The City of Vail purchased nine units this year, including this condo at the Pitkin Creek complex. The city paid cash, then went into a restricted bill of sale and is selling the units at a reduced price.
City of Vail/courtesy photo

The City of Vail purchased three homes this week, bringing the total to nine so far this year.

The city purchased two units in the Buffehr Creek condos and one in the Columbine West condominiums. The total purchase price was approximately $1.8 million.

The city’s total spending this year for the nine units is approximately $7.25 million.

About $4 million of the money comes from collections from a new municipal sales tax, passed in 2021.

After voting to approve the purchases, Councilman Kevin Foley made sure to thank city voters for passing this tax increase last year.

The units will be offered for sale, then rented if they do not sell. Part of the deed restriction process includes a significant reduction in the sale price, combined with an appreciation limited to 1.5% per year.

The first unit purchased by the city, a family unit in Pitkin Creek condos, was purchased for $975,000. The unit is currently under contract for $635,000.

Adapt to the market

Vail Housing director George Ruther said the purchase program grew out of the valley’s property boom over the past two years.

The city had a program for several years called Vail InDEED, in which the city absorbed a portion of the sale price of a home in exchange for a permanent deed restriction.

But in the months when cash purchases became common, fewer sellers wanted to participate. A cash offer closes much faster.

Ruther said interest in InDEED started to pick up as the market cooled down a bit. Board member Barry Davis called the program “InDEED plus”.

Ruther said units purchased so far can be resold or leased. Target markets are those who are either for the city or work in the city. The municipality, one of the largest employers in the valley, currently has more than 30 vacancies, or about 10% of its workforce.

First pitching the idea of ​​helping with a purchase, Ruther said the idea was to act “like the rich aunt or uncle.” This idea was abandoned in favor of another much simpler one: just buy the thing, then resell it.

“Once we have the house, buyers can take the time they need” to complete a transaction, Ruther said.

Ruther credited city leaders with taking the initiative to buy homes.

Davis said the current effort comes from the board “locking in on the one thing we can agree on.”

Need more than ever

The ever-increasing need for housing continues to grow, of course. Davis noted that there were just over 90 lottery applicants when Chamonix’s 32 townhouses became available. Four years later, there were 40 applicants for a single unit that was offered for resale.

“That’s a strong indicator,” Davis said.

While the city pays to lower the price of the units it buys, Ruther noted that the city cannot buy or build anything for the kind of money it spends to lower those prices.

Using money from the new tax, along with money from the general fund and the reserve fund, allows the city to “turn cash into real estate assets,” Ruther said.

It’s a pretty safe bet, Davis said.

“These are easy wins,” he said. “These units will never be cheaper, and even if the world turns upside down, I would still prefer to own the units.”

Davis acknowledged that there is no perfect process for act restriction units. “But we are trying,” he added. And, he noted, given how difficult it is to build anything new or rezone an existing property, it’s a good step.

“We can’t build another Chamonix today, but we can do it,” he said.