0.974 568 1.5 379 60 – 64 3,107 0.62 1,919 0.36 682 0.960 655 1.4 468 65 – 69 2,513 0.40 996 0.27 265 0.939 249 1.3 192 70 – 74 1,510 0.29 439 0.40 174 0.905 157 1.2 131 75 – 79 710 0.18 125 0.48 60 0.849 51 1.1 46 80 – 84 378 0.09 33 1.00 33 0.755 25 1.0 25 TOTAL 16,089 9,785 2,003 1,908 1,368 (Note: LFPR = Labor Force Participation Rate) 9 Source of data on population and labor force participation rates: State Demography Office, Colorado Department of Local Government. 1 - 7 - 14 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 15 Nexus and Proportionality: 2012 Update In addition to the Housing Needs Assessment completed in 2007, the County utilized a “Nexus and Proportionality” study from 2008 to inform the Housing Guidelines. Although not technically part of this Housing Needs Assessment update, several tables in the Nexus report are key to the County’s Housing Guidelines. The following tables are explained and revised here using current data: • Area Median Income by Household Size • Income Distribution of Eagle County Households • Rental Limits and Affordable Housing Prices • The Affordability Gap • Level of Service Estimates/Mitigation Rate Area Median Income Federal, state and local housing programs are typically based on an anchor to Area Median Income, or AMI. AMI is calculated annually by the US Department of Housing and Urban Development. Eagle County figures for 2012 are shown below, along with a comparison to 2007 for 100% AMI levels. Table 9. Area Median Income by Household Size, 201210 Household Size AMI Level 1-person 2 persons 3 persons 4 persons 5 persons 50% AMI $29,700 $33,925 $38,175 $42,400 $45,800 60% AMI $35,640 $40,710 $45,810 $50,880 $54,960 80% AMI $47,520 $54,280 $61,080 $67,840 $73,280 100% AMI $59,400 $67,850 $76,350 $84,800 $91,600 120% AMI $71,280 $81,420 $91,620 $101,760 $109,920 140% AMI $83,160 $94,990 $106,890 $118,720 $128,240 100% AMI Comparison, 2007 and 2012 AMI Level 1-person 2 persons 3 persons 4 persons 5 persons 100% - 2007 $56,800 $64,900 $73,000 $81,100 $87,600 100% - 2012 $59,400 $67,850 $76,350 $84,800 $91,600 Change 4.6% 4.5% 4.6% 4.6% 4.6% 10 Housing and Urban Development 1 - 7 - 15 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 16 Income Distribution of Eagle County Households Household income distribution by tenure (renter or owner) was calculated using 2005 – 2009 data from the Comprehensive Housing Affordability Strategy (CHAS) data. This data is available annually (although there is a lag) and can be used to update housing strategies. The table below shows that 68% of renters and 36% of owners (a total of 47% of all household types) earn less than 100% AMI. Table 10. Eagle County Income Distribution by Housing Tenure, 2005 - 200911 Renters Owners TOTAL AMI Level # % # % # % 30% AMI 1,395 24.69% 320 2.96% 1,715 10.41% Between 30% and 50% 745 13.19% 930 8.59% 1,675 10.17% Between 50% and 80% 920 16.28% 1,300 12.01% 2,220 13.47% Between 80% and 100% 780 13.81% 1,375 12.70% 2,155 13.08% 100% AMI 1,810 32.04% 6,900 63.74% 8,710 52.87% TOTAL 5,650 100.00% 10,825 100.00% 16,475 100.00% Rental Limits and Affordable Housing Prices The following table can be used to help determine the appropriate AMI levels to target through housing policies. Affordable housing prices were calculated assuming a 4% interest rate, a fixed mortgage amortized over 30 years, 10% down payment, and HOA/property taxes/insurance at 20% of the mortgage payment. Affordable rent is calculated at 30% of monthly income. 