Can private builders create affordable Vail Valley homes?
Vail, CO, Colorado
I really hope Gary Miller is a straight shooter.
Miller is the managing partner of Vail Capital Partners, the Avon-based private equity group that Tuesday bought the River Run apartments at Dowd Junction. He sounds like a decent, sincere guy, but everyone who’s worked in this business in this valley for any length of time has been fed at least one steamin’ bowl of hooey by someone in the real estate and development business.
For now, though, let’s take Miller at his word. If he backs it up, it could bode well for the valley’s future.
Miller got his ownership of River Run off to a good start when he pledged that the condos ” the 117 units have always been rentals ” would stay in the rental pool for at least another 18 to 24 months. In the last couple of years, tenants at River Run have been told they’d have to move in a matter of months, only for nothing to come of the previous owners’ plans.
He also said the first thing on his group’s to-do list for the property is to do take care of some fixes that have been put off for a few years.
So tenants have at least a little certainty at the moment, while Miller and his partners hammer out plans for the property.
In a conversation Wednesday, Miller stressed that there are no firm plans right now, that Vail Capital Partners is still examining its options. But he was also pretty clear about what he’d like to see happen at the property.
“If we do re-develop, we want to target professional housing,” Miller said. Depending on how the planning goes, the property could also include some rental housing as well as some starter second homes, perhaps for people moving out of fractional condos into sole-ownership units.
That means lawyers, doctors, engineers and others between, say, 25 and 49 who are either buying a first home or moving up from smaller place into a larger one.
Miller, who has lived full-time in Vail for the last decade, is familiar with the local housing shortage and high prices. Because of that, Miller said he’d favor some kind of deed restriction on at least some of the units at a rebuilt River Run. But, he said, he’s not a fan of price caps. Rather, he’s interested in restrictions sort of like the ones in Gypsum, where restricted housing can only be sold to people who work in the county.
Where the conversation got interesting, though, was when Miller started talking about the philosophy of his group, and how that’s different from a lot of investment companies.
We’ve all seen plenty of pieces of property trade hands over the years, and seen things like mobile parks replaced by far more expensive housing. It’s the old real estate maxim about building to the “highest and best use” of a piece of land, a noble-sounding phrase that really means “getting the most possible revenue.”
It’s why the valley’s housing market is dysfunctional at the bottom, and why there are all kinds of taxpayer-backed plans and programs to get people into their first homes.
Miller said his group is different.
“We’re not here to maximize profit on any investment,” he said. “We want a consistent return on our investment.”
Miller describes his partners as socially conscious people interested in philanthropy in their home towns.
“We believe real estate is a long-term investment,” he said.
Zillion-dollar homes will always be a big part of the local real estat scene. But with “affordable” units included at the West End project in Edwards, the newly-approved Stratton Flats homes in Gypsum, and now Miller’s thoughts, there might be a small trend building. Maybe the free market can actually find some room for the average buyer.
Scott Miller writes about valley business every week. Reach him at email@example.com.
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A Nov. 30 to Governor Polis and the Eagle County Commissioners from Beaver Creek Resorts Company – as well as the towns of Vail, Avon, Eagle and Minturn – requests a variance program which would allow businesses to remain open.