Town Board, County Commissioners Hear Housing Crisis Stats at August 13 Joint Meeting

A joint meeting between the Town of Lake City Board of Trustees and Hinsdale County Commissioners was held Wednesday, August 13, where agencies Proximity Green, Triple Point Strategic Consulting, Dynamic Planning + Science and Western Spaces, LLC., gave a presentation to show their findings from a housing strategy survey in and around Lake City earlier this year.
Jeff Moffat, Principal of Triple Point Strategic Consulting, was in attendance, as was Ethan Mobley, owner and Principal Planner of Dynamic Planning + Science. Leading the meeting was Grant Bennet, real estate consultant and developer with Proximity Green, via Zoom from Denver, who explained that the purpose of the meeting was to help build momentum for collaborative action between the Town and County by understanding the housing crisis reality through data-driven evidence, and to provide direction for the next phase of strategy development.
“I have been deep in the trenches,” he said, “with both Town of Lake City and Hinsdale County for the last three months. I have rolled up my sleeves and really gotten to know this community”
Bennett began the slide presentation by saying that there were 97 household survey responses received, as well as 21 employer surveys collected.
The results of the study solidly confirmed that there is, indeed, a housing crisis in Lake City. Seventy-seven percent of Lake City’s residents said housing availability is a critical problem, and the community’s biggest problem. Twelve percent said they plan to leave Lake City due to housing costs; seventy two percent of housing stock is seasonal or vacant, with a zero percent rental vacancy rate.
The survey also showed that the median home price is $563,000, with the average annual salary around $39,000, and while 43 percent of employers provide housing assistance, families, workers and
continued page 7essential services are being lost because people can’t afford to live where they work.
Within Lake City, the survey confirmed that at least 24 jobs remain unfilled due to housing barriers. Bennett also said the response rate of the survey was 25.5 percent of the Lake City community, a statistic that would be literally impossible to achieve in larger communities.
“It’s not exactly a shock that there is a housing crisis,” he said, “but this will put up some data points for Trustees and Commissioners to ponder.”
Three hundred sixty of the three hundred eighty households surveyed said their residence is in poor condition; 340 said housing is too expensive; 50 renters were blocked from ownership because of cost. These statistics are based on the 97 household surveys, projected to all 380 county households.
“So what is causing displacement,” Bennett said. According to the survey statistics, renters have seen a 34 percent rent increase; 28 percent of homes in the community are vacant or used as short term rentals and not used year round; 22 percent of residents have seen lease non-renewals; and 16 percent of renters were displaced by owner move-ins. Fourteen percent of residents live in overcrowded homes, with 20 percent needing more bedrooms, with many unable to afford needed repairs.
“Again, this is no shock to Lake City’s residents,” said Bennett, “but there is literally a zero percent rental vacancy rate. There are currently only five homes actually for sale. Families are forced to take whatever is available, and if a rental does come up, it disappears immediately.”
Further, Bennett said that 12 percent of households are planning to leave Lake City due to housing, but there is some hope in the fact that fifty-one percent are interested in ‘deed-restricted’ housing, or affordable workforce
housing.
The next slide showed why businesses in Lake City can’t function without affordable workforce housing with statistics from the local employer survey response saying they are having problems providing housing just to keep the doors open. Essential workers can’t afford to live here. Showing examples of average earnings, the slide showed teachers salaries are $39-69 thousand per year; nurse salaries are $32-64 thousand per year; and a Sheriff’s deputy, $26-56 per year.
This means that affordable housing on a teacher’s salary would cost around $245,000; a nurse, around $200,000; and a deputy, around $165,000. With a median home price in Lake City averaging $563,000, a teacher would be facing a gap of $318,000 between salary and home price, which Bennett called “obviously unsustainable.”
Jeff Moffat then took over the meeting, saying
“according to these statistics, even the highest paid workers can’t afford basic family life. Construction work is the best paid local job, and even that still falls $24,355 short annually. This isn’t about poverty, it’s about the impossibility of middle-class life in Hinsdale County. These are serious red flags,” Moffat
said.
Moffat went on to show a slide revealing that Hinsdale County has a $92-million a year economy, breaking down to $70.6-million from local economy, $5.4-million in tourism and outdoor recreation, and $16.4-million in the vacation home industry.
“This diverse $70.6-million local economy is three times larger than tourism but it all depends on housed workers,” said Moffat.
Further, the survey showed that the cost of inaction would be an annual economic loss of $960,000 from unfilled employment positions, service degradation resulting in reduced school quality, healthcare access and public safety response. Also, each family that leaves Lake City makes it harder to recruit the next essential worker.
There will be missed funding opportunities as well, as state housing programs require local action within the next 12 to 18 months.
Bennett said, “bottom line – this is not just a housing study, it’s a community survival strategy. We have the data, the funding opportunities, and the first project ready to go. What we need is leadership commitment to act.”