11 CHAS Data, 2005 – 2009 Analysis 1 - 7 - 16 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 17 Table 11. HUD Median Income/Rental Rate Guidelines12 Median Income Information County Eagle AMI $84,800 % of Median Income for Area No. of Persons Occ. 200% 140% 120% 100% 80% 50% 30% 1 $118,800 $83,160 $71,280 $59,400 $47,520 $29,700 $17,820 2 $135,700 $94,990 $81,420 $67,850 $54,280 $33,925 $20,355 3 $152,700 $106,890 $91,620 $76,350 $61,080 $38,175 $22,905 4 $169,600 $118,720 $101,760 $84,800 $67,840 $42,400 $25,440 5 $183,200 $128,240 $109,920 $91,600 $73,280 $45,800 $27,480 6 $196,800 $137,760 $118,080 $98,400 $78,720 $49,200 $29,520 Rent Limits Studio 1 $2,970 $2,079 $1,782 $1,485 $1,188 $743 $446 1 bdrm 1.5 $3,181 $2,227 $1,909 $1,591 $1,273 $795 $477 2 $3,393 $2,375 $2,036 $1,696 $1,357 $848 $509 2 bdrm 3 $3,818 $2,672 $2,291 $1,909 $1,527 $954 $573 3 bdrm 4 $4,240 $2,968 $2,544 $2,120 $1,696 $1,060 $636 4.5 $4,410 $3,087 $2,646 $2,205 $1,764 $1,103 $662 4 bdrm 5 $4,580 $3,206 $2,748 $2,290 $1,832 $1,145 $687 6 $4,920 $3,444 $2,952 $2,460 $1,968 $1,230 $738 Ownership Housing 1 Studio 1 $592,000 $415,000 $355,000 $296,000 $237,000 $148,000 $89,000 1BR 2 $632,000 $442,000 $379,000 $316,000 $253,000 $158,000 $95,000 2BR 3 $711,000 $498,000 $426,000 $355,000 $284,000 $178,000 $107,000 3BR 4 $789,000 $553,000 $474,000 $395,000 $316,000 $197,000 $118,000 4.5 $821,000 $575,000 $493,000 $411,000 $328,000 $205,000 $123,000 5 $853,000 $597,000 $512,000 $426,000 $341,000 $213,000 $128,000 6 $916,000 $641,000 $550,000 $458,000 $366,000 $229,000 $137,000 Affordability Gap The figures in Table 11, above, can be used to calculate the affordability gap for different AMI levels. According to the 2008 Nexus/Proportionality Analysis, “The difference between prevailing market prices and what targeted low-income households can afford to pay for housing is the gap that must be taken into consideration when determining the amount of fee that could be paid in lieu of producing units under certain circumstances.” 13 12Analysis and calculations using HUD AMI data 13Nexus/Proportionality Analysis for Commercial Development/Workforce Housing Linkage, January 2008, RRC Associates, Inc., Rees Consulting, Inc. 1 - 7 - 17 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 18 Table 11. Affordability Gap14 2007 100% AMI 2012 100% AMI 2012 120% AMI 2012 140% AMI Target Income Point (3 person HH) $73,000 $76,350 $91,600 $106,890 Affordable Monthly Housing Pmt. $1,825 $1,909 $2,290 $2,672 Property Taxes/ Insurance/HOA (20%) $365 $382 $458 $534 Mortgage Payment $1,460 $1,527 $1,832 $2,138 Max Mortgage Amount $231,000 $319,500 $383,400 $448,200 Affordable Purchase Price $243,150 $355,000 $426,000 $498,000 Average Sq. Ft. of Units 1,000 1,000 1,000 1,000 Median Price/Sq. Ft. $385 $396 $396 $396 Market Cost/Unit $385,000 $396,000 $396,000 $396,000 Affordability Gap $141,850 $41,000 -$30,000 -$102,000 The affordability gap, plus any desired administrative fees, can be used to assess a payment in lieu of constructing new units. The table above shows that the affordability gap has lessened considerably since 2007, due in large part to lower mortgage interest rates. In 2007, a typical mortgage incurred 7% interest; the 2012 update was calculated using a 4% rate. Households earning more than 100% AMI do not have an affordability gap; it is appropriate in the post-2008 economy to target Eagle County housing guidelines to those households earning 100% AMI and below. Level of Service Estimates: the Mitigation Rate The 2008 Nexus/Proportionality Analysis calculated a 55% mitigation rate, based on the belief that “55% of all households generated by jobs in Eagle County live in the county and have incomes equal to or less than 140% AMI.” (page 3) This 55% was a target service level to address through housing guidelines and policies. Using the same methodology in 2012 produces a mitigation rate of 41%. The percentage of commuters was revised to include only those commuters likely to want to move to Eagle County. Comparison pie charts are shown below: 14Analysis and calculations using HUD AMI data and Eagle County real estate sales data. 1 - 7 - 18 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 