Earlier this Fall, the Summit Alliance of Vacation Rental Managers presented a Workforce Welcome concept to the Summit County Board of County Commissioners as part of our ongoing commitment to finding a balance between the vacation rental industry and the community within we work, live and play. Here, we are sharing the full detail on the Workforce Welcome proposal that was presented.
At SAVRM, we are dedicated to helping everyone in our community find success. From the businesses that operate here to the workers that support us. We are all local and we strive to promoting a healthy sense of community for all.
Workforce Housing Concepts- Workforce Welcome
Our goal at SAVRM is to work together with the Town and County leadership to find realistic solutions to our housing crisis. We hope the ideas outlined in this document will be useful to your conversations and may help in this process.
This program is meant to be offered to STR owners, through local management companies, as an incentive package for owners to convert their properties from STR toLTR. The goal is to have the owner convert from STR to LTR without having to change management companies, provide them equal or greater revenue (at market rate) than they can make currently, provide lease security during the lease period for the owner, and provide financial incentives to local managers to participate in marketing this program to their owners without going through a great deal of trouble or losing revenue.This effort is still very much in development, but some of the ideas that will form the foundation of this program are below.
To better understand the economics of second homeownership, and the financial burden these homeowners are under, we have complied some stats from the SummitAssociation of Realtors database from the past 24 months (Breckenridge, Silverthorne, Dillon, Wildernest) demonstrating average purchase price for a variety of unit sizes within the County. In addition, we pulled mortgage data for each price point from BankRate to illustrate monthly payments to demonstrate the financial obligation of second homeowners, that drive the price of long-term rentals in the County.
Due to the demonstrated financial burden of ownership, it can become difficult for owners who would like to long term rent to do so “affordably” to our local workforce.Keeping rent affordable, in most situations, will require a subsidy. SAVRM is recommending we provide a monthly allowance to each participating owner to subsidize rent for local workforce and incentivize owners who have short term rentals or second homes to convert their property to a long-term rental. This incentive would be paid in two installments during each rental year, directly to the owner.
We believe any plan needs a goal and have estimated a participation rate of the 60+lodging companies in Summit County at 100 STR to LTR conversions (30 studio, 30 1br, 30 2br, 10 3br). Based on this conversion goal, and unit conversion assumption, we can extrapolate what seems to be an affordable financial subsidy for each governmental entity of $516,000 to convert 100 units each year. This could either be shared across the county, both the subsidy and conversion goal, or each entity could choose to take on the full goal of the program within their boundaries.
We would look to create “opportunity zones” consisting of areas and communities(buildings) that have been identified as feasible for workforce housing, based on location, age, amenities, transportation, and overall cost/value.
These zones would reflect viable workforce housing units and exclude all other types of units from active consideration. Essentially, focusing our efforts on housing that is recognized as “local” supply, and allowing the more “resort” style homes to continue operating as normal. We would however request that an owner in any area be able to participate in this program, if they choose, regardless of overlay zoning.
Each professional management company in Summit would be able to manage 5 or less LTR properties without having to be licensed by DORA as performing“property management and leasing services”, to ensure we do not burden local managers with the need for additional costs and licensure.
This would also enable managers to keep their clients in house, and keep revenue in house, to encourage managers to participate in the STR to LTR conversion process.
No cost for BOLT licensing for participating homes/owners.
Removal of RETT requirement upon sale of property for participating owners in the program for at least one year.
Reduction or removal of property tax for subject property.
Subsidize 7 nights of complimentary lodging per year in Breckenridge for participating owners.
In closing, as we all know, to develop ONE workforce housing unit in the County costs approximately $250,000 per bedroom. Granted, this unit will be perpetual, and is a one-time cost. However, looking at the economics of this incentive program, our community could produce a consistent inventory of up to 100 affordable rental units for 10 years for the cost of development of 10 2br workforce units.
We hope this document is helpful as either an implementable facet of a larger solution, or at a minimum a catalyst for an effective and comprehensive incentive program.
