Colorado’s housing crisis has gotten so bad that small towns are now building people homes

SILVER CLIFF  – The vacant lot along First, Second and Third streets is lined by wooden stakes that delineate the Bobcat Subdivision, a site for affordable housing in this southern Colorado town. 

Eventually, this area could be filled with more than a dozen homes with stunning views of the Sangre de Cristo mountain range.

This isn’t the work of a developer seeking big profits, but rather a Custer County Schools project aimed at keeping the community afloat. 

The housing crisis in rural Colorado is so severe that school districts, towns and counties, with the help of organizations like Habitat for Humanity, are building homes and apartments for teachers and deputies and others who are the lifeblood of the communities, but are being priced out of the market or living in substandard housing.

A couple miles west of the Bobcat Subdivision, on the outskirts of adjacent Westcliffe and with equally breathtaking views, is the Bobcat Quad – another school district project named for the school’s mascot. Its four one-bedroom apartments are offered to district employees for $500 a month, and there’s always a waiting list.

And in Poncha Springs, 50 miles away, the Spartan Heights subdivision is taking shape on land owned by the Salida School District, thanks to partnerships with Habitat for Humanity and a local developer.

A trio of housing needs assessment reports released in November for Fremont, Custer and Park counties reveal the challenges: poor quality of existing homes and apartments, lack of rental units, an influx of retirees seeking less expensive homes and an escape from the Front Range, a growing number of vacation homes, and increasing housing prices. Also, building costs tend to be higher in rural areas and often there is no one to do the work. 

The reports echo previous assessments for other south-central Colorado counties.

“It’s a big problem and it will take time to resolve,” said Autumn Dever, regional housing director for Central Colorado Housing, a department of the Upper Arkansas Area Council of Governments. “We need solutions all across the board. We need all types of housing.”

Those solutions are coming from the community rather than outside investors and developers, who generally pursue the high-end and vacation-home markets that have fueled housing price increases in some areas. 

Sydney Benesch grew up in Westcliffe and returned a few years ago to teach second grade. Finding decent housing on a teacher’s salary was a challenge. The base annual salary for the district is now $32,000; one-bedroom apartments rent for as much as $1,200 a month, and rentals are hard to find.

“This is where I wanted to be so I would have figured something out,” she said. “But this has helped so much.”

She was among the first to move into the Bobcat Quad apartments four years ago and loves it. Expecting her first child in July, she and her husband are looking for a larger home.

The lower rent, she said, helped them save money for the baby and a bigger place.

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Custodian Brett Berry moved into the Quad in April 2019 after living in a studio apartment above the local laundromat. He said his wife is disabled, and the lower rent means he doesn’t need a second job.

“This has helped us get back on our feet and pay off debt,” said Berry, a Westcliffe native who’s worked for the district for 12 years. “It’s been a real godsend to us.”

Custer County Schools Superintendent Mike McFalls said it’s difficult to recruit teachers when the pay is low and rents are high. Even though the district has only four apartments, he said, “it’s a stab in the right direction.”

The apartment manager reports to the school board, so district staff is not involved in the rental and maintenance issues, he said.

The district, in conjunction with local builders and the district’s Building Trades program, for students interested in construction careers, wants to build houses in Bobcat Subdivision, but they know it will take time.

Chris Palmer, of Palmer Builders, said he recently started talking with teacher Renee Johnson about a partnership. He moved his company from Colorado Springs to Westcliffe last year, and she is new to the district this year so they’re starting from scratch.

He said he moved, in part, so he could be more involved with his community. Although he hasn’t previously worked with a building-trades program, he believes they are a tremendous idea because of a “shortage of young blood coming into the trades.”

McFalls said the district owns more than a dozen parcels of land, and the “school board wants to put a house on every tract. It takes a long time because we only have a handful of kids. But we’re definitely supportive of anything we can do to provide affordable housing.”

Johnson said she is talking with Palmer and Trinity Homes about partnerships to develop that land.

Although most local officials say they’re a bit uncomfortable in the development world, they realize others aren’t going to solve these problems for them.

Proximity to the metro area creates its own problems

Park County owns several parcels of land, including in Fairplay and Bailey, said Sheila Cross, director of development services for the county. 

The two towns’ proximity to high-cost areas – Bailey to metro Denver and Fairplay to Summit County – means local residents are often squeezed out of the market by the commuter workforces of adjacent communities.

The county partnered with Summit Habitat for Humanity on plans to build housing for eight families, in duplex or single-family homes on its land in Fairplay. The county also has spoken informally with a local developer about a parcel it owns in Bailey. 

But the county doesn’t want to move too rapidly, Cross said.

“As a county government we’re not used to being developers,” she said. “This is a bit of a test period – we’ll build one and see what happens.”