19 Table 12. Level of Service Estimates Because the methodology for calculating mitigation rates, above, makes several unverifiable assumptions (about commuters, and about household distribution rates), and does not take into account potential differences between renters and owners, the authors of this update recommend using cost-burdened percentages to determine level of service estimates and proposed mitigation rates. Households with Incomes > 140% AMI 27% In-Commuters 18% Households with Incomes 140% AMI 55% Level of Service Estimate 2008 Households with Incomes > 100% AMI 47% In-Commuters 12% Households with Incomes 100% AMI 41% Level of Service Estimate 2012 1 - 7 - 19 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 20 From Table 3 on page 9 (repeated below), we see that 45% of Eagle County’s households are cost-burdened (43.8% of all owners and 46.5% of renters). Using the cost-burdened percentages generated through analysis of CHAS (Colorado Housing Affordability Strategy) data produces a result consistent with the 2008 study methodology, but provides a more easily replicable and defensible source of data. Table 3. Cost Burdened Households in Eagle County 2008 - 201015 American Community Survey, 2012. 50.7% 19.6% 46.5% Owners with Mortgage Owners without mortgage Renters 1 - 7 - 20 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 21 Conclusions and Recommendations This update to the Housing Needs Assessment is intended to be factual and supported by accessible data sources. A few conclusions and recommendations are included in this final section, for use in informing future housing policies in Eagle County. Retiree Housing and Its Impact on Workforce Housing Table 8 of this report (page 14) shows the number of new workers needed to replace current Eagle County workers who retire. As current workers retire, their housing units change in status from units that house workers to units that do not house workers (assuming the retirees stay in their homes). The new employees who fill the jobs vacated by retired workers create a demand for new housing units. If retired workers move to retirement housing options, their former housing units can house future workers and remain in the workforce housing status. It is important to note that the retiree numbers in the report do not include second homeowners or amenity-seeking retirement migrants who may retire to Eagle County in the future. Both of these in-migration trends have been well documented and show up in the increase in the senior population from 2000-2010, and the projected higher increases in the future 65+ population. Given these established trends, we recommend that the County Housing Department pursue the development of appropriate senior retirement housing options that can provide for the future housing and health care needs of the elderly population. These retirement housing options would free up existing housing units that can be used for workforce housing needs. Focus on Rental Housing While the 2007 Housing Needs Assessment, the 2008 Nexus/Proportionality Study, and the 2009 Housing Guidelines focused most of the attention on ownership housing, it is clear from a review of the updated data that inclusion on rental housing is appropriate in 2012. The most recent data shows that 46.5% of all renters are cost burdened (paying more than 30% of their income for housing). It is harder to qualify for a mortgage than in the past due to a tighter credit market, and new employees moving to the County may be reluctant to purchase because they fear the housing market has not yet “hit bottom,” and/or they may be uncertain about their long-term employment status. For these reasons, we recommend that the County Housing Department consider rental housing in revisions to the Housing Guidelines. 