The Brown Ranch presents our community with an unprecedented opportunity to take control of our housing future and design the community in which we want to live.
THE STEAMBOAT SPRINGS HOUSING NEED
The Steamboat Springs and Routt County community is at a turning point in its arc of history. We pride ourselves on being a town with a resort, not a resort town. The community that many have visited or called home because it is a “real town” is losing the very character that has made it special for generations. A major influence in this loss of character is the intense pressure on existing housing supply and the commensurate increase in housing prices. The development of housing that is affordable to the local workforce has been limited for decades, creating a housing deficit for our community. Increases in tourism and the demand for second homes have only exacerbated this shortage. This market imbalance has resulted in a decline in the working age population, a workforce that is housing cost-burdened, and forced to travel long distances to access housing or double-up in the limited housing supply available in Steamboat Springs. This confluence of events has created a seriously large housing problem that requires a seriously large solution.
Seeing this growing need, YVHA began an aggressive plan to deliver affordable housing in our community using federal Low-Income Housing Tax Credits (LIHTC) and grants. Since YVHA’s inception by the City and the County in 2003, and the affordable housing mill levy in 2017, we have been delivering housing to the community’s workforce. We built 48 lowincome units at the Reserves, 72 low- and moderate-income units at Alpenglow, 90 moderate-income units at Sunlight Crossing, and we are in the process of building 75 low income units at Anglers Four Hundred and approximately 200 moderate-income units at Mid Valley.
Despite this progress, the housing deficit persists, with limits on the number of units that can be developed on infill land within the existing city limits of Steamboat Springs. A larger planned neighborhood is needed to address the decades-long absence of workforce housing being built in the Yampa Valley. Early in this process, we commissioned a housing demand study to better understand how many units are required to meet the needs of our workforce. The study identified an immediate need for 1,400 housing units, with more needed in the near future to keep up with job creation in the Valley. The Brown Ranch is the solution to this need. It is the last developable tract of land within the urban growth boundary that can create the homes needed for our workforce.
There is an immediate need for 1,400 units to house local, full-time Steamboat Springs workers, and a future need for additional units to support sustainable growth.
Defining the Problem
A confluence of market factors is driving the need for more affordable housing in Steamboat Springs – continued job growth in Routt County, finite planned development, and a growing presence of second-home owners and property investors that have inflated both the for-sale and short-term rental markets. Together, these forces create a significant housing shortfall for local workers. As a result, the Steamboat Springs workforce is traveling further to find housing, spending a large share of their income on housing, or “doubling up” in the limited supply within Steamboat Springs, creating health and safety issues for residents.
ABOUT THE HOUSING DEMAND STUDY
This dilemma has spurred the need to quantify the housing demand for local Steamboat Springs workers. RCLCO used a range of data points including data from the Colorado Labor Department, the US Census, and the local Assessor’s office to quantify both the housing shortfall that exists today, as well as the amount of additional housing units needed to support the number of new jobs anticipated in Routt County over the next 10-20 years. The findings from this analysis are then utilized to define a target program for the Brown Ranch Development, a community that will mitigate the existing workforce housing crisis.
RESULTS OF THE STUDY
RCLCO estimates that the current housing shortfall is roughly 1,400 units. Projections for future demand relative to supply growth suggest that there is a total need for approximately 1,960 new homes by 2030 (560 additional units beyond the existing need) and approximately 2,300 new homes by 2040 (900 additional units beyond the existing need). The methodology for determining both the current and future need is described later in this section.
WHO TO SERVE
In order to better understand demand as it relates to the Steamboat Springs workforce, RCLCO looked into the segmentation of housing needs by income and family size. The largest need falls within two categories:
Rental units in the “low income” category, meaning those earning less than 60% of the Area Median Income (AMI). Ownership units in the “move-up” category, or 128%-258% AMI.
Addressing the housing shortfall for these groups is a necessary step to support local businesses that face challenges retaining workers, while also providing opportunities for long-term Steamboat residents who have deep roots in the area and wish to continue raising families in the Yampa Valley.
Jobs have outpaced housing production for the past 10 years. Meanwhile, housing supply is shifting to vacation rental properties, reducing the available inventory for permanent housing. Housing costs are skyrocketing as a result of the increased demand.
Local housing supply is not keeping up with net new job and household growth, exacerbating housing supply and affordability challenges in both Steamboat and Routt County. From 2014 to 2019, 2,100 local jobs were added in the County, which should have translated to around 1,135 local-serving housing units. Instead only 34 total units were added to the County inventory for local permanent residents. All of these were ownership units, and in fact, rental units decreased by four. Meanwhile, more than 300 units were added for seasonal vacation rentals. In the longterm, housing inventory in Steamboat Springs for both renterand owner-occupied units tends to grow at a rate of 0.5% to 1% per year, while jobs have grown closer to 2% annually. This mismatch in historical employment demand and slow housing supply growth can explain the existing deficit.
In addition to job growth outpacing new development, housing prices continue to surpass AMI growth in the county. From 2015-2021, home prices grew at a rate of 9-10% per year, while AMI grew at a rate of 2.5%, furthering the housing squeeze.
