Hello Commissioners,

My name is Tucker Zimmerman. I am a Realtor with Coldwell Banker Mountain Properties, a homeowner in Dillon, and a primary resident. I do not own or manage any short-term rentals.

I am writing to you based on your proposals for changes concerning STR permits/licenses. I am primarily concerned with three issues; Infringement of Property Rights, Government Picking Winners and Losers, and your motives.

Regardless of if a homeowner chooses to short-term rent or not, they purchased their property knowing it was an option. That option includes the future rentability of the property. This could be at the time of resale or just because of a life change. By taking away the owners property rights, you are diminishing the value of their asset. It’s cut and dry, you are taking money out of people’s pocket. Is Robinhood the thief really a good guy?

My second concern is even worse. In the words of Timothy Carney of the American Enterprise Unit “every time the government picks a winner, it creates another loser.” Your preliminary plan designates neighborhood zones where you will either heavily restrict or outright ban STR’s. This is an outright example of the government picking winners and losers. For example, let’s consider two properties that sold for similar prices in Keystone and Dillon Valley. Both Buyers bought their properties under the same county rules, knowing short-term rentals were an option. Now, you are going to heavily restrict STR’s in Dillon Valley but not Keystone. Therefore, you will kill any appreciation for the Dillon Valley property but the Keystone property will continue to appreciate. What gives you that right?

The noble goal of increasing affordable housing is at the center of all of this so my third point may come across as an accusation, but I don’t intend it that way. Instead, I think you’ve been played by two major corporations. Many of the properties maintaining their property rights under your proposed plan and under the recent Town of Breckenridge Plan are heavily staked by Vail Resorts or Powdr Corp. Both companies stand to benefit by having a semi monopoly on short-term rentals. Vail & Powdr both hold significant management stakes in the real estate you have deemed exempt. In fact, I don’t think a STR restriction has been placed on any real estate that would affect either company. However, they also stand to benefit from increased availability of workforce housing. Keep in mind that much of the labor for these companies is not the true local we’re trying to support. Both Vail and Powdr hire many J-1 and H-2B visa applicant, they even host job fairs in other countries. I’m all for a free market workforce, but I don’t think Summit County Government should harm our homeowners to supply cheap housing for Billion dollar corporations. To avoid any appearance of impropriety, Vail & Powdr corp employees should not be eligible for any deed restricted housing or the new Lease to Locals program. Those companies can build their own employee housing, I will be happy to help them find some land. If you prioritize Vail & Powdr’s bottom line, that’s where it becomes Crony Capitalism.

Thank you for considering these points. I urge you not to restrict any aspect of property rights but if you feel you must, please do not play favorites.

Update on Summit County Short Term Rental Moratorium from Summit Association of Realtors Executive Director. For updates on Breckenridge Short Term Rental Restriction Please see my prior blog post or inquire to me. 

-Tucker Zimmerman

Here’s an update on the County’s emergency short-term rental license moratorium proposal:

1. The emergency moratorium would disallow any new short-term rental licenses for twelve weeks, effective Tuesday, September 14^th.
2. The moratorium applies to unincorporated Summit County, but the County has exempted Keystone and Copper Mountain because these areas are designed for STR’s as tourism areas. Breckenridge, Blue River, Frisco, Dillon, and Silverthorne do not fall within the County’s jurisdiction, so this does not apply to them.
3. The moratorium intends to allow an overwhelmed staff to get caught up in processing nearly 75 applications for licenses per week, almost 1000 since January.
4. At the same time, the County is working on multi-faceted incentives and housing programs to help address housing issues that they hope to roll out by mid-October. This includes cash incentives to owners in areas such as Dillon Valley and Wildernest that they believe should serve as locals housing, to convert from STR to long-term rentals. It also includes allowing accessory dwelling units in areas where they aren’t currently allowed or incentivizing ADU’s to become long-term rentals with deed restrictions. These are just a few of their ideas.

SAR has asked that the County consider allowing properties already under contract the ability to apply for a license during the moratorium. We have also asked that spec homes/new developments under construction be allowed to apply for licenses. Finally, we have requested that properties that have STR reservations/rental contracts through the winter months be allowed to honor those contracts. We have asked the same to the Town of Breckenridge.

To learn more, sign up to come to SAR’s Pizza & Politics on Friday, September 10^th, from 11:30 am-1:30 pm to hear from County Commissioners Tamara Pogue and Josh Blanchard. We encourage you to bring your words of opposition or support, and ideas for them to consider.  Free Pizza lunch at SAR.

