Vail to start allowing buy-in from local businesses at Timber Ridge redevelopment

Vail is forging a unique funding structure for the redevelopment of Timber Ridge, which will allow buy-in from local businesses and residents in an effort to make the estimated $152 million project more manageable.

 “It appears for one of the first times in Vail’s history, we’re actually seeing a significant amount of participation from business owners in helping address the housing challenges,” said George Ruther, Vail’s housing director. “This shift in paradigm, I think, is largely being brought about because of the financial model that we’re using here on the redevelopment of Timber Ridge. It appears to be moving in a great direction.”

Reservations incoming

At its Tuesday, March 21 meeting, the Vail Town Council gave the go-ahead for the town and Triumph Development to begin accepting cash reservations on homes at the approximately 288-unit development.

---

---

Starting on Friday, March 24, at 9 a.m., businesses will be able to lock down units with a fully refundable $5,000 deposit. This reservation system — as well as the required reservation agreement — will be available on Triumph Development’s website.

Ruther said that “given the amount of interest” they’ve seen, it’s time to get more concrete commitments.

---

---

“I think there is value to not only gauging their interest but at some point getting people to commit to a greater degree,” he said.  

For businesses, this deposit will set aside units on a first-come, first-served basis.

And for individuals interested in purchasing a unit, there will be a separate lottery process announced in the future, Ruther said.

The town also determined that of the approximately 288 homes it expects to bring to the new Timber Ridge, it plans to set aside around 150 for businesses and around 90 for individuals, with the town also purchasing around 44 units (or one building) as additional rentals.

“The business aspect of this needs to happen for the whole program to come together. When these businesses buy these apartments and they’re putting their employees in there, it’s opening up other properties; we’re creating housing, it’s deed-restricted, it stays that way,” said Council member Pete Siebert. “So we get a good firm base for the rest of the project and actually that’s what allows us to consider buying a building and providing ownership opportunities.”

Each of these units will be 100% deed-restricted, largely following the town’s typical terms. For Timber Ridge, these terms are being considered as follows:

• 30 hours per week of employment at a business located within Eagle County or 75% of income is earned from a business located within Eagle County
• No rental rate cap on the for-rent homes
• A 1.5% per annum maximum price appreciation cap on the for-sale homes
• No maximum price appreciation cap on the for-rent homes
• For-sale homes shall be limited to primary residences occupancy (individuals)
• For-rent homes shall be limited to rental units only (businesses and town)
• The homes are not eligible for an Employee Housing Credit credit, per the Vail Town Code
• All homes subject to a town approved resale process

On Tuesday, the Town Council expressed an interest in prioritizing Vail-owned businesses and not allowing purchases from investors outside of the valley. To this, Town Manager Russ Forrest said that, based on current discussions, the town would have “first right of refusal” for the purchase of units.

Over the past two weeks, Triumph and the town reached out to the local community to gauge its interest in this model. And, according to Council member Travis Coggin, “everything seems to be looking good from a demand standpoint.”

“It seems like a unique way to really tackle this and get real community buy-in that’s going to benefit everyone,” Coggin added.

On Tuesday, Ruther called the response “somewhat remarkable,” with businesses expressing interest in around 145 homes (and 248 beds) and individuals expressing interest in around 100 homes (and 164 beds).

Ruther added that the greatest level of interest was for the one-bedroom units, which he said was likely a factor of the product type as well as the price point. For the other unit types, Ruther said there was good demand for two-bedroom units as well as studios, with less interest in the three and four-bedroom units.

“At the end of the day, we have done a good job of matching demand with interest,” Ruther said, adding that as businesses and individuals put down deposits for specific unit types, Triumph will be able to better refine the development’s exact unit mix to match demand.

Thus far, the estimated prices — meaning they could change as development gets underway — for the new Timber Ridge are as follows:

• Studio: $377,000 
• One-bedroom: $433,000  
• Two-bedroom: $655,000 
• Three-bedroom: $868,000 
• Four-bedroom: $1,080,000 

Tackling the price tag

The town and Triumph decided to move forward with this model in an effort to make the estimated $152 million price tag more manageable.

In previous discussions, the proposed deal structure stipulated that the town would provide the land as well as “seed money” for site development and infrastructure costs, estimated to cost around $38 million. Triumph Development would be responsible for the remainder of development costs (estimated at around $114 million).

For the town to purchase one building or approximately 44 units, as it is currently targeting, it would cost the town an estimated $17.25 million (or $392,000 per unit).

Carlie Smith, the town’s finance director, said the town would have to do some kind of “financing for that building.”

“It could potentially bring down the future bonding capacity that the town has,” Smith said. “In addition, we would need to subsidize, I’m estimating about $5 million, based on initial conversations with the bound council to be able to make those rents affordable. You would also, of course, not be getting reimbursed for that building, losing that cash flow to put into future housing projects.”

Smith added that the town’s estimated debt service per year would be about $2 million.

Council members expressed an interest in also looking for additional grants or partnerships to help fund the building, with Smith agreeing the town would continue being creative in its funding efforts.

Relocation of residents

The town and Triumph are targeting for construction to kick off in May 2023 and for residents to begin moving in November 2025, which would leave the current Timber Ridge residents without homes.

The town has long been seeking solutions for these residents, with its primary option being the Residences at Main Vail, which is expected to open on Aug. 1, 2023. At Tuesday’s meeting, the council discussed giving priority and rent discounts to Timber Ridge residents in the new Residences at Main Vail.

As presented, the town would give Timber Ridge residents the first opportunity to lease at the new Residences property, opening up leasing options a month before it opens it to the general public. To this, the council posed no opposition.

However, it was also presented to give current Timber Ridge residents a discounted rental rate for a two-bedroom, one-bathroom unit, which the majority of Council members opposed.

“I do want to help them move there, I don’t want to do it based on just a blanket reduction in rent,” Coggin said.  

Mayor Kim Langmaid agreed, adding that in order to be “fiscally responsible on this project and others moving into the future” the town needed to consider a way to help those in need, but not across the board.

“We had a lot of discussions about the financing of this and it was really important that we were able to pay off those annual fees and keep up with our payments and not be losing money on this,” Langmaid said.

With majority support, the town is expected to bