Second homes' effects studied

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From affordable housing to rampant job growth to tax policy to community character, there is very little that the growth in Steamboat's second-home market won't touch, officials said.

The social and economic impacts of second homes were the focus of a study by the Northwest Colorado Council of Governments that was presented to the City Council on Tuesday.

Routt County was not a part of the study, but the numbers and findings that came from Grand, Eagle, Summit and Pitkin counties are applicable to Steamboat Springs, city officials said. Using them, the city can start preparing for increased demand in the market, which the study predicts will happen in the next 18 years as baby boomers enter the age bracket of those who overwhelmingly purchase second homes.

"The impacts of this study are far reaching," Council President Paul Strong said. "It really says something for what Steamboat could look like in the next 10 to 20 years and what the community needs to do to make sure its vision is the one we end up with."

With 52 percent of all housing units in Steamboat being second homes, their social and economic impacts are hard to overlook.

"I do think it affects everything," Strong said.

The city's number of second homes blends in with those of the study's four counties, in which an average of 60 percent of housing units were second homes. Eagle had the lowest percentage, with 49 percent of its housing units as second homes, and Summit had the highest at 67 percent.

For Strong and fellow councilman Ken Brenner, the snapshot of ski resorts' upper-income housing market proves that something should be done for their lower-income housing market.

"It really stresses the need for immediate work in affordable housing," Strong said.

A catch-22

One of the study's main findings was that a strong second-home market increases the cost of housing and the demand for low-income jobs. So, while the second-home market creates more jobs, the people working those jobs will have a harder time affording to live in the community where they work.

"The second-home industry is not creating jobs in this town (for people) who can afford housing in this town," Brenner said.

The study found that 18 jobs are created during the construction of a 3,000-square-foot second home. Spending from that home spurs another 1.8 jobs.

The study went on to show that second homes were the single biggest generator of $5.3 billion "ouside dollars" entering the four-county region. Second homes accounted for 34 percent of the outside income, winter visitors generated 28 percent and summer visitors generated 14 percent. Residents who generated income from outside sources, such as out-of-town jobs, accounted for 18 percent.

The more second homes there are, the more need there is for jobs, especially those in the service sector such as lawn maintenance, cleaning companies, massage therapists and caterers.

The catch-22 for communities is that as the demand for second homes goes up, so do home prices, especially in areas where land is limited. And as prices go up, it is harder for the work force to live in the community where they work.

"It's a pretty simply message they are trying to give us," Brenner said. "As long as you see second-home growth, and obviously that is going to continue, real estate prices will continue to escalate, you'll see the demand for jobs continue to escalate, and it is going to be harder to house your work force."

Brenner said it speaks to the need for creating affordable housing that, through measures such as deed restrictions, will stay affordable.

Room to grow

Strong noted that Steamboat Springs is different from other communities in the study, because it is in a wide valley with room to grow. The ski resorts in the studied region are in narrow mountain valleys without much buildable land. Also, in all four studied counties, more than 70 percent of land is preserved as state and federal land. In Pitkin County, 83 percent of the land is in state and federal hands.

Steamboat has room to grow west of town, where a community plan supports building 2,400 homes, one-third of which would be for affordable housing. And, less than 50 percent of the county's land is in state and federal hands.

"Our community is different in some respects, but some of the pressures will still be there," Strong said.

Tax policy

Tax policy was another key issue city officials said could be influenced by second-home owners. More than six months ago, the city established the Tax Policy Advisory Board to recommend a long-term taxing strategy for the city.

The impact of second-home owners will be taken into account when the advisory board makes its recommendation, which is expected later this fall, chairman Ken Solomon said.

Solomon and a few other board members attended Tuesday's meeting, and the board spent about 10 minutes at the end of its last meeting discussing the study.

The advisory board discussed the idea that second-home owners are in town for 30 percent to 40 percent of their time. During that time, they are contributing to sales tax, but they demand tax-dependent services such as roads, sewer, water, fire protection and ambulance year round.

"We see maybe in the future why we would want to go to a mill levy. They get all the services, but they are only going to pay 30 to 40 percent of the time," he said.

Board members also talked about reducing city sales tax and adding a service tax, which would focus on the lawn maintenance crews, caterers and cleaning companies that second-home owners use. Solomon said the advisory board was hesitant to make such a recommendation, questioning whether the tax would even cover its own administrative costs and how the city would differentiate between the neighbor child mowing lawns and a professional business.

Strong said a property tax should be part of the city's revenue stream. But his reasoning is based on establishing a more stable revenue source than sales tax, not finding a way to place more taxes on second-home owners.

"There is the notion of 'Good, let's tax the people that don't live here. It won't affect us,'" Strong said. "I think that is somewhat of a selfish strategy."

He said when owners visit their second homes, the study indicates that they tend to spend more than residents.

Strong said he could see the city creating a recreation district where a mil levy would go to fund recreational amenities that full- and part-time residents support.

In the survey, 58 percent of fulltime residents and 59 percent of second-home owners gave open space and trails a top priority, more than public transportation, medical services, education and other services. The second highest-ranking priority was for parks and trail systems.

Community character

A less tangible question than tax policy is how second-home owners could affect the community's character.

In a question that asked about the future use of second-home properties, almost half of study respondents said they would like to increase the use of their residence, and 28 percent said they wanted to see an increase of use by friends and family.

About 11 percent of the second-home owners said they intended to use the homes as a full-time retirement residence.

"That becomes a positive effect. They're here full time, just like us, in buying patterns. That is a positive thing, but when are they going to retire?" Solomon said and noted the almost 20-year baby boomer wave is just beginning.

Brenner said the more alarming statistics were the ones indicating that 17 percent of respondents want to use their residences as part-time rental units, and 7 percent want to use the homes as full-time rental properties.

The fear is that 75 percent of the homes in Steamboat could be sitting empty, Brenner said, pointing to some towns that have enacted zoning regulations requiring certain housing units to remain occupied.

"What if only 17 percent of the homes were being lived in, if the resort was all cold beds? What happens to the character of the town?" Brenner asked.

Strong questions what will happen in another 20 to 30 years when the second-home owners are in their 70s and 80s and decide they don't want go through another long winter. He wonders whether the homes will pass to their children or whether they all will start selling, causing a crash in the housing market.

Another concern, as land and new-home prices continue to rise, is that the income divide will widen between the second-home owners and the work force.

Talking to the City Council on Tuesday night, Pitkin County Commissioner Mick Ireland said there were three Aspens, three Eagles and three Steamboats: the second-home owners, the middle class and the largely Hispanic working class.

Communities don't have a good gauge of how the two ends of the spectrum spend their money, and governments rarely hear their voices, he said.

"You don't really know about the two sectors that are really important, integral in your community," Ireland said.

The city has said it hopes to join Northwest Colorado Council of Governments and wishes to participate in future studies on second-home owners.

"I think it is very important. You are going to see this discussion a lot more," Brenner said.

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