Workforce households have become more and more cost-burdened: an increasing share of households spend more than half their income on rent, or must seek housing outside of the county.
The market trends described on the previous pages have led to increases in cost-burdened workforce households, where cost-burdened households are defined as those that spend over one third of gross income on housing. From 2014 to 2019, the share of households earning less than $50,000 that were cost-burdened increased from 30% to 39%. Households earning between $50,000 and $100,000 experienced a similar trend, with cost-burdened households increasing from 15% to 27% and extremely cost burdened households increasing from 0% to 5%. These trends underscore the rising unaffordability of housing for local workers in Steamboat Springs.
A majority of Routt County households fall into the 60-128% AMI or 60% AMI & Below categories. These households make up the local workforce. Market trends will continue to squeeze this population unless housing that is affordable to these incomes categories is developed at scale.
In order to assess demand for housing, RCLCO used a local employment-based model that aligns with the goals of Brown Ranch’s mission to serve local workforce households.
The Colorado Department of Local Affairs (DOLA) estimates that in 2022, Routt County had an estimated 20,000 workers. By 2040, the County is estimated to gain an additional 4,000 – 5,000 net new jobs that will drive the need for new housing. About 80% of these new locals are expected to be based in greater Steamboat Springs because it continues to serve as the primary economic driver in the county, with its wealth of local businesses, commerce, and tourism demand.
Historically, there are roughly 0.54 households for every job in the greater Steamboat area, which has remained consistent over time. Therefore, RCLCO assumed that going forward, every new job added would continue to generate demand for about 0.54 new households.
In order to better segment the local, employment driven housing need into distinct groups, RCLCO cut for the Steamboat Springs share of county worker households (80%), then analyzed the distribution of households by income level and parsed demand into four categories:
Low-Income (60% AMI or less) Entry-Level (60% AMI to 128% AMI, or the 33rd percentile of housing sales in 2021) Move-Up (128% AMI to 258% AMI, or the 67th percentile of housing sales in 2021) High-End (above 258% AMI)
These definitions are consistent with historical demand studies undertaken by the City and YVHA in 2016, 2018, and 2020 respectively.
After parsing demand into these groups, RCLCO compared wages for valuable local jobs, such as retail workers, teachers, police, and doctors in Steamboat to the aforementioned housing need categories. Given that many professions pay annual incomes that fall into Low-Income, Entry-Level, and Move-Up categories, and the goal of Brown Ranch is to serve all local workers, RCLCO focused on quantifying the housing needs for all three of these groups. Based on RCLCO’s analysis, Steamboat area workers in these income groups generate demand for about 7,800 housing units in 2022.
In order to understand how the local housing supply compared to the estimated demand by income group, RCLCO utilized Routt County Assessor and US Census American Community Survey (ACS) data. For both owners and renters in each income group, attainable housing costs were calculated based on the assumption that households should spend up to one third of gross income on housing. These attainable housing cost ranges were compared to local-serving supply within the same ranges. In order to define local serving supply, RCLCO removed properties in the County Assessor’s database where the primary owner mailing address was outside of Routt County zip codes (50-60% of housing supply at each income level is estimated to be non-local). This results in an estimated net shortage of 1,400 units today.
The Brown Ranch can help alleviate the current and future housing shortage, but key decisions about who to serve are needed to define the project.
In order to project the future demand for workforce housing, RCLCO relied on forward job projections and several key assumptions, including the continuation of historical trends in income growth, housing inventory growth, and a similar share of inventory allocated to non-local uses for each income group. RCLCO also factored in planned housing authority development to supply and assumed a slowdown in housing market price growth for consistency with long-term historical levels as a conservative estimate. Based on this analysis, there is expected to be a net demand for 1,961 Low-Income, Entry-Level and Move-Up households by 2030, and over 2,400 in the Steamboat area by 2040.
This reflects the theoretical net need for housing but, RCLCO understands that in practice, many existing households in the market are not going to move in a given year. While RCLCO recognizes that new housing at Brown Ranch can serve new and current local workers, RCLCO also assumes only a share of existing households will re-locate based on historical “turnover” for owners and renters for each income group. Brown Ranch can slowly close the housing gap over time, ultimately addressing over half the existing housing shortage by 2030 with a large Phase I, and the majority of the housing shortage by 2040 with 2,264 total units.
BASIS OF RECOMMENDATIONS
Based on the principles established through the Focus Team meeting process, the Demand Study, and preliminary work to align Demand and Project Economics, the recommended housing delivery at Brown Ranch is 2,264 units by 2040. Approximately 30% of these units should be targeted as affordable for the 60% AMI and below category (“Low-Income”) while 43% should be targeted as affordable for those earning 60-128% AMI (“Entry-Level”). The remaining 37% should be affordable to those earning 128-258% AMI (“Move-Up”). These recommendations align with current assumptions about housing need, community preferences, and available subsidies. The plan incorporates flexibility for changing needs over time.