1 - 7 - 21 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 22 Three Major Findings Three major changes to the recommendations of the 2007 and 2008 studies emerged in this update: 1. Shift from 140% AMI to 100% AMI. While the 2007 study (and subsequent guidelines) recommended focusing on households earning 140% of AMI, this update shows that the affordability gap emerges at 100% AMI (see Table 11, page 18). Sixty-eight percent of renter households (3,842 households) earn less than 100% AMI (see Table 10, page 16); 36% of owner households (3,572) fall into this AMI category. 2. Shift from 55% to 45% Mitigation Rate. The 2008 Nexus/Proportionality study recommended a mitigation rate of 55%, based on the belief that “55% of all households generated by jobs in Eagle County live in the county and have incomes equal to or less than 140% AMI.” (page 3) Using what we believe is a more solid methodology for targeting housing policies (cost-burdened households), we recommend a 45% mitigation rate. 3. Reduction in Number of Housing Units Needed. The 2007 Housing Needs Assessment calculated a need for 12,506 housing units, both to catch-up with unmet demand and to meet future needs. Table 4 on page 10 and the subsequent explanatory paragraphs and tables reduce this need to 2,472 by 2015 and 7,340 by 2020 (cumulative). We feel that this is a reliable estimate based on current demographics, job forecasts, and trends. Future Updates to the Housing Needs Assessment The researchers designed this study to be replicated in the future, using current data to update tables and calculations. A focus on cost-burdened households through new American Community Survey/CHAS data allows a way to assess the success of future housing policies (a reduction in the 1 - 7 - 22 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 23 number of cost-burdened households could indicate success). This data can be monitored annually. The 2007 Needs Assessment included four different surveys: household, in-commuting employees, employer, and realtor/property manager. Collecting data through surveys allows a broader and more qualitative approach to housing planning and policies, and may allow analysis at smaller geographic levels. However, collecting data through surveys is time-consuming and expensive, and may not be justified given the rich data available through public sources. Future housing needs assessments will need to weigh the costs/benefits of conducting surveys. The Cyclical Nature of Eagle County’s Economy While the housing affordability gap is much smaller than in 2009, it may increase again with cyclical economic swings. Using the analysis techniques provided in this report provides a way to readily update housing guidelines and policies based on current conditions. 1 - 7 - 23 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 24 APPENDIX H-1 Estimate of Housing Needed to Fill Jobs Vacated by Retirees, 2011 - 2020 In this update of the 2007 Housing Needs Assessment, the number of housing units needed for the “workforce required to replace members who retire” is estimated in a new way, based on the decline in labor force participation rates by five-year age groups. The following describes how these new calculations are made. Referring to the very first row on the table, the total population ages 50 to 54 in 2011 is 3,711. With a labor force participation rate (LFPR) of 0.81, then 3,021 of this age group are in the workforce. Four years later, in 2015, the LFPR of this cohort is 0.76, so the decline in LFPR is 0.81 – 0.76 or 0.05 which when divided by the beginning rate of 0.81 means that 0.05 / 0.81 or 7% of this cohort have retired or that its “retirement rate” is 0.07. Multiplying 0.07 times 3,021 (those in the workforce in 2011) equals 216, presumably the number of workers who retired during the five-year period. However, the five-year survival