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September 2021

Skiing's Prickliest Problem: Housing

Affordable housing for staff has long been a thorn in the ski industry's side. How did it transform into a full-blown crisis?

Written by Andy Bigford | 0 comment

The housing crisis in this Western ski town had reached the tipping point. “Locals” realized they would forever commute 25 to 100 miles every day on a narrow, twisting, snow-clogged road. Old miner’s cottages that once housed workers were being bought up for millions and razed for another vacant trophy home. Tents and campers parked on Forest Service land, open space, or just the end of a dirt road became highly sought-after accommodations. In the municipal election, half the city council was rejected and replaced by fervent housing advocates who prioritized locals over attracting more visitors.

Sound like today’s housing crisis? The year was 1989, the place was Aspen, and in my role as editor of the local newspaper, I had a front-row seat for the spectacle. This is all to say, at least for major Western ski towns, we’ve been here before.

Double whammy. But the current pandemic-fueled crisis—now also impacting parts of New England and other swaths of ski country—has reached new heights. Along with its accompanying labor shortage, it’s a dire situation for the industry. Lack of housing has forced reductions to revenue-generating summer activities at ski resorts in the West, and there may be more shortfalls this coming winter. 

Complicating matters is the nationwide housing shortage—5.5 million units underbuilt over the last 15 years, according to a recent survey by the National Association of Realtors—and the much-debated national labor shortage, which hit a record in April with 9.3 million unfilled job openings.

Less inventory. In the West and places like Vermont, the pandemic made a bad problem worse when second-home owners fled urban centers and moved full-time into their ski country vacation homes. As these so-called “mid-termers” took up more space, real estate sales and prices skyrocketed, as did rents. Others who were formerly visitors also bought homes and moved to the mountains, further reducing the inventory of housing that previously may have been rented to locals. This all had been preceded by an over-arching shift from what were once local worker housing units to short term rentals (STRs). That made the pandemic-inspired changes all the more painful for locals, and especially employees. 

“What was a chronic problem is now acute,” says Mike Kosdrosky, who ran Aspen and Pitkin County’s groundbreaking housing program for nearly six years and now advises resort communities across the country as part of his new company, Workforce Housing Solutions, in Basalt, Colo.

No housing, no staff, no service. The resort business flourished during the pandemic winter, overcoming what was arguably the industry’s greatest challenge ever. However, the industry workforce is suffering unprecedented burnout from the combination of reduced staffing levels, operational changes, and constant policing of Covid safety rules. Now, many destination resorts face the challenge of housing the staff they need to provide traditional levels of customer service.

This can’t be cured by a vaccine. Without housing, it is difficult, if not impossible, for resorts to fulfill their goal of making service, i.e., their people on the front lines, a major part of the customer experience they provide.

SIGNS OF AN EMERGENCY

The bottom-line impacts are already here.

Public pleas. In Crested Butte, Colo., which has been bursting at the seams since Covid, tourism officials cancelled the remainder of the town’s summer advertising campaign due to the housing/labor shortage, according to the Crested Butte News (there is no plan to reduce the winter spend). The budget was diverted to a message that warned visitors that the town and its local workers were stressed and hurting, and that guests should prepare for lower levels of service, including longer waits. » cont. 

The local governments in Frisco, Colo., and surrounding Summit County—home to Breckenridge, Copper Mountain, Keystone, and Arapahoe Basin, and the largest ski community in the country in terms of skier visits—passed “emergency declarations” to publicize the severity of the housing/staffing/customer service issue. 

In Tahoe, Calif., hit particularly hard by work-anywhere Bay Area tech employees fleeing San Francisco to find higher ground, “Roundabout Rallies” were scheduled in 2020 in Tahoe City and other spots around the lake, according to SFGate. Fed-up locals had intended for the rallies to promote a new tourism code and visitor stewardship, but the effort quickly devolved into a shouting match targeted at sending visitors packing, thus exposing a class warfare that has simmered for decades. 

Desperate for solutions. In Jackson Hole, Wyo., which has long housed a substantial portion of its workforce in tents and campers, the local housing director pointed to monthly home rentals skyrocketing fourfold and requested $13 million in funding to build housing in fiscal 2021.