April-Dawn Knudsen, executive director of Summit Habitat, said it made sense for her organization to venture into Park County because 7% of the Summit workforce lives there. She said Habitat expects to break ground and complete two units this year.

“Homeownership is very much out of reach for people we depend on in our communities,” she said, noting that Park County teachers earn about 49% of the area median income.

The plight of local workers is the force behind several efforts across central Colorado, including:

•  The town of Florence in Fremont County wants to partner with a developer to transform a building it owns into affordable workforce apartments. 
• The city of Victor in Teller County is considering proposals from two local developers to build affordable housing for full-time residents on 16 city-owned lots. “Our workforce wants to live up here so they don’t have to drive every day,” city administrator Deb Downs said. “But they can’t find housing in good enough condition.”
• The Chaffee County Housing Trust is working with a local developer to build eight homes at Two Rivers in Salida and six at The Farm in Buena Vista.
• Custer County used a $40,000 El Pomar Foundation grant to buy lots in Silver Cliff for multi-family housing and is mulling how to develop them.
• The town of Alma in Park County is identifying vacant and blighted property that it might acquire at low cost for Habitat housing.
• A self-help housing program sponsored by U.S Department of Agricultural/Rural Development and Central Colorado Housing has built 109 homes in Fremont and Chaffee counties since 1999, with more in the works. Similar to Habitat for Humanity, families work together and with a construction supervisor to build the homes on government-owned land.

Whatever housing is built on these public plots will have deed restrictions so that it remains affordable in the future. Generally, houses built under these programs must be used as a primary residence and can’t be rented out or offered as vacation rentals.

Vacation-rental market adds pressure

Short-term vacation rentals are a huge part of the housing problem across the state, and increasingly in non-ski resort towns, officials said. 

According to an October 2019 report from the National Association of Realtors Research Group, six of the seven counties in the Upper Arkansas River housing region ranked among the top 25 vacation home counties nationally for price gains from 2013 to 2018, all with gains exceeding 55%. The region includes Chaffee, Custer, Fremont, Huerfano, Lake, Park and Teller counties, and only Teller was not on the list.

“The VRBO industry has a huge impact on the housing issue,” Dever said. “Homeowners can make more money on short-term rental than long-term rental.”

A bill introduced at the Colorado statehouse this year created a stir recently because it proposed taxing short-term rentals as commercial rather than residential properties. Real estate agents and property managers strongly opposed the measure, which died in its first committee hearing on a 6-0 vote. But affordable housing advocates and some local officials were happy for the discussion about the issues.

MORE: A Colorado lawmaker brought a short-term rental bill he never intended to pass. It created an uproar.

Charles Bogle, chairman of the Custer County Attainable Housing Committee, said vacation rentals are a two-edged sword in a tourist economy.

“About half of the houses in Custer County are other than full-time residences,” he said. “We’ve got everything from hunting cabins to quite nice houses that are second homes. In the last couple of years VRBO rentals have increased – that’s good news and bad news.

“It’s taken long-term rentals off the market, but to satisfy our need for summer events it lets us bring in outside folks,” he said.

The county added a 2% lodging tax about eight years ago, he noted.

Most communities now tax and regulate vacation rentals, but the impact remains.

Problem is worst in Chaffee County

Of the seven counties she serves, Dever said Chaffee County’s housing crisis is the worst. 

Businesses in Salida and Buena Vista have been forced to reduce and change hours and some have closed because employees can’t afford to live there, she said.

Indeed, Salida is the poster child for what can go wrong.

“We see what’s going on in Salida and we don’t want that to happen,” said Wade Broadbent, Florence’s planning director. “We want to tell people that Florence is great, but one by one. We want sustainable growth.”

Last year the town began to see interest from remote workers and retirees from Colorado Springs who liked the town’s affordable prices and proximity to the Front Range, he said.

Florence has a good water system and “tons of water rights,” he said, noting that three subdivisions were platted before the 2008 real estate market crash stalled development. 

Reed McCulloch, executive director of the Chaffee County Housing Trust, finds it interesting that others are learning lessons from issues in his county. When the crunch started in Chaffee County, he mused, “we looked at Breckenridge.”

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The Housing Trust was created in 2008 and had its first project ready to go in 2009 but couldn’t get financing because of the Great Recession. Efforts were shuttered until 2015, but affordable housing projects take time, so they have been outpaced by demand.

While the projects may seem small to city dwellers, none of the smaller towns are interested in seeing a big apartment complex plopped in its midst, said Becky Gray, Chaffee County’s housing director. They want to maintain their character – and want places where people want to live so they remain in the communities.

“There is a lot going on,” she said. “Hopefully we can look back in a couple of years and say, ‘Look, we got people in houses.’”