rate of this group is 0.982, which means that on average, only 213 of the 216 survived (3 died) by 2015. Finally, assuming that the number of workers or retirees per household for this age group is 1.6, this leads to the result that the number of housing units needed for the replacement workers is 133. These calculations are performed for each five-year age group from 50 – 84 and for two five-year time periods, 2011 – 2015 and 2016 – 2020. The total number of units for each period is presented in bold in the lower right-hand corner of each panel. The calculations were actually performed by gender – shown on the two lower panels – with the total (male and female) calculated as the sum (or the average rate) of the gender- specific results. 1 - 7 - 24 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 25 Appendix H-1: Estimate of Housing Needed to Fill Jobs Vacated by Retirees, 2011 - 202016 2011 – 2015: All Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 3,711 0.81 3,021 0.07 216 0.982 213 1.6 133 55 – 59 3,081 0.76 2,328 0.23 540 0.973 525 1.5 350 60 – 64 2,519 0.58 1,458 0.40 576 0.960 553 1.4 395 65 – 69 1,533 0.35 538 0.24 127 0.936 119 1.3 91 70 – 74 738 0.27 199 0.42 84 0.906 76 1.2 63 75 – 79 408 0.15 63 0.52 33 0.854 28 1.1 25 80 – 84 201 0.07 15 1.00 15 0.749 11 1.0 11 TOTAL 12,191 7,621 1,591 1,525 1,070 2011 – 2015: Male Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 1,977 0.856 1,692 0.10 166 0.981 163 1.6 102 55 – 59 1,651 0.772 1,275 0.19 239 0.968 232 1.5 154 60 – 64 1,301 0.627 816 0.35 289 0.957 276 1.4 197 65 – 69 804 0.405 326 0.28 91 0.929 84 1.3 65 70 – 74 403 0.292 118 0.39 46 0.879 40 1.2 33 75 – 79 207 0.179 37 0.41 15 0.817 12 1.1 11 80 – 84 106 0.106 11 1.00 11 0.730 8 1.0 8 TOTAL 6,449 0.774 4,274 857 816 571 2011 – 2015: Female Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 1,734 0.766 1,328 0.04 50 0.987 50 1.6 31 55 – 59 1,430 0.737 1,054 0.28 300 0.977 293 1.5 196 60 – 64 1,218 0.527 642 0.45 287 0.963 277 1.4 198 65 – 69 729 0.291 212 0.17 36 0.956 34 1.3 26 70 – 74 335 0.242 81 0.48 39 0.937 36 1.2 30 75 – 79 201 0.127 26 0.69 17 0.885 15 1.1 14 80 – 84 95 0.040 4 1.00 4 0.805 3 1.0 3 TOTAL 5,742 0.700 3,347 734 709 498 16 Source of data on population and labor force participation rates: State Demography Office, Colorado Department of Local Government. 1 - 7 - 25 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 26 2016 – 2020: All Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 4,071 0.82 3,343 0.06 206 0.983 202 1.6 127 55 – 59 3,800 0.77 2,930 0.20 583 0.974 568 1.5 379 60 – 64 3,107 0.62 1,919 0.36 682 0.960 655 1.4 468 65 – 69 2,513 0.40 996 0.27 265 0.939 249 1.3 192 70 – 74 1,510 0.29 439 0.40 174 0.905 157 1.2 131 75 – 79 710 0.18 125 0.48 60 0.849 51 1.1 46 80 – 84 378 0.09 33 1.00 33 0.755 25 1.0 25 TOTAL 16,089 9,785 2,003 1,908 1,370 2016 – 2020: Male Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 2,093 0.86 1,800 0.08 147 0.982 144 1.6 90 55 – 59 2,012 0.79 1,589 0.16 262 0.969 253 1.5 169 60 – 64 1,646 0.66 1,086 0.32 346 0.957 331 1.4 236 65 – 69 1,285 0.45 578 0.29 167 0.928 155 1.3 119 70 – 74 770 0.32 246 0.38 92 0.876 81 1.2 67 75 – 79 367 0.20 73 0.40 29 0.807 24 1.1 22 80 – 84 175 0.12 21 1.00 21 0.717 15 1.0 15 TOTAL 8,348 0.76 5,395 1,064 1,003 720 2016 – 2020: Female Retirees AGE GROUP Pop. LFPR In Wrkforce Retire. Rate New Ret’d 5-Yr Surv. Rate Surv. Retired Ret’d /Hhld Needed Housing 50 - 54 1,978 0.78 1,543 0.04 59 0.987 59 1.6 37 55 – 59 1,788 0.75 1,341 0.24 322 0.978 315 1.5 210 60 – 64 1,461 0.57 833 0.40 336 0.964 324 1.4 231 65 – 69 1,228 0.34 418 0.24 98 0.956 94 1.3 72 70 – 74 740 0.26 192 0.42 81 0.937 76 1.2 64 75 – 79 343 0.15 51 0.60 31 0.889 27 1.1 25 80 – 84 203 0.06 12 1.00 12 0.820 10 1.0 10 TOTAL 7,741 0.69 4,390 940 905 650 1 - 7 - 26 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 