Municipal Finance Creates Affordable Housing for Lower Income Workers in Aspen and Throughout Colorado Ski Country
The local housing authority in Aspen, Colorado had responsibility for facilitating the development of affordable housing for the large body of lower income labor required to support the skiing and hospitality industry in the Aspen area. At that time, the city and county had a very limited supply of rent-controlled housing. A majority of lower income workers had to commute from as far as 40 miles, down one of the most dangerous mountain highways in the country. The government finance subsidiary of a major national finance companywas asked to provide financing for a small package of rent-controlled employee housing units in Aspen.
Doing a lower cost tax-exempt financing required some expansion of traditional risk parameters and innovative structuring. The hurdles presented had precluded the housing authority from completing a successful tax-exempt financing for any of its properties to date. The primary roadblock stemmed from the fact that the housing authority was unwilling to allow its property to be mortgaged in a way that would allow a lender to resell it as non-rent controlled property at open market prices. Rent controlled property was limited and hard to acquire. The authority did not want to jeopardize losing what it already had. Unfortunately, the resulting limitations on repossession and disposal of the property created an unsecured or under-collateralized transaction that was unacceptable to previous lenders.
For the financing provider the compelling reason to proceed with the financing was also the source of great satisfaction upon completion. According to Bob Neptune, now Consultant, Government Financing at The Alta Group and the President of the government finance company during the Aspen public financing project said, “There were more than 1,000 applicants entered in the lottery to receive the right to rent one of the 26 units we were financing.”
By allowing for a much longer than standard grace period, the housing authority was convinced to allow repossession and resale at open market rates in the event of default. The large number of applicants virtually ensured full occupancy while dramatizing the need for and value of creating this type of housing.
The result of this effort was that 26 members of the lower income workforce (along with their families) had a decent place to live within walking distance or a short bus ride from their workplace. This financing had helped the waiters, waitresses, lift operators, bus drivers and retail workers who were keeping the community a thriving, attractive place to visit.
"Our sense of “doing good” was multiplied many times over by what happened next. Our work on the Aspen project generated the realization that there was an overwhelming shortage of employee housing in almost all of the Colorado ski resort towns,” said Bob. “Consequently, we were able to use the structure we had devised to finance housing projects that supplied housing for more than 1,000 lower income employees in five different communities. Those projects are a constant reminder that our work is still helping to provide affordable housing for lots of families in need.”
This case study is based on an article published in the Monitor by Bob Neptune, Consultant, Government Financing at The Alta Group.