Summer businesses were so strapped for staff in Sun Valley’s local community of Ketchum, Idaho, that the city council considered allowing workers to stay in tents in the town park while they hunted for more suitable accommodations, according to aWall Street Journal report. One council member, who works two different jobs in addition to handling city affairs, was essentially homeless, unable to find a rental he could afford.

In the East, many issues contribute to labor shortages. Housing issues there are not as severe as in the West, but are becoming more challenging. 

Sugarbush in Vermont’s Mad River Valley started offering steeply discounted season passes ($100 each) to any local property owner who would rent a spare bedroom to a worker.

Killington, Vt., benefits from a relatively adequate housing stock a half hour away in Rutland, but did see more locals’ beds disappear over the Covid winter as 740 local units were listed as STRs, while the population is just 700, according to a report from Curbed. 

Like many others, Killington has been buying up older lodges on the outskirts of the resort to house seasonal—and car-less—J-1s and H-2Bs, which then creates a transportation need.

Progress is being made. In North Carolina’s Maggie Valley, as in other isolated parts of the country, employee housing has been a need for decades. Cataloochee Ski Area started a pilot program in 2003 and now houses about 85 employees, a third of the workforce. The ski area likely couldn’t operate without it (look for more on Cataloochee and other outliers in the second part of this series). Even in the Midwest, many ski areas provide seasonal housing, particularly for J-1s and H-2Bs. 

In its first-ever survey of resorts on the matter, NSAA found that almost 60 percent of U.S. ski areas provided housing during the 2019-20 season, handling an average of 138 employees. In the Rocky Mountain region, 68 percent of resorts provide employee housing. There is not enough space here to list the dozens of employee housing projects Western resorts have built in the past decade, let alone earlier developments. (I took a “gap year” to ski bum in Summit County for winter 1977-78; after deboarding the Greyhound bus in Frisco, the first floor space I found, before lucking into a condo rental, was in the Sunrise employee housing complex at Keystone Resort.) 

THE SECOND PART OF THIS SERIES ON THE HOUSING CRISIS, HIGHLIGHTING SOME OF THE PROGRAMS THAT ARE WORKING (AND NOT WORKING) IN SKI COUNTRY, WILL APPEAR IN THE NOVEMBER ISSUE OF SAM

HISTORICALLY CHRONIC

The root of the problem is simple at major Western destinations and Eastern ski/mountain towns: enormously affluent demand for an extremely expensive, scarce local product that is subject to high construction costs, zoning laws, rampant NIMBY (Not In My Backyard)-ism, and the limitations of narrow and largely built-out valley floors, open space restrictions, and Forest Service land. Shortages/high costs—especially for new workers, who initially face the nearly insurmountable hurdle of the first/last month’s rent plus damage deposit—were apparent in skiing from the beginning. Warren Miller somehow made living in his trailer in the Sun Valley parking lot in 1947 exciting and romantic (shooting rabbits for dinner, hosting huge parties with Hollywood socialites), creating a “roughing-it” ski bum mystique that has persisted for decades. 

Warren was followed by thousands who now declare: “I lived in a tent when I first came here, the newcomers can make the same sacrifice.” The big change: In many ski towns, the workforce has become predominantly comprised of immigrants, people who work extremely hard to support themselves and their families, essentially keep the lights on in the valley, and understandably must prioritize a safe, decent place to live over a powder morning.

The birth of workforce housing. First in Aspen in the early 1980s and eventually across the Western ski town landscape, local governments began to require that developers build “workforce housing” as part of every new development, or pay a “fee in lieu” to eventually create it elsewhere. These programs are not an entitlement, such as public housing, but are considered a privilege and governed by a contract. In the business, “employee housing” defines units that a company builds for its own needs, while “workforce housing” refers to the broader government programs serving those who work anywhere within the county.

