How Housing Happens, Part 1: Public/Private Partnerships versus the Private Sector
I believe the community needs housing that’s 100% for local workers and 100% not for wealthy out-of-towners. Sound impossible? It’s not. But it does require a delicate balancing act of policy, zoning, private philanthropy, public financing, community outreach and thoughtful leadership. I’ve been on the front lines of housing policy for 12 years. I helped shape policies that built 411 units in the past few years. Every one of these units is conveniently located near transit and services and available only to local households.
There are two categories of housing in Teton County, market-rate and deed-restricted. Most housing in Teton County can be purchased on the free market by anyone in the world, and most households in Teton County can’t compete with a vast outside market of higher earners who would love to live in our unique place. At a median value around $5 million, the vast portion of free market single-family housing is out of reach of local workers. The second category, deed restricted housing, can only be bought or rented by local workers. It includes a supply of housing stratified by price to meet demand from households of various income levels. Deed restricted housing provides housing for local households, period. The median price of a single-family deed-restricted home is just over half a million dollars.
There are four different mechanisms through which deed restricted housing enters the housing pool.
- Preserve our existing stock of housing by compensating homeowners for placing a deed restriction on their home. That leaves them the right to sell to a qualified local worker regardless of income level but not to the absolute highest bidder.
- Buy free market property where market housing or commercial development would otherwise get built and lease the land to a housing developer for almost nothing in return for guarantees that housing built on the site is deed restricted.
- Use zoning incentives to expand the earning potential of a property in exchange for the provision of “bonus” housing units, at least some of which must be restricted to local workers.
- Require developers to build some amount of deed-restricted housing to partially mitigate the need for new housing resulting from new development—a so-called mitigation requirement.
Preserving community character boils down to increasing the ratio of deed-restricted housing to free-market housing. To that end, each mechanism has its plusses and minuses. The first two strategies are the most effective at improving the ratio of deed-restricted to free-market housing because they eliminate potential market housing while adding 100% deed restricted housing. But they are costly, can be complex, and can take time to come to fruition. The first strategy, preservation, is rare, likely because the current maximum compensation, $200,000, is insufficient to incentivize owners to place a workforce deed restriction on their property. The second strategy requires a lot of up front capital–the land must be bought at free market prices, and construction funding must be sufficient to make bankers comfortable with the financing. Those up-front costs can cost the public tax payer tens of millions of dollars.
The second two strategies cost tax payers less because developers pay for the new housing units. However, they only add new housing when coupled to new development, and the new development generates the need for yet that much more new housing. This does little to positively influence the final ratio of deed-restricted to market housing. As an example, of the recently completed 195 units at the Loop, 82 are deed restricted and 113 are available to anyone in the world who desires to live here, including highly paid remote workers. 113 market units generate yet more jobs and yet more need for housing. And as an example of strategy number 4, the proposed hotel that will replace the Kudar cabins on North Cache will add 70 new hotel rooms, 32 new market residences (short-term rentals), a restaurant and other amenities and only 16 units of deed restricted housing that will house about 20% of the employees needed to staff the enterprise.
Strategy number two is the gold standard. For example, the 57-unit Jackson Street Apartments is the largest 100% deed-restricted housing project in our history. Because it’s on land that could be used for lodging and high-end housing, it is eliminating potential new jobs and creating nothing but community housing–a complete decoupling of housing from job creation.
But getting that project finished took a major team effort. Many years ago, Teton County bought contiguous lots specifically for housing. It couldn’t get built until the Town Council first rezoned the property for housing. Eventually, a housing-focused nonprofit, the Cumming Foundation, purchased more adjacent lots and brought yet more capital to the table. A local bank provided low-interest financing. And Housing Authority Director April Norton artfully steered the project through a rigorous public process and down a narrow legal alley where public funding could leverage private philanthropy.
A second effort to build over 200 units of housing on publicly purchased land at 90 Virginian Lane did not move forward. One reason it did not is that the developer, who is reputable, was a for-profit developer whose investors expected returns that made it hard to achieve units affordable to the bulk of Teton County Households. I am confident a new vision will emerge that will once again achieve the gold standard in community housing.
Maximizing our opportunities to build housing that’s 100% for local workers requires thoughtful, experienced leadership. Polls are open now. Ballots can be cast through primary election day on August 18th. This season, please vote to re-elect Mark Newcomb for County Commission.