Bennett went on to say that the four agencies have developed a proposed vision for Lake City and Hinsdale County, which is to provide housing opportunities across all life stages, enabling residents to find appropriate homes as they begin careers, raise families and retire in the community they love. Bennett said, “we want to put both a vision and goals forward that reflect your interest, and we are listening loud and clear to get feedback to understand, and if we can work on building your housing system, we can help it to respond to making Lake City and Hinsdale County a more affordable and more effective place to live. Housing can’t solve everything but it is a core tenet to making life in your community worthwhile.”
Ethan Mobley took the floor via Zoom, with a slide showing proposed goal #1, which is to create 40 new housing opportunities. The impact of this would be an increase to the current 380 households with 80-100 potential new residents, providing opportunities for middle income families, for the fabric of the community to grow.
“How do we do that? Forty units is a heavy lift,” Mobley said, “That will be quite a bit of money, so how do we chew this off a little bit at a time? By looking at different types of opportunities. It’s very difficult to build your way out of a problem. But I think we can make incremental progress with some of the opportunities that you have in Lake City and beyond, and that includes the Lake Fork project site (Town-owned land north of the Medical Center). I assembled a team to do the design and engineering for that project. I think we can provide a good cross-pollination between these teams as they develop the requirements for the site, and we are actively designing the Lake Fork Housing Project and the 28 units for the site. The financing will come later on down the road. There are other opportunities around Lake City and in Hinsdale County as well. One of those opportunities is conversion, and down payment assistance. That is converting existing housing stock that’s used for vacation rentals to single family residential opportunities. That could also be converting existing land that single family residential home could be built on. So, opportunities to get you to that 40 units beyond the 28 units with the Lake Fork Housing Project.”
Mobley also mentioned ‘land banking,’ which is setting aside land for future generations, whenever possible, to ensure future growth. He said, “we want to be right-sized for our capacity, have a meaningful impact on the community and lay a foundation for future growth.”
The floor went back to Bennett, who presented proposed goal #2: creation of a balanced housing mix. Currently, Lake City’s residents are broken down into a 20 percent rental population compared to an 80 percent ownership population. The target goal is for rentals to be 25 percent, with ownership at seventy-five percent.
Right now there are only 76 rentals for 465 jobs (some of which are seasonal), with a zero percent vacancy rate. Workers simply cannot find housing. Bennett said, “from speaking with some of the employers around town, I know that they are providing summer housing through the visa program to make it work. Lake City has a much lower rental percentage than comparable mountain towns, even Colorado-wide. The generalized percentage of renters in Colorado is 33 percent, in comparable mountain towns it is 30 percent, and in Lake City, it’s 20 percent. This shift would be a modest shift, but it would create housing options for workers while maintaining strong homeownership opportunities.”
The third proposed goal would be to build a year-round housing community. Bennett said, “Currently, only 28 percent of Hinsdale County properties have year-round occupancy. That means 72 percent of the homes in Lake City are seasonal residents, or vacation short term rentals. But we even heard stories from folks who own property in Lake City, from out of town, and they use the house to hook their trailer up during the summertime so they have power and septic access, but they don’t actually use the house. So there is this high percentage of use that is very disproportionate to other communities in Colorado. A ten-year goal would be to increase year-round housing from 28 percent of your housing stock to 35 percent. In comparison, communities nearby, like Ouray, has a 55 percent year round housing stock; Aspen, 65 percent. It might almost seem counterintuitive, but communities like Aspen and Crested Butte and others have spent quite a bit of money and time working to get that year-round community focused housing owner occupancy up much higher. Gunnison, which is much more of a workforce town, has a much higher percentage at 70 percent. We don’t think Lake City will ever get above 50 percent any time soon, but to grow that percentage from 28 to 35 in a five to ten year time span would be great goal to work towards. How do we get there? That could look like new construction, it could like the conversions that we had talked about where you have down payment assistance for someone who would want to buy a home that is currently in the vacation or seasonal rental market, could turn it into a year-round home. Just having this lens of a stronger permanent resident priority for your housing ecosystem.”
Bennett turned it back over to Mobley, who showed a slide titled Comprehensive Strategy Approach showing multiple pathways to address the crisis. From left to right, the screen showed low cost options through high cost.
Tile one was titled Policies and Incentives – which would utilize fast track permitting, Accessory Dwelling Units (or ADUs, which refers to a small, self-contained living space on the same property as a larger, primary single-family home) ordinances and enhancing short term rental regulations. Mobley called this ‘low hanging fruit;’ He said, “in other words, how can we cut costs and provide more for less? This would involve zoning code updates and practices within your community development departments to streamline housing, making it more attractive and less expensive to develop housing in your area.”