Housing authorities also launched highly regulated guidelines for how to qualify for subsidized housing and to remain in it, hiring compliance officers to crack down on violators, who for major violations can be evicted. It was perhaps the worst of big government, because it absolutely had to be in order to preserve the program’s accountability and locals’ trust. Ski resorts usually have their own property managers and staff to oversee their “employee housing;” they operate outside the government program but try to provide the same thing—affordable housing.

LOCALLY, A TOLL

Besides funds raised through new developments, there are a variety of other taxation tools. Aspen approved a 1 percent real estate transfer tax (RETT) in the early 1990s, which, along with developer fees, funds housing. Many other major ski towns/counties followed Aspen with now-standard “housing authorities.” While the resulting deed-restricted beds built or converted have been substantial, they’ve never been nearly enough.

Aspen/Pitkin County’s program is the largest per capita in the country, with 3,080 units in its inventory available for both rentals and purchases. If those assets were sold on the free market, it’s estimated they would be worth more than $3 billion. In the free market, real estate typically fetches double to even 10 times its price in the deed-restricted category. 

Of course, Aspen being Aspen, workforce housing isn’t particularly inexpensive. Homes at the upper end of the regulated Aspen program sell for more than $1 million, and annual household incomes can reach into several hundred thousand dollars and still qualify.

THE NEW TIPPING POINT?

It was apparent from the beginning in the West that housing would always be a chronic, complex, hyper-local issue, and perhaps that’s a major reason that “housing crisis” has never been one of the absolute front-burner ski business issues that gets nationwide industry focus. Now that workforce housing has become so hard to find, that is likely changing.

Resident support. A recent survey by the Colorado Association of Ski Towns (CAST) and Northwest Colorado Council of Governments (NWCCOG) of mountain residents in the state’s six major ski counties—representing roughly a fifth of nationwide skier visits—showed they were overwhelmingly supportive of a variety of taxes and other legislation to ease the No. 1 problem in their lives: the housing shortage. The report recommends RETTs, enacting higher property taxes for second-home owners (many of whom, over the years, have done a lot for mountain communities), and even instituting “vacancy taxes” for homes that are not “warmed” by either visitors or workforce.

Is this the time for such drastic action, in the wake of a once-every-hundred-years’ pandemic? That question was posed on a recent SAM Huddle by Colorado Sun veteran reporter Jason Blevins, who has written tens—if not hundreds—of thousands of words about the statewide crisis and lives it daily from his home downvalley of Vail. It’s a reasonable question; if half the migrating “mid-termers” move back to urban centers within a year or two or three, as some observers expect, that would somewhat ease the shortage. And there are already signs that volume and prices are at least cooling off in the overall mountain housing market.

CORRECTIVE STEPS

The bottom line here was expressed by Bill Jensen, then the CEO of Telluride, almost four years ago: “We are realizing we have to be leaders in creating the solutions.” 

Those solutions range from converting older lodges to seasonal dorm-like housing to building all-new employee housing. However, the latter can be complex and frustrating due to local housing rules and regulations. And regardless of the ease of implementing some solutions, finding or developing enough housing for all of a destination resort’s employees is often a daunting prospect.

Besides partnerships, innovation, and a commitment to fund and build, build, build, what other steps can be taken in resort towns to start to bridge the gap? Heed this warning from Aspen, with the hindsight of experience: “It’s easy to build it,” Kosdrosky says of a process that he knows many resorts have not found easy at all. “It’s another to manage it long term.” (More on that in the second part of this series.)

There are no easy answers, and many new ideas may or may not work in various locales. But for the first time, the employee housing shortage seems to have everyone’s attention, with many mountain town residents pushed to a point where they want to spend tax money on preserving their quality of life, not attracting more visitors. At least in the West, resort leaders will likely need to build a powerful consensus, perhaps not unlike the one formed to fight climate change. This would also involve concerted lobbying in high places as funding from state and federal governments comes into play. 

Various voices have warned over the years that housing is actually the ski industry’s biggest challenge in the West. Leaving that debate aside, it is possible that it will take even more leadership from the top CEOs and managers, in both spirit and substance, to put a dent in the crisis. From decades of dealing with government programs, with all their pros and many cons, housing expert Kosdrosky offers this prediction: “It’s going to be up to the private sector to really address this.”