Tahoe Housing Trouble Part 3: Local entities aim to crack Tahoe’s housing crunch
August 20, 2018
In a bold attempt to help fix Tahoe’s housing crisis, local agencies are teaming up to support a new approach to life at the lake.
“The demonstration project is just one tool we need to focus on to fix the housing situation,” said Heidi Hill Drum, CEO of Tahoe Prosperity Center (TPC).
Hill Drum is talking about the Housing Tahoe Partnership, a task force whose goal is to break ground on a workforce housing development in spring of next year.
The initiative’s roots stem from a housing taskforce formed by El Dorado County District 5 Supervisor Sue Novasel. From there the torch was passed to TPC, which formed following the 2010 Tahoe Prosperity Plan.
Developed in 2010, the plan was the first comprehensive economic study of its kind in the basin, according to Hill Drum. Today the nonprofit TPC works to unite communities in the basin, including local and state jurisdictions, businesses and individuals.
Earlier this year TPC launched a housing partnership. Some funding partners include Barton Health, the city of South Lake Tahoe, El Dorado County, Tahoe Regional Planning Agency (TRPA), Lake Tahoe Community College (LTCC) and Vail Resorts.
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“It’s hard for me to imagine that anyone would argue against local workforce housing,” Hill Drum said. “People deserve to live where they work.”
The partnership aims to secure a project site by December, should the plans fall into place. Hill Drum said this would likely involve demolishing an existing property and developing a new one, because much of the stock in the city is outdated. However, TPC’s top priority is to make the project happen.
The development is intended to be high-density and centrally located. Hill Drum and others hope the project will serve as a blueprint for building the type of housing desperately needed in the basin.
MAKING AMERICA’S CITIES AFFORDABLE
Though the world of today’s affordable developments is relatively new, Tahoe could quickly fall behind considering efforts to combat the crisis elsewhere.
More and more U.S. cities are jumping on the affordable housing bandwagon, not for fashion but out of necessity. As a result, local jurisdictions are becoming the leading innovators in making metropolitan areas affordable again.
In Boston, where a studio in a waterfront condominium can cost $750,000, developers contribute to an affordable housing fund if they opt out of building affordable units. This is just one aspect of an Inclusionary Development Policy adopted by the city, according to the city of Boston website.
The state also issued $86 million in bond financing. Coupled with other investments, these funds were used to build the largest income-restricted housing development in Boston in the last 25 years. Units are reserved for households making between 30 and 165 percent of the area median income (AMI).
Denver, though not traditionally expensive like resort towns in Colorado, is taking proactive steps to keep costs from skyrocketing amidst the city’s growth. A revolving affordable housing fund was established in 2016, and higher property taxes and development impact fees are expected to raise more than $150 million in the next decade, according to the city.
It’s estimated that in the U.S., there are 29 units available for every 100 extremely low-income households, according to Urban Institute. The National Multifamily Housing Council (NMHC) estimates that the country needs to add more than 4.5 million housing units by 2030. If construction doesn’t keep up with these demands, it will make it nearly impossible for rates to go down.
This is particularly significant in resort communities where second-home ownership is high, because out-of-town buyers make the market more competitive. As it gets more competitive, local buyers can lose traction when trying to find a home.
Despite rising demands for market and below-market rate homes and apartments, it doesn’t usually make financial sense for developers to build units that won’t go for sky-high rates. According to Urban Institute, “Without the help of too-scarce government subsidies for creating, preserving and operating affordable apartments, building these homes is often impossible,” because there is a huge gap between construction costs and what most people can afford.
If targeting renters who make less than the AMI, rents would likely have to be more than 30 percent of a household’s income in order for the developer to pay back investors.
When households are spending more than 30 percent of income on rent, they are considered “cost burdened.”
In Tahoe, this often motivates people to move off the hill, because families can rent three-bedroom house in the Carson Valley for $800 to $900 a month, as opposed to a one-bedroom in South Shore for hundreds more per month.
In an effort to understand how other resort towns have combated this problem, the Tahoe Chamber led 15 Truckee-Tahoe community leaders to Vail, Breckenridge and Keystone, Colorado to see how these ski towns approach affordable housing and foster community involvement.