27 APPENDICES E-1 and E-2 Tables E-1 and E-2 provide some basic data on the Eagle County economy from 2002 through 2010. Table E-1 presents total jobs – both wage and salary and self-employed and proprietors – by industrial sector. Table E-2 provides information on personal income by component. While personal income has largely consisted of earnings by place of work (82% in 2002 and 75% in 2010) it also includes monies earned outside the county (residency adjustment), dividends, interest and rent, and personal transfer receipts from government (retirement and disability, medical, income maintenance, unemployment and veteran benefits) and from non-profits. The data on jobs shows growth from 2002 to 2007, and then declines from 2007 to 2010 as the result of the recession. The biggest growth in the first period and then decline in the second is in construction and construction-related fields, e.g., professional services, administrative and waste (includes temporary workers), some retail and, indirectly, real estate. The second general area of growth and decline is in tourism- related industries: accommodation and food services, retail trade, and other services (laundry and personal services). The data on personal income show strong growth in earnings by place of work during the periods 2002 – 2005 and 2005 – 2007 (6.5% and 10.0% per year, respectively) followed by a - 5.4% per year from 2007 – 2010. Dividends, interest and rent also grew strongly during the first two periods (10.1% and 13.6%) before declining a small amount (- 1.8%) during the latter period. Personal transfer receipts, which grew at 6.5% and 8.5% per year from 2002 – 2007, jumped up to 21.3% per year from 2007 to 2010. Proprietor’s income dropped - 4.2% per year from 2005 to 2007 (as earnings remained strong) but increased with the recession (2007 to 2010) as workers offset their earnings losses with other sources of income. 1 - 7 - 27 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 28 APPENDIX E-1: Estimated Total Jobs by Industry, Eagle County, 2002 – 2010 2002 2005 2007 2010 2002 - 2007 2007 - 2010 Total Jobs 33,851 36,529 40,163 35,662 6,312 -4,501 Agriculture 123 191 186 203 63 17 Mining 7 11 14 17 7 3 Utilities 51 54 68 63 17 -5 Construction 5,356 5,316 6,329 3,900 973 -2,429 Construction of buildings 1,300 1,241 1,552 944 252 -608 Heavy construction 328 270 254 112 -74 -142 Special trade contractors 3,728 3,805 4,523 2,843 795 -1,680 Manufacturing 383 450 442 312 59 -130 Wholesale trade 439 482 524 528 85 4 Retail Trade 3,464 3,557 3,815 3,433 351 -382 Transportation and warehousing 555 581 653 536 98 -117 Information 328 377 512 399 184 -113 Finance activities 541 773 826 775 285 -51 Real estate 2,817 3,032 3,159 2,963 342 -196 Professional & business services 1,956 2,248 2,472 2,077 516 -395 Management of companies 215 154 153 157 -62 4 Admin and waste 1,600 1,897 2,197 1,941 597 -256 Education 155 287 278 255 123 -23 Health Services 1,547 1,675 2,028 2,023 481 -5 Arts 3,200 3,577 3,632 3,931 432 299 Accommodation and food 6,214 6,974 7,155 6,562 941 -593 Accommodation 2,478 2,898 2,852 2,683 374 -169 Food services, drinking places 3,736 4,076 4,303 3,878 567 -425 Other services, exc. govt. 2,160 2,208 2,836 2,460 676 -376 Government 2,740 2,686 2,884 3,128 144 244 Federal and state 363 352 353 383 -10 30 Local government 2,377 2,334 2,531 2,746 154 215 Total Jobs 33,851 36,529 40,163 35,662 6,312 -4,501 1 - 7 - 28 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 29 APPENDIX E-2: Personal Income of Residents by Components, Eagle County, 2002 – 2010, part 1 (In Millions of Dollars) Component 2002 2005 2007 2010 Total Personal Income Amt. % of Tl Amt. % of Tl Amt. % of Tl Amt. % of Tl Earnings by Place of Work $1,491 82% $1,792 81% $2,033 78% $1,881 75% Wage & Salary Disbursements $972 54% $1,174 53% $1,421 