If you have any questions or comments, please feel free to reach out to the County Commissioners directly or to the SAR Board of Directors, Brian Bernardoni, our Government Affairs/Public Policy Director, or myself.

Breckenridge to Cap Nightly Rentals

Update from Summit Association of Realtors-Executive Director Sarah Thorsteinson

As expected, last night, after listening to an additional 3 hours of public comment, the Breckenridge Town Council passed a cap on new short-term rental licenses for non-exempt units at a maximum of 2200 licenses. There are roughly 3,0000 non-exempt licenses right now. Permits will be reduced through attrition, meaning as properties are sold, or licenses are turned in, the permit level will be reduced.  Once the 2200 level is achieved in several years, the Town will issue licenses based on a waiting list.  Attached is the ordinance and staff memo. The ordinance goes into effect November 2^nd, 2021. Current property owners may apply for licenses up until November 2^nd. Properties under contract must have been under contract at 11:59 pm September 27^th to obtain a permit.

Here are the details directly from the staff memo:

1. Sets a cap of 2,200 non-exempt STR licenses at any time 
2. Provide for a 6-month temporary STR license to the purchaser of an STR licensed property 
3. Requires that exempt properties have an on-site 24 hour staffed front desk 
4. The person responsible for staffing the front desk cannot be a member of the security 
personnel 
5. Provides for the administration of a waitlist of applicants for STR licenses when the non-
exempt license population exists above the 2,200 limit 
6. Added provisions for exchanges of property that allow the purchaser/grantee of a licensed property to obtain an STR license (‘exempt’ transfer categories) 
3. The amount of time a wait list member has to apply for a license after being notified that they are eligible has been reduced from 20 to 5 days 
4. Units for which a building permit was issued and in effect on September 14, 2021 may apply for a license within 20 days of receiving a certificate of occupancy (CO). 
5. Transfers pursuant to a valid real estate contract that was fully signed prior to September 28, 2021 provided the sale is completed within six (6) months of the signing of the contract.

Frisco is revisiting the development of the Lake Hill workforce housing subdivision. https://www.summitdaily.com/news/local/after-2-decades-summit-county-officials-still-finalizing-early-plans-for-lake-hill-development/

Take a look at the letter I just wrote to Frisco and Summit County Officials. Let me know if you have any questions regarding deed restricted housing or any comments on this topic. I'd love to hear your side of this story!

Dear Frisco Town Council, Summit County Commissioners and Summit Housing Authority, 

I am writing you today in response to the renewed interest in the Lake Hill affordable workforce housing project, and regarding the current and future structure of all deed restricted property in Summit County. My name is Tucker Zimmerman, and for the last 4+ years I have been a Realtor with Coldwell Banker Mountain Properties in Frisco. I was a resident of Frisco for my first three years in Summit County and am now a homeowner in the town of Dillon. Prior to relocating to Summit County I was a Realtor with Grand County’s most successful real estate team where I was heavily involved in the development of the Lakota Duplex neighborhood, and the evaluation of several other prospective developments. I am an alumni of the University of Colorado Boulder, with a degree in Corporate Finance and a Certificate in Real Estate. 

It is exciting to hear about the possibility of such a large workforce housing development coming to fruition. With the proposed 436 units, this project has the potential to make a significant difference in our affordable housing crisis for locals. In fact, with the limited land available for development, this may be one of Summit County’s last opportunities to make a significant dent in the problem. That is why I’m writing, to express my concern with how deed restrictions have been structured in the past and to offer areas where I think they could be improved. 

My underlying concern is that current deed restrictions undercut the reasons to own a home for the noble pursuit of supplying homes at an attainable price. These do not have to be independent, especially with the resources Summit County and its towns have been willing to supply. According to a 2016 Harvard Study,1 “Homeownership continues to be associated with significant gains in household wealth at the median for families of all races/ethnicities and income levels.” This gain in wealth is due to three major factors:  equity building through mortgage principal reduction, equity building through value appreciation, and the long-term potential to live in a mortgage free home. Of these, deed restrictions cut out the strongest wealth builder which is gain of equity due to value appreciation. I believe as Summit County officials you should evaluate whether the goal of workforce housing is to:  A) Continue your current path of supplying housing in a way that leaves owners unable to move into market rate housing, or B) Help our residents engage in and take advantage of our county's valuable real estate market. If you choose option A, the county and towns will fund countless housing projects and will eventually run out of land without ever solving the problem. 

The primary problem lies with the 3% per year appreciation cap tied to most affordable housing projects. Let’s take the Peak One neighborhood as an example. The Peak One Neighborhood limits appreciation to the lesser of 3% per year or the percentage increase in AMI (Area Median Income). At the time of development, according to the Peak One Neighborhood website, mortgage interest rates were around 5%. As an example, I looked at (Address removed for owners privacy). The owner purchased this three-bedroom, two-bathroom home for $294,900 on 10/21/2011. Assuming I used the same calculation method as SCHA, today the maximum resale price (ignoring approved capital improvements and real estate commission) for this home would be $393,970. That is a total increase in value of only 33% since October of 2011, while the average Frisco three-bedroom home price has risen about 114% since just January 2013 (January 2013 is as far back as Summit Association of Realtors provides data for). Not only did this owner’s appreciation not keep up with Frisco as a whole, but in 2011 there were five market rate three-bedroom homes priced below $300,000. One of those five homes (Address removed for owners privacy) just closed on June, 9, 2021 for $710,000, a 141% gain.

Now let’s go back to that mortgage interest rate of 5% I mentioned above. Assuming the owner of (Address removed for owners privacy) borrowed 80% of the purchase price, this Frisco resident has now paid about $148,176 in mortgage payments and still owes a principal of $193,750, totaling $341,926. So if this owner sold today, they would only reap a net 17% gain or 1.7% per year which far underperforms the S&P 500. After reading this case study, ask yourself if you think the owners of (Address removed for owners privacy) can likely move out of deed restricted housing? Were the owners of (Address removed for owners privacy) well served by the the Town of Frisco, Summit Housing Authority and the developers of the Peak One neighborhood? On both counts I would respectfully argue the answer is no. Not only that, but the appreciation cap is just that “a cap” not a guarantee. My point? A homeowner in this situation can only lose. 

I didn’t start this letter with the intent to sabotage deed restricted housing; I want to improve upon it and allow Summit County residents to engage in our market, so I’ll move onto my suggestions for a better system. Deed restricted housing should not be a permanent solution but should be a leg up to lift our locals into the free market. Below I’ll outline some suggestions, and I’ll use some timelines and numbers as a baseline, but it is up to you to study what the appropriate values should be to better serve our community. 

Appreciation Caps: As clearly demonstrated above, we need to do away with appreciation caps. At a minimum, they need to be significantly increased. I would argue a minimum of 8% per year is necessary to give locals a chance to ever move out of deed restricted housing without a significant career change. For perspective, market rate housing in Frisco is up 14.9% from May 2020 to May 2021.

Transition to Market Housing: While it’s great to live in an area with year-round neighbors, Summit County should blend the locals' housing with the reality that we live in a second-home destination. My proposal would be that after five to ten years of ownership, a deed restricted home could be sold to a non-resident with a heavy transfer tax paid by the Buyer (~10%), or it could be sold to a qualifying resident with no transfer tax. This transfer tax would then go back into the funding pot to create new affordable projects. Perhaps a maximum number of homes per year could be transitioned into free-market homes. 

Creativity: The county should look at creative variances where appropriate, and only in the case of workforce housing. Two years ago, the town approved an unwanted gas station at the corner of Highway 9 and Lusher Court, next to the Baymont Hotel. We didn’t have a need for a new fuel station or convenience store but the developer found that was the most valuable use for that parcel. In retrospect, what if the town would have allowed a height variance to match the Baymont in exchange for a developer building an affordable housing condominium project? This was a location where no view corridor would have been affected and it’s in an even better location than the proposed Lake Hill subdivision. 

Funding: Summit County Government needs to create a system where affordable housing funds itself. With the scarcity of land, it’s going to be increasingly difficult to create new projects. Summit County is one of the most beautiful places in the world and we have an extremely high quality of life. Perhaps our government could look to attract new big businesses that would fund affordable housing for not only their employees but for our long term locals as well. In the past, big business has been something the county has avoided instead of embraced. 

Restrictions: Currently some deed restricted properties and loan programs carry the stipulation that the owner/resident not own other real estate. While the motive is pure, it is wrong to prevent people from participating in the free market. On a personal note, I am recently engaged and we would one day like to have a family. This, naturally, would require a larger home. It would be unfortunate if my ownership of a condominium in Dillon prohibited us from becoming a part of the Lake Hill community. 

While past workforce housing projects have been well intentioned, they have ultimately underperformed the county's needs and have failed the residents from a financial perspective. It’s time to take a fresh look at how these projects are structured. The Lake Hill development presents the perfect opportunity to do so. Let’s not create another housing trap for our locals. Let’s use this as an opportunity to springboard them into a better Summit County. 

Thank you,

Tucker Zimmerman

TZimmerman@CBMP.com

Resident of Dillon, Colorado

Realtor at Coldwell Banker Mountain Properties

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