What importance do you place on housing? Is it a luxury? An entitlement? A necessity? George Ruther found himself at the center of this question as the community development director for the Town of Vail, a Colorado mountain hamlet of about 5,000 people, a median home price of roughly $1 million, and a housing crisis very similar to our own here in Truckee/Tahoe. He is now the director of Vail’s newly created Housing Department, and his answer is that housing is infrastructure — as necessary as roads, water, and power lines.
Ruther recently spoke at a North Lake Tahoe Resort Association Membership Luncheon on housing solutions, and began his talk with a garage — a $16 million parking garage in Vail, for commuters.
“How many parking spaces do you think that $16 million built?” he asked the audience. The answer: 116. The average size that two parking spaces takes up? Just under 500 square feet, roughly the size of a studio apartment. It’s a harsh example of how a lack of housing not only a great cost to the area, but how misguided reactions to it only serve to exacerbate the issue.
It doesn’t have to go that way though, as Ruther then explained how the town managed to open up about 110 units of deed restricted locals-only housing for just over a third of the cost of that garage. Vail’s primary tool for opening these units is a program they call InDEED, with which they buy the rights to deed restrict for-sale housing units in perpetuity — often purchasing the deed restriction in exchange for covering a homebuyer’s down payment, but they will also exchange deed restrictions in larger commercial projects by covering funding gaps. The mechanisms are flexible, but the end goal is the same: resident housing. Moonshine Ink sat down with Ruther after his presentation to get the full scoop.
What clicked in Vail that jump-started its new approach to addressing the housing crisis? It happened because you personalize the problem — it’s affecting everybody across the board, up and down, left and right, big employers, small employers, everybody is impacted by this in one way or another and the do-nothing alternative is just not acceptable. I was in a meeting one time and a gentleman stood up and he said, “Well we can’t afford this.” And I was so pleased when about 10 other people got up in the room and said, “We can’t afford not to do this.”
Beyond the personalization of the problem, you talk about the wasted cost of building a $16 million parking garage for people commuting from out of town — so there is a concrete economic benefit to creating housing? What we found was, again there’s about a $12.5 million economic impact to the business community around recruitment, retention, training, loss of business opportunity because you’re understaffed for a period of time … We saw about a quarter million dollar impact to the Town of Vail in the form of just sales tax in collections within the community because not having those people living in the community and taking their dollars and spending them elsewhere was a loss of money that way, and then we saw about a $9 million direct impact to municipal services. That’s the parking structures, the transit, those types of things. I use the example of 116 parking spaces for $16 million. For the same $16 million I could have built the Chamonix [housing] project which was 32 homes.
How have you streamlined the public review process? I don’t care how you get there, as long as you get to this place. No two of these development projects are ever exactly the same … Being flexible, I think we are very flexible in our review process. Not in the end goal. Where the town I think has been successful is having a really clear vision about what it is they want to achieve, and once you understand that vision, how you get there becomes, it helps tremendously. I think you’ve probably heard that saying,”Without a destination any old road will do.” Well, we have a destination in mind and it’s 1,000 deed-restricted units.
You’ve had $2.5 billion — with a b — of private investment in Vail during the last six years. How much of that translated into housing? Out of all of that development we got about 125 homes developed.
Does that cut it for you? No. We missed the boat. We had an opportunity, it was pre-recession so low bond rates, interest rates were very low and we missed that opportunity … We have done more housing developments, acquired more deed restrictions in the last three years than we did in probably the 15 years before.
You mention deed restricting units for local residents a lot, specifically a program called InDEED, what does that look like in the Town of Vail? Vail InDEED, it’s been characterized kind of in the community as that bold stroke towards addressing our housing problem. It’s a new tool that we put in place. We used to have this Buy Down program where we’d buy a home and place a deed restriction on it and then we’d resell it … We were putting out this sizeable capital cost — we were buying the whole property when all we wanted was that deed restriction — so what we finally said, and it kind of came as an afterthought, we said, “Why don’t you go find the house you can’t live without, and then you come sell me a deed restriction on that property [for the price of your down payment].”
Another way InDEED came about is people are starting to understand that if you want to live in the community, that might be one of your only opportunities, is to have deed restricted property.
So you buy the deed restriction for the cost of the buyer’s down payment. It allows the locals to afford housing, what does it do for the Town? Our average deed restriction purchase is about $67,000 per deed restriction, and for $67,000 we effectively own the property because we have a controlling interest. We own the future of that property with that deed restriction. When the average home price in Vail I think is upwards of $1.6 million, $67,000 is a small price to pay to capture a deed restriction, and it’s in perpetuity.
What about the negative views of deed restricting? It has been successful for rentals but some don’t want it to impact the investment they are placing on a home. There was a time when nobody wanted to own [deed restricted housing], because it’s like, I’m impacting my future value, and I want it to double in price, all those reasons it kind of had a stigma associated with it. Well that has changed, and I now have people who understand that owning a deed restricted property is a great way to get into the community and live in the community.
Where do private interests fit in with deed restrictions? One of the comments we’ve heard over and over again from employers — and this is why I think it can work — is if you own a restaurant I’ve heard people come to me and say “I’m a good restaurant to work for, but I’m not a good property manager, I don’t want to be a landlord. So you put the mechanisms in place that I can tap into and I’ll be behind you 100 percent.”
[A] development we just got funding for [recently], that’s exactly what it is. The Town of Vail, we acted as the clearing house — the catalyst. We created these 36 deed restricted opportunities [by covering a funding gap for the developer in exchange for deed restricting the units] and then we make it available for Vail employees and Vail employers to lease on a first come first serve basis. So… score. So what we see happening in that situation is we see all the smaller mom and pop style businesses that have less than 10 employees; this is an opportunity for them to step in and provide housing for their employees without having to become a landlord or have to come up with the capital cost of going out and buying a place for their property owner.
What kind of application for the methods you’ve mentioned do you see here in Tahoe? I’m not certain that some of the stuff I’ve presented today is completely plug-and-play and transferrable to the [Tahoe/Truckee] region. I guess the message that I wanted to try and get across was, again, when you personalize the problem and you get community buy-in to the issue, and you can demonstrate value, when you solve that problem, people get on board.
We spent a decade pointing the finger at whose fault it was and therefore who was responsible for solving the problem and it got us… it didn’t get us very far. When you kind of right size the problem you come up with solutions that work and I think that’s what we’ve been successful at doing is we’ve come up with solutions that work for our community and our circumstance.