55% $1,205 48% Supplements to Wages & Salaries $181 10% $229 10% $255 10% $239 10% Proprietors Income $338 19% $388 18% $357 14% $437 17% Earnings by Place of Work $1,491 82% $1,792 81% $2,033 78% $1,881 75% - Payments for Government Social Ins. $(147) -8% $(182) -8% $(209) -8% $(182) -7% + Residency Adj. for Commuting $24 1% $26 1% $25 1% $34 1% = Net Earnings by Place of Residency $1,368 76% $1,635 74% $1,849 71% $1,733 69% + Dividends, Interest, Rent $387 21% $516 23% $666 26% $631 25% + Personal Transfer Receipts $56 3% $68 3% $80 3% $142 6% = Tl. Personal Income (Residents) $1,811 100% $2,219 100% $2,594 100% $2,507 100% Population (U.S. Census Bureau) 44,227 47,205 49,803 52,064 Per Capita Income (Actual $) $40,958 $47,004 $52,095 $48,149 1 - 7 - 29 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 30 APPENDIX E-2: Personal Income of Residents by Components, Eagle County, 2002 – 2010, part 2 Component Annual Average Pct. Change Total Personal Income '02 - '05 '05 - '07 '07 - '10 Earnings by Place of Work 6.3% 6.5% -2.5% Wage & Salary Disbursements 6.5% 10.0% -5.4% Supplements to Wages & Salaries 8.2% 5.4% -2.1% Proprietors Income 4.8% -4.2% 7.0% Earnings by Place of Work 6.3% 6.5% -2.5% - Payments for Govrnmt Social Ins. 7.4% 7.2% -4.5% + Residency Adj. for Commuting 1.6% -1.0% 10.9% = Net Earnings by Place of Residency 6.1% 6.3% -2.1% + Dividends, Interest, Rent 10.1% 13.6% -1.8% + Personal Transfer Receipts = Tl. Personal Income (Residents) Population (U.S. Census Bureau) Per Capita Income (Actual $) 1 - 7 - 30 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 31 APPENDIX P-1: Eagle County Population by Municipality, 2000 - 2011 The population of the county grew at an average annual rate of nearly 2% per year during the period 2000-2010. Eagle and Gypsum had the highest percentage growth during the decade. Most notable is the continued growth in the County during the years 2007 – 2010 when there was an 11% decline in jobs. Draft estimates for 2011 prepared by the State Demography Office show a modest decline (- 0.5%) from 2010 for Eagle County. Colorado State Demography Estimates Avg. Annual Rate Of Change Area July 2000 July 2005 July 2007 July 2010 July 2011* 00-05 05-07 07-10 10-11 EAGLE COUNTY 43,289 47,278 49,284 52,057 51,777 1.8 2.1 1.8 -0.5 Avon 6,124 6,570 6,524 6,413 6,375 1.4 -0.4 -0.6 -0.6 Basalt (Part) 2,031 2,470 2,630 2,919 2,899 4.0 3.2 3.5 -0.7 Eagle 3,071 4,289 5,371 6,483 6,459 6.9 11.9 6.5 -0.4 Gypsum 4,151 4,956 5,528 6,517 6,496 3.6 5.6 5.6 -0.3 Minturn 1,079 1,084 1,100 1,035 1,034 0.1 0.7 -2.0 -0.1 Red Cliff 298 298 293 269 267 0.0 -0.8 -2.8 -0.7 Vail 4,825 4,613 4,592 5,278 5,242 -0.9 -0.2 4.8 -0.7 Unincorp. Area 21,710 22,998 23,246 23,143 23,005 1.2 0.5 -0.1 -0.6 * Draft estimate, currently under review. 1 - 7 - 31 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 32 APPENDIX P-2: Eagle County Population by Age, 2007 - 2015 Tables P-2A and P-2B show the population by age for the County. In contrast to the state, Eagle County has a higher proportion of its population in the age group 25 to 44 and a lower percentage over the age of 65. However, its proportion of population of the younger adults (25 to 44) has declined over the previous ten years and is expected to continue to do so through 2015. Concurrently, the percentage of the population over 65 in Eagle County has increased and is expected to do so more rapidly through 2015. Table P-2A. Population by Age, Eagle County, 2007 - 2015 2000 2007 2010 2015 Age Group Number % of Total Number % of Total Number % of Total Number % of Total 0 to 17 10,111 23% 11,941 24% 12,777 25% 16,062 26% 18 to 24 4,961 11% 3,720 8% 4,362 8% 4,198 7% 25 to 44 18,198 42% 19,308 39% 18,778 36% 20,542 33% 45 to 64 8,723 20% 11,981 24% 13,205 25% 15,715 25% 65 & Over 1,297 3% 2,334 5% 3,003 6% 5,328 9% Total 43,290 100% 49,284 