Summit County, home to Breckenridge and Keystone resorts, has invested greatly in affordable housing and assessing the needs of locals, and within a few years will have completed several housing developments.
In 2017, Eagle County (home of Vail) conducted a thorough assessment of housing needs; it was the first in a decade. In the town of Vail, a deed restriction program called Vail InDEED was implemented in 2017 to keep units available for residents. The program, which has proved to be very popular, allows homeowners to deed restrict their home in exchange for some amount of funding that can be used at the homeowner’s discretion. Under the restrictions, the property must be occupied by residents who work a minimum of 30 hours per week in the county.
Deed restrictions stay with a property even after it’s sold, allowing the town to keep with its future housing goals.
AN INITIAL STEP
The issue hasn’t gone without notice from local officials — several have already pointed to housing as a major local issue in the upcoming elections.
There is an important distinction, though, between workforce and affordable housing, mainly the income margin that developments are intended for. Workforce housing is intended for those making 60 to 120 percent of the AMI, according to HUD.
Affordable housing is generally for people making between 30 and 80 percent of the AMI. Most affordable developments address a more specific margin of income within the 30 to 80 percent range. This can present a series of challenges when it comes to securing developers, because it makes it nearly impossible to turn a profit.
There are, however, examples of successful projects in the region.
In Kings Beach, the Workforce Housing Association of Truckee Tahoe worked with Domus Development, a private developer of affordable and workforce housing, to assess housing needs in 2007. It did not lake long for the community to start building.
The Kings Beach Housing Now development hosts 77 energy-efficient apartments for low-income workers, and was funded with tax credit equity, the HOME Investment Partnership Program, Placer County and other sources. The development spans five sites and nine buildings, all which are rented to households making between 30 and 60 percent of the AMI, which is between $22,830 and $45,660 for a family of four.
When it comes to employer involvement, there are some opportunities for local and seasonal workers. Kirkwood Mountain Resort has first come, first serve housing on site, and Heavenly Mountain Resort owns apartment complexes on Keller Road in South Lake where rent is about $13 a day. However, employees can’t stay in the units long term.
Edgewood Tahoe offers market competitive wages, insurance and retirement benefits and other perks to accommodate employees, according to Julie Cabral, Edgewood’s director of human resources. Housing is available in a converted motel in South Shore.
“For our seasonal golf course maintenance crew we also offer a year lease at the our employee housing units to help retain our skilled seasonal workers in what is admittedly a tough housing market,” Cabral wrote in a statement to the Tribune. “Our goal is to be the employer of choice in the region.”
As for efforts from the city of South Lake Tahoe, the Single Room Occupancy (SRO) Program was established to regulate motels and hotels to housing tenants for 30 days or more, which mainly include quality and safety standards that must be met my the property.
The city’s housing program coordinator did not respond to multiple requests for comment.
According to the city website’s most updated numbers, there are currently 223 SRO certified units between 14 motels and hotels, and 43 properties have applied and being assessed.
Though the SRO Program is in place to provide cheaper housing options, it does illustrate a strange and divisive juxtaposition: residents living in motels and visitors staying in homes serving as vacation rentals.
And SRO rooms aren’t always cheap. Residents can pay more than $1,000 for a room with a kitchenette, depending on the rental property, which isn’t much lower than the average cost of a studio in South Shore.
Amid these past and ongoing efforts, TPC hopes the pilot project spearheaded by the Housing Tahoe Partnership can serve as an example for the Tahoe Basin. The pilot project is just one of many goals for the community, said Hill Drum, adding that TPC will act as facilitators for the project and developers will take over the construction process.
Specific plans are yet to be determined, including the project’s target demographic. Hill Drum said a larger site with 50 units or more could be available for a wider range of people, such as those making between 80 and 120 percent of the AMI. A smaller project with fewer units could target a more narrow range, it just depends on the developer the partnership ends up working with.
“We hope all ranges will eventually have better options,” Hill Drum stated. “One pilot project can’t fix it for every level, so it could vary by location and size of the project.”