Feeling the heat

Rising fuel prices pinching some landlords

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— Landlords who rent apartment buildings in Steamboat and include utilities in their rent are taking a hit on rising natural gas prices this winter.

Curt Weiss, whose firm manages Walton Pond Apartments, has 300 rental units in various properties.

At Walton Pond, where he provides employee housing for workers at the Steamboat Ski and Resort Corp., he has seen monthly gas bills for each of his 12 buildings go from the low $200 range to $400 a month. Each building contains eight apartments.

Those 12 buildings run off a central boiler and the cost of heat and hot water are figured into the monthly rent.

Gas prices aren't the only contributing factor, Weiss said.

"It's just been a frigid, cold winter," he said.

Ray Kulas, property manager for Mountain Village Apartments, is feeling the gas crunch as well. He offers a fixed utility cost in his apartments, and because two of every eight units are reserved for families with modest incomes under a federal tax credit program, his utility rates are lower than normal.

Renters who qualify for a "Section 42" rent program at Mountain Village have their utility costs fixed at $27 a month for a one-bedroom apartment, $35 for a two-bedroom apartment and $42 for a three-bedroom apartment. That fee includes natural gas heat, hot water, sewer, trash, landscaping and snow removal.

"Our natural gas bill is $4,000 over last year," Kulas said.

Weiss and Kulas say they both have apartments for rent on the open market this winter. His two-bedroom units generally rent for $775 a month on the open market, including heat and hot water. He offers month-to-month leases during the summer.

"With our 300 units, we are in a position where there are probably only two months of the year when we don't have some availability," Weiss said.

Presently, he has one apartment in Hayden, three at Walton Pond, one at Quail Run and another at Riverside available.

Kulas, who works for Corum Real Estate Group, said 91 of the 103 apartments in his complex are occupied.

If 88.3 percent occupancy sounds favorable, consider that the 12 empty apartments represent a lost cash flow opportunity of $12,000 a month, Kulas said.

Kulas' challenge with filling his apartments is exacerbated by the fact that the tax credits extended to Corum Real Estate Group by the federal government require that both of the Section 42 units in each apartment building must be rented before other open market units may be rented.

Kulas said he's having a difficult time renting those subsidized units because wages in Steamboat put people above the maximum qualifying incomes.

In one of his buildings, which has all three-bedroom units, he has two apartments he cannot rent on the open market because one of the Section 42 units hasn't been rented.

Under Section 42, the maximum allowable income for one person is $19,000. That includes all sources of income in addition to a paycheck, such as interest income from a bank account. The amount jumps to $21,700 for two people, $24,450 for three people, $27,150 for four people and $29,300 for five people.

Lease rates are $464 for a one-bedroom apartment, $555 for a two-bedroom and $639 for a three-bedroom.

Four to five years ago, when the apartments were first completed, Kulas said, he had no problem qualifying tenants for Section 42. Local wages have gone up during the intervening years, but his income limits haven't changed, and now he struggles to qualify tenants.

Kulas said he thought he had a single man qualified for one of his one-bedroom units. Working for $9 an hour at the front desk of the Steamboat Grand, the tenant was under the $19,000 maximum. Two weeks later, he received a $2 an hour raise, and wound up renting an apartment on the open market for $755 a month, including utilities and cable TV ($47 over base rent).

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