100% 52,125 100% 61,845 100% Table P-2B. Population by Age, Eagle County and Colorado, 2000 - 2010 Eagle County Colorado 2000 2010 2000 2010 (numbers in thousands) Age Group Number % of Total Number % of Total Number % of Total Number % of Total 0 to 17 10,111 23% 12,777 26% 1,109 26% 1,228 24% 18 to 24 4,961 11% 4,362 9% 433 10% 489 10% 25 to 44 18,198 42% 18,778 38% 1,411 33% 1,432 28% 45 to 64 8,723 20% 13,205 27% 966 22% 1,347 27% 65 & Over 1,297 3% 3,003 6% 419 10% 555 11% Total 43,290 100% 52,125 106% 4,339 100% 5,051 100% 1 - 7 - 32 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 33 APPENDIX P-3: Population, Households, and Housing Units in Eagle County, 2000-2010 Table P-3 contains data on households and housing units. Not much has changed during the last decade in the relationship among these variables. The number of persons per household has remained constant at a little over 2.7. Occupancy rates (of residents) have been just above 60%, with owners constituting 64% of the occupied units and renters 36%. Approximately three-quarters the vacancies, or 30% of the total units, are for seasonal or recreational use. 2000 2005 2007 2010 Total Population 43,289 47,278 49,284 52,067 Group Quarters Pop. 353 353 353 55 Household Population 42,936 46,925 48,931 52,012 Persons per Household 2.73 2.74 2.75 2.71 Total Housing Units 25,145 28,711 30,271 31,390 Occupied Units (Households) 15,751 17,124 17,818 19,209 Occupancy Rate (Residents) 63% 60% 59% 61% Owner Occupied 10,033 12,326 Pct. of Occupied Units 63.7% 64.2% Renter Occupied 5,718 6,883 Pct. of Occupied Units 36.3% 35.8% Vacant Units 9,394 11,587 12,453 12,181 Vacancy Rate 37% 40% 41% 39% Seasonal Use Units* 6,739 8,297 9,003 9,731 Pct. of Total 27% 29% 30% 31% Note: All data are as of July 1 for all years. * Estimate prepared for this study. 1 - 7 - 33 10/23/2012 Update to the Eagle County Housing Needs Assessment, June 2012 Venturoni Surveys & Research, Inc.; Economic Council of Eagle County Page 34 APPENDIX P-4: Households by Type, Eagle County and Colorado, 2000 and 2010 Family households in Eagle County comprised 60% and 62% (note the small increase) of total households in 2000 and 2010, respectively. Statewide, 65% of households were family households in 2000, and 64% in 2010. The percentage of non-family households in Eagle County is slightly higher than the statewide average, but that difference has decreased over the ten-year period. Eagle County 2000 2010 Household Type Number Number Total Households 15,148 100% 19,236 100% Family Households 9,020 60% 11,991 62% With own children under 18 4,947 33% 6,357 33% Husband & wife 4,025 27% 5,090 26% Female Householder 612 4% 841 4% Nonfamily Households 6,128 40% 7,245 38% Householder living alone 3,168 21% 4,269 22% Householder alone 65+ 287 2% 660 3% Colorado 2000 2010 (numbers in thousands) Household Type Number Number Total Households 1,658 100% 1,973 100% Family Households 1,084 65% 1,262 64% With own children under 18 544 33% 590 30% Husband & wife 405 24% 423 21% Female Householder 102 6% 118 6% Nonfamily Households 574 35% 711 36% Householder living alone 436 26% 551 28% Householder alone 65+ 116 7% 154 8% 1 - 7 - 34 10/23/2012 VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: October 23, 2012 ITEM/TOPIC: Executive Session, pursuant to: 1) C.R.S. §24-6-402(4)(a)(b)(e) - to discuss the purchase, acquisition, lease, transfer, or sale of property interests; to receive legal advice on specific legal questions; and to determine positions, develop a strategy and instruct negotiators, regarding: Ever Vail Redevelopment Agreement; 2) C.R.S. §24-6-402(4)(f) - to discuss personnel matters, regarding: Updateon Town Managers direct reports. PRESENTER(S): Matt Mire 10/23/2012 VAIL TOWN COUNCIL AGENDA MEMO MEETING DATE: October 23, 2012 ITEM/TOPIC: Adjournment (6:00 p.m.) 10/23/2012