Low-medium cost would involve optimizing existing stock with a preservation fund, conversion incentives and down payment assistance. Mobley said, “this would involve upgrading existing housing stock to make it more family friendly and finding funding for down payment assistance.”
Medium cost options would focus on revenue development with housing trust funds, short-term rental fees and employer partnerships.
High cost options, development projects, include the 28-unit Lake Fork Project, land banking and ownership programs. Mobley said, “we are designing the project, but once those documents are done we are going to see a capitol gap. We’re going to have to find five million dollars or more to develop that project. How do we do that? That’s a very high cost item.”
Bennett took the floor again, saying, “how do we move from raising the crisis flag to thinking about community opportunity? The status quo is that there is a continued population decine, business recruitment failure and people are planning to leave – essential worker exodus. We think that through some of the strategies we just talked about, and everything on that strategy spectrum. With action, we can see workers living where they work, businesses being able to recruit and families choosing to stay in Lake City. We see these things as essential – as a backbone, and we have seen it across many communities; this housing ecosystem that’s not just seasonal rentals, not just short-term rentals, can add a lot of strength to your community for the long run.”
Bennett turned to the audience, then, asking for questions, comments and concerns. Trustee Henry Woods said, “I appreciate all this effort. Most of the small towns that I’ve been around in Colorado, the solution to a workforce housing crisis is to build a huge trailer park 30 miles down valley and have all the working class people live there. I think it’s really important to have all our working class people in town. Some things I’ve been thinking about; it seemed like such an innocent thing when people started coming to us saying they wanted to rent their houses out on a weekly basis. But now we realize it’s an epidemic, it’s a huge deal. I think we need to have some kind of effort to ratchet down short-term weekly rentals. Maybe an idea would be the ADU idea, that construction over certain price, they have to have a mother-in-law cabin on the property to be rented to a working class person.”
Commissioner Greg Levine spoke next, saying, “the first thing I would be curious about and find kind of interesting, I don’t really agree with but data is data – in this report it says ninety-five percent of those surveyed report poor conditions in their homes? I find that completely amazing. That data point is kind of confusing to me. Also – this is all really great information, but it’s nothing everyone in this room doesn’t already know about. As long as I’ve been here, there has been a huge crisis with year-round housing versus summer residents. So the year-round housing increase, you touched on it – but I don’t really understand how you would increase that without, I don’t know, de-incentivizing people? It’s always been that people have had second homes and they don’t live here full time. That’s their perogative, I guess, if you have the money to have a second home. I just don’t get how you would get that year- round increase even up to thirty-five percent. Also, the short-term rental piece. We have created an economy now, a system that is very lucrative for people and I don’t see how you would ratchet that back very easily. So, while I appreciate everything that’s being said, and I have read through this document now completely, I just don’t see how we get from A to B on this. I don’t see the answers. I think the housing project is a long-term solution of course, but some of these other low hanging fruit or short-term solutions, I think we have been struggling with that since before I’ve been here, for 30 years we have been struggling with that. I guess I need some more information on that.”
Bennett said, “we look forward to responding to your exact request in future work sessions, because there are certain tools that we can bring to bear to think about incentivizing, de-incentivizing activity. There are programs in many communities around Colorado that would to speak to that. We wanted to share this data today, and to unpack the state of the housing, but we look forward to coming back to you through the working group to unpack that strategy toolkit.”
Town Manager Lex Mulhall spoke up, saying “one of the ways we could de-incentivize would be, instead of a multi-unit apartment complex being bought up, like Silver Street Villas – three of them got turned into short term rentals. That could be a policy. If it’s a multi-unit, short-term rentals wouldn’t be allowed – this is just theory at this point, just an example. Somebody called me the other day about the Red Wagon – about buying those five apartments and turning three of them into short-term rentals. Another way would be the ADUs – incentivizing people who are doing new construction to also build a grandma suite, finding ways to sweeten the deal for them. Waive certain fees, allow them to use a common tap as long as they build an ADU that will always be used for long-term housing.” Mulhall gave a few more examples of possible solutions, to which Levine replied, “this is great – that’s exactly what I was looking for – solid solutions.”
“Right now,” Mulhall said, “we are in this whole planning and strategy phase. Within the plan we will have different policies, different tools in the toolkit that we can use, but we will still need buy-in from the Board as well as some kind of buy-in from the community as well. So yes, that’s what we want to come out of this; different strategies to increase the housing stock without just having to say – okay, no more short-term rentals. We’re trying to find ways to let people have their cake and eat it too.”
Trustee Jodi Linsey said, addressing Commissioner Levine, “I believe we’ve never actually addressed these issues. Yes, they have been here the entire time and we’ve never looked at them, and we have never had such a smart team helping us look at them through the lens of solutions. It’s always been that there’s nothing we can do about the housing crisis, but Lex has given us some examples and I believe there are lots of ways that we can address these issues Lake City is facing.”