Weathering Wintergreen

7 min read

Living In Resorts On Worker Wages 

Like most resort areas where local property is bought up by wealthy patrons from all over, particularly ski resorts where usable land is severely restricted by mountains and rugged terrain and stormy weather makes long commutes impractical, Keystone, CO has a severe problem with affordable and workforce housing.

Unlike other Colorado ski resorts, like Aspen and Telluride that began life as Old West mining towns in the 19th century, Keystone’s history is far briefer and more focused. Tucked into the White River National Forest in Summit County, west of Denver by Interstate 70, Keystone Resort owes its existence to Max Dercum, a professor of forestry and the ski team coach at Penn State who came to Colorado in the 1940s to work for the U.S. Forest Service. He and his wife Edna settled on a ranch outside the tiny town of Keystone where they pursued their passion for skiing.

Together with a friend from the army’s famed 10th Mountain Division, which trained in Colorado, Dercum developed Ski Tip Ranch overlooking Keystone Mountain, with himself and Edna as the first ski instructors. Then, in partnership with Bill Bergman, a corporate lawyer from Cedar Rapids, IA, who fell in love with the place, Dercum opened Keystone Resort on November 21, 1970. The Ralston Purina Company acquired the resort in 1974, and since 1996, it has been owned by Vail Resorts, Inc.

Keystone’s affordable workforce housing problem was compounded as the economy recovered after the 2008-2009 recession when investors began purchasing much of what had been long-term rental supply and converting it into short-term and seasonal rental property. The ascendancy of Airbnb and other online lodging platforms only made the situation worse. As of December 2016, there were 982 active Airbnb’s in the area.

The average cost of a single-family home in Keystone is $1.2 million, and $350,000 for a condominium, which does not include homeowners fees. Average workforce incomes do not come close to housing affordability. Area businesses regularly complain that the lack of housing undermines their stability. As of this writing, Vail Resorts, the Summit County Sheriff’s Office, St. Anthony’s Hospital and the Summit County government have a combined 86 unfilled positions.

In August 2018, Gorman & Company, Vail Resorts, Summit County and the Summit Combined Housing Authority broke ground on the Village at Wintergreen, a community of 196 rental units on more than 28 acres on U.S. Highway 6 in Keystone, which Kimball Crangle, Gorman’s Colorado marketing president, described as “spectacular,” for the audience at the recent National Council of Housing Market Analysts in Denver. She says the project offers a variety of housing types to a range of income levels. The project comprises 196 one-, two- and three-bedroom apartment units in ten buildings, constructed on 12.8 acres of a steep 48-acre site. Forty of the units are nine percent Low Income Housing Tax Credit, 36 units are seasonal housing master leased to Vail Resorts but still managed by Gorman, and 120 are designated workforce housing with a cap of 100 percent of AMI, which represented a close collaboration between Gorman and the county. Though the specifications are somewhat different between the various housing designations, costs per unit were pretty similar.

Applicants must work a total of 30 hours a week within Summit County to qualify for the workforce component.

“Gorman is largely an affordable housing provider,” says Crangle. “We do a lot of tax credits but started to deliver on other housing products that are very much in need for a community, but the financing is not as easily identified.”

The Workforce Housing Funding Problem
Just as Dercum and Bergman were pioneers in developing the area for skiing, Gorman has been a pioneer in developing the Village. “Workforce housing is incredibly difficult to finance, and it was hard to bring forward in our case because there is not a lot to point to [in comparables],” Crangle explains. “We had to go and build the data from what was available and figure out how to tailor workforce housing to meet the needs.” As an example, she notes that evaluating household composition is different because, “Here, there are many roommates rather than the typical LIHTC family situation.” Roommates and couples with no children represent 67 to 80 percent of total households that are between 80 and 120 percent of county area median income.

And the need is dire. “Renting a couch in Summit County could be $500 to $700 a month! People therefore are driving very long distances to get to work, and winter conditions at ski resorts make that very difficult.” According to the most recently available 2015 government statistics, a police officer or sheriff’s deputy makes approximately 90 percent of AMI; a fireman, 70 percent; a starting teacher, 60 to 70 percent; and a cook working in the resort area 50 to 60 percent. Rental affordability projections are based on 30 percent of salary.

To make the project work, Gorman enlisted Vail Resorts, Summit County, the Colorado state Home Investment Partnerships (HOME) and the federal LIHTC program.

“A true public-private partnership,” says Crangle. (See Sources and Uses below.) Summit County provided Gorman & Company with a $300,000 loan in support of the Wintergreen Apartments, and the Summit Combined Housing Authority partnered with the developer to enable a property tax exemption for this portion of the project. These two partnerships were instrumental in Gorman & Company’s successful application for nine percent LIHTCs from the Colorado Housing and Finance Authority (CHFA).

“The Wintergreen parcel is owned by Vail Resorts,” Crangle explains. “We developed a ground lease between Vail and Gorman. There is no way we could purchase the land and still make the pro forma work.” The parties agreed to a 99-year lease with a 99-year extension. The rental figure was based on a current appraisal.

The Traffic Problem
The wooded site boasts amenities in keeping with its ruggedly beautiful locale, including community gardens and greens, dog parks, furnished outdoor and gathering areas. There is a small market 200 yards away. But the prime concern for the developers was access to the resort areas and businesses. Crangle states, “Keystone, like many mountain communities, has a really bad traffic problem for about five percent of the time. But it is so bad that it’s all people think about. We don’t run into NIMBYism in mountain towns because everybody knows they need affordable housing desperately. But what we do run into is, ‘How are you going to fix our traffic problems?’”

One way is a proposal currently under review to impose parking fees, which would further hamper making ends meet for the local workforce.

“We’ve worked hard on multi-modal access,” says Crangle. “We have pedestrian connectivity to the trail system.” Gorman is building and maintaining a path from the Wintergreen neighborhood to Tennis Club Road along an easement granted by Vail Resorts. “And we worked with Vail Resorts to bring a shuttle bus through the site for workers.” The shuttle will be added to the resort’s Red Route and circulate three times an hour between 7:55 am and midnight.

Ultimately, the aim for The Village at Wintergreen is not only to provide this desperately needed affordable and workforce housing, but also to increase and enhance the sense of community. It is a long-accepted precept in resort areas that if workers and merchants cannot afford to be residents and take advantage of the location and municipal facilities and have a stake in them, that the sense of community itself will be lost. As Bob Kato, a small business owner puts it, “People who would be strong contributors to the community leave here, mostly because of housing.”

Gorman & Company, in collaboration with the county, state and Vail Resorts, wants to keep that from happening.

Story Contact:
Kimball Crangle
Colorado Market President, Gorman & Company