It was a low income housing project gone wrong in Ketchum, Idaho, that sparked long-time resident Steve Shafran's interest in workforce housing.
The project, which wasn't his, never got off the ground, but Shafran realized it wouldn't have provided housing for the teachers, firefighters and healthcare workers being targeted, because their incomes were just high enough to price them out.
Ketchum, next to the Sun Valley ski resort, is one of many mountain resort towns in the west grappling with a severe shortage of workforce housing, exacerbated by an influx of remote workers and second home purchases that began during the pandemic.
Vacation home sales rose 16.4% in 2020, with the sale of second homes in what the National Association of Realtors called "vacation counties" outpacing the market, according to a 2021 NAR report.
The median price of a home in Ketchum was $998,000 in 2024, according
Ketchum's workforce primarily consists of low- and middle-income households making under $45,355 per year or $23 per hour, according to Ketchum's
Ketchum lost 335 long-term rentals between 2010 and 2019, which the city report partly attributed to conversions to short term rentals.
"This is without accounting for pandemic acceleration when Ketchum's population grew by 25% compared to historical 1% annual growth," the report said.
In 2021, Shafran, an investment banker, met with long-time friend and real estate executive Tom Wolff and Mary Wilson, a chief operations officer, about creating a non-profit that would provide housing for that "missing middle."
The trio formed Wood River Community Housing Trust to build affordable rental housing for essential workers like teachers, healthcare workers, firefighters and service industry workers. The idea was to provide housing for people who couldn't afford the high market rents, but didn't qualify for federally subsidized affordable housing.
The target is people earning 80% to 140% of the area median income. Since most federal subsidies, including the low income housing tax credit program, which helps fund most
"The first thing I learned is that LIHTC doesn't work for essential workers, because they make too much," Shafran said. "If you call a lawyer and say you want to set up a nonprofit for workforce housing, they will say the IRS doesn't see that as a charitable activity."
But, while building workforce housing is not considered a charitable activity, lessening the burden of government is, Shafran said. And since the local government believes it has a housing crisis, the trio was able to create a nonprofit to build workforce housing, he said.
"We asked the local officials, and they said they would happily agree the city has a housing problem," he said. "That is important, because as a nonprofit, we don't have to pay property taxes, and for a typical apartment building, 20% of the rents go to pay property taxes."
That means it can charge 20% lower rents, which helped the organization reach its goal of renters not paying more than 30% of their income toward rent, he said.
"We are all about the missing middle," Shafran said. "These are people who are crucial to the long-term health of the community."
As a nonprofit, the trust can issue tax-exempt debt.
On its first project, the 12-unit Skyview Residences in Hailey, 12 miles from Ketchum and 13 miles from the Sun Valley Resort, it sold $4.5 million in bonds to wealthy individuals.
On its 27-unit Saddle Loft Apartment project, which opened in November in Hailey, Zions purchased the entire $7.5 million in bonds. The senior debt to make up the difference on each project was through the Idaho Housing and Finance Association, he said.
He estimates the trust saved 1.5% in interest costs on the 5% interest rate they received through Zions compared to what market rate would have been.
The YMCA, hospital and school rented 10 of the 12 Skyview apartments, so the trust didn't have to work to rent them.
He expects it will take six to eight months to fill up Saddle Loft, which opened in November, given the size of the town.
U.S. Department of Housing and Urban Development data for Blaine County puts salaries in the target income range of $44,500 to $77,500 a year for individuals.
The trust is looking at other projects in Ketchum, and also in other resort areas. It would like to get to 200 workforce housing units in Ketchum, which is about one-third of what data from the city shows it needs.
He believes the trust has created a model that works for creating middle class housing in a small resort town that can be replicated.
Shafran hasn't discovered any national workforce housing companies that are nonprofit, and he would welcome others to "steal his idea."
"I think we could do this all over the country," Shafran said. "There is enough demand from essential workers."
Mike Schrader, a partner in Orrick's Portland, Oregon, office, who was special counsel on the Idaho Housing tax-exempt bonds, said he has been seeing a lot of initiatives and efforts exploring the problem, but not a lot of closed transactions.
"We have been focused on special purpose 501(c)3's that are a joint venture between the public and private," Schrader said.
He is currently speaking with six or eight developers and sponsors about affordable housing projects, and three are in predevelopment on projects targeting the "missing middle."
It's not just resort areas, but rural areas all over Oregon that are experiencing this housing shortage, he said.
On Feb. 20, Oregon Housing and Community Services, the state's housing finance agency, launched a new program to create a moderate income revolving loan fund. The program targets families making under 120% of AMI. The program will provide zero interest loans to cities and counties for new housing units. The program is part of
"Our whole team at Orrick is working on finding models that could be replicable for a town of 10,000 or a ski community," Schrader said.
"There is a great deal of interest for middle class housing to support resort communities up and down the Rockies," said
Solutions leaders of resort towns from South Lake Tahoe, California, to Telluride, Colorado, are contemplating include a vacancy tax on homes that are empty more than six months of the year; and then using that revenue to pay for workforce housing.
Measure N, South Lake Tahoe's vacancy tax, a $6,000 tax on units occupied less than 182 days a year, failed in November with 70.7% opposed, according to El Dorado County election results.
The Colorado Association of Ski Towns, which represents 28 cities, also is considering a vacancy tax.
In some ski resort areas, 40% of homes sit vacant throughout the year, according to Census Bureau data, which also showed that one in three homes are used as short-term rentals. The tax wouldn't apply to homes used for short-term rentals.
CAST was looking for a legislator to sponsor the legislation, according to its website.
"The lack of available and attainable housing for employees in Colorado mountain resort communities has reached a crisis level, which is directly impacting the provision of basis services as well as the ability to adequately staff and operate all businesses," from ski resort companies to local, small businesses," according to CAST's statement.
The legislation would allow cities and counties to go to voters with vacancy tax proposals.
