Winter Park wants to pay property owners to convert their houses into long-term rentals

Winter Park
Posted at 5:36 PM, Sep 24, 2021

WINTER PARK, Colo. — Somewhere between the breathtaking beauty and bustle of business you’ll see it: a little town becoming a little bigger. All over Winter Park, the sound of construction can be heard in the distance as the town grows to try to accommodate all its residents.

Like other mountain communities, Winter Park is facing a home affordability crisis that has been exacerbated by COVID. On top of a previous housing shortage, more remote workers are moving to the area, further straining the home stock.

"The market has skyrocketed and essentially that’s created a scenario where our housing inventory is not attainable for any of our local workforce,” said Winter Park Mayor Nick Kutrumbos.

The town council has stopped short of declaring it an official emergency, but Kutrumbos says it is a crisis that will require local, state and federal solutions.

The housing shortage is so bad, businesses are being forced to adjust their hours or close for a couple of days a week because they cannot find employees to work. Kutrumbos is worried this is quickly becoming a health and safety that could impact response times during emergencies.

In an effort to help, the town has annexed some areas, nearly doubling in size over the years, and it has mechanisms in place to negotiate with developers on some land. Kutrumbos credits the town councils from 15 to 20 years ago for the foresight.

The current town council is considering changing its building codes and designs for new projects. It has also set up the Winter Park Housing Assistance Fund with the help of the Grand Foundation that helps buy down the rent of some residents by $400 a month.

That money goes directly to the landlord for up to one year before the renter needs to reapply for the program. Almost 400 families have been able to receive financial aid during the current application cycle.

The town is also moving forward with an emergency ordinance to address short-term housing in the area. It formed a short-term rental panel two years ago to do a deep-dive on the issue.

The town council has dedicated $325,000 to a program that would try to incentivize property owners to convert their short-term rentals (like AirBnB and VRBO) into long-term rentals for people living in Winter Park. The town council is hoping it’s enough to house at lease 40 workers.

“What we are trying to do is compete with short term rentals. In Winter Park I would speculate or guess that over 80% of our housing inventory is on the rental market,” Kutrumbos said.

For a studio or one-bedroom home, the current town plan is to offer property owners up to $5,000 for a six-month lease or $10,000 for a 12-month lease.

For a two- or three-bedroom home, the current plan is to offer property owners up to $10,000 for a six-month lease and $20,000 for a 12-month lease.

The town council doesn’t want to ban short-term rentals because there are not many hotels in Winter Park and the town needs short-term rentals to help bring in tourism.

“We know that we want them and need them. We don’t want to take them all away, we don’t want to limit them right now. But, I think that the dollars and the incentives that this program offers will be enough to make people think twice,” Kutrumbos said.

The town would ask realtors to help out by advertising the program to anyone who buys a property from them

The money to pay for the program will come from the town’s general fund. The way Kutrumbos sees it, if Winter Park can’t figure out its housing issues, businesses will close down, and the town will lose revenue regardless.

However, some worry about the message this move will send to current long-term rental property owners.

David Jamison is a real estate broker in the area and says he has seen the number of long-term rental units start to quickly decline.

Jamison blames two factors for the decline: a booming housing market where homeowners can sell properties for much more than they originally bought them and an increasing number of people moving to the mountains thanks to the prevalence of remote work.

He doesn’t believe the housing affordability issues are new, but he does think COVID is exacerbating the problems.

While he agrees that the town needs to do something to help, he’s worried that the property owners who have already been doing long-term rentals will feel let down but the town council with the emergency ordinance.

“Certainly, it will bring up a lot of people who are already doing the long-term rentals wondering where is their paycheck from the town,” Jamison said. “How do you compensate the people who have been doing it for 20 years already?”

Some of the short-term rental owners might also not like the fact that they won’t have access to their home for a visit.

The emergency ordinance also doesn’t limit the amount property owners can charge for those rentals, meaning the homes might not necessarily be more affordable.

The town has received positive feedback on the idea and plans to launch a website with the program details in the near future. The program will last for one year but could be extended in the future.

One company’s approach

While Winter Park tries to incentivize property owners, Mountain Parks Electric, Inc. is taking matters into its own hands. The electric cooperative’s 65 employees service roughly 22,400 customers in Grand County.

Mountain Parks Electric has had a difficult time recruiting qualified employees to the area because of the housing affordability issues. Previously, the co-op had wanted its employees to live within 30 minutes of the office.

In recent years, however, it’s increased that radius to 45 minutes, possibly lengthening the time it takes to respond to an outage.

On top of COVID and more remote workers, the East Troublesome Fire also put a strain on the housing market in the area. The fire destroyed more than 300 homes north of Winter Park.

Two of Mountain Parks Electric's employees lost their homes in the fire and another several were displaced due to damage. The fire made an already tight housing market even tighter.

“A lot of the people that were displaced, others who owned homes, have now had to find places to rent while they rebuild their homes,” said Scott Simmons, the assistant general manager for the co-op.

In an effort to help, the company has decided to sell a parcel of land it has owned for more than 30 years to put the money toward employee housing.

Mountain Parks Electric had originally purchased the 2.7-acre plot for around $60,000 with the intention to use it for a substation.

Over the years, though, Simmons says the co-op determined a substation in that area was not feasible.

The land is now in the process of being purchased for roughly $1.25 million.

“We will use the money to either build housing for our employees or to purchase some existing housing,” Simmons said. “We would like to have some kind of a program where we can help people purchase homes.”

The company plans to set up an endowment fund with the proceeds from the sale to help employees.

All across mountain communities, housing availability and affordability are becoming major issues. Towns and even individual employers are trying their hand to help is issue, knowing it will take years of effort and a number of ideas to truly solve the issue.