Non-residential uses at Brown Ranch are important to building a walkable and connected community. Aligning community goals with demand will help ensure success of nonresidential uses on the site.
Non-residential uses will be an important component in achieving urban design and sustainability goals, such as the creation of a walkable community. Access to affordable food options is also a critical aspect of the Health Equity Initiative. Evaluating nonresidential demand helps us understand how much of each use can be supported within Brown Ranch.
The commercial space summary table to the right is based on regional and visitor/ tourist demand, as well as demand from the future residents of Brown Ranch. By 2030, the population will support an unsubsidized, mid-sized grocer of about 30k s.f., several supporting restaurants and shops, and a couple neighborhood offices. By 2040, a full community commercial core is possible, with a “downtown” feel and up to about 170k s.f. of space.
The proposed services for Brown Ranch use this data as a starting point for establishing the non-residential areas required, but only capture those aspects of the non-residential demand that align with the vision and principles for the site. For example, the inclusion of healthy, affordable, and accessible food at Brown Ranch is important. This type of access is best fulfilled through a food co-op or similar community food program. There are likely other sites in West Steamboat that are better suited to accommodate the large-format grocery store indicated in the Demand Study.
The proposed services also include spaces that were not indicated by the demand, but that we know through the health equity work and community engagement are critical to supporting the community at Brown Ranch. These spaces include childcare, a school, and unspecified community programs.
As the development progresses, other nonresidential services may emerge that are important to meeting community goals. The Development Plan accounts for this by identifying developable blocks that extend beyond what is needed to meet the proposed services. Balancing community need with economic viability will be critical in shaping the balance of housing types and non-residential programs within each neighborhood and phase.
There is a mismatch between the cost to build housing and the levels of affordability required to meet the need outlined in the Housing Demand Study.
Affordability refers to the percent of income spent on housing. Typically, it is assumed that no more than 30% of a household’s gross income should be spent on housing. “Affordable” to a family earning $250k per year is different than affordable to a family earning $80k per year. In Steamboat Springs, finding affordable housing is a challenge for nearly all the income levels of the workforce.
AMI is the measure used to define affordability. The AMI for Routt County in 2022 is $102,300 for a family of 4. At 100% of AMI, affordable monthly housing costs would be about $2,558. The full AMI chart for Routt County is included in the Appendix for reference.
Construction in Colorado is expensive. Even in the absence of land costs, the cost to build a new single-family home is more than a Steamboat household making 150% of AMI can afford. Further, the vertical construction of homes is only one component of the total cost to build at Brown Ranch (or on any site). A significant investment in roads, utilities, and pedestrian-friendly streetscapes is needed to set the stage for a vibrant community.
Initial estimates suggest that infrastructure per housing unit will make up about 21% of the total costs, while soft costs (design, management of the project) permits, taxes, and fees typically make up about 25% of any residential construction project.
In order to achieve the Steering Committee’s primary goal of providing affordable and attainable housing, subsidies from a variety of sources will be required. However, the following factors will also affect housing affordability:
Housing Types (mix of apartments, townhomes, and single-family homes) Mix of Incomes Served Tenure (owner vs. renter mix) Scale of Development
Compact development models using higher density housing types and efficient infrastructure will help to mitigate the amount of subsidy needed, without sacrificing income levels served or opportunities for ownership.
Higher density housing types are significantly less expensive to build on a cost per unit basis. For example, a single-family home is only affordable to a household earning 268% of AMI, while a townhome can serve a household at 136% AMI. This means that YVHA can build seven apartments for every single-family home. While there is significant community interest increating single-family home options at Brown Ranch, the project will need to rely heavily on multi-family and single-family attached homes (while still providing a share of single-family homes) to serve the need, reduce the subsidies required and make housing at Brown Ranch a reality.
In order to meet the demand for the local Steamboat Springs workforce, housing choices at a range of affordability levels are required. Regardless of housing type, lower income household will require more subsidy than higher income households. A range of scenarios were tested, but IT WAS ultimately determined that Brown Ranch must deliver a unit mix that aligns with the need identified in the Housing Demand Study.
TENURE (OWNER VS RENTER MIX)
Another key lever tested is the mix of owners and renters at Brown Ranch and how that could impact affordability. Typically, for-sale housing units have cost premiums that range from 10-20%. While it is expensive to build more for-sale units, Brown Ranch will seek to maintain strong ownership levels based on community input and the Demand Study, with a target of roughly 50% owner units for Entry-Level households, and over 60% for Move-Up households. Given severe cost challenges, housing that serves households with under 60% AMI will remain predominantly for-rent, with opportunities to grow into ownership at Brown Ranch.
SCALE OF DEVELOPMENT
Much of the infrastructure needed to support the entirety of Brown Ranch will be needed within the first few years of development. In addition, a large amount of non-residential space will be needed to support a vibrant, health-oriented community. Delivering a large number of units in Phase I can help mitigate upfront costs and positively impact project economics, while staying aligned with project goals (large influx of new units that will immediately serve Steamboat’s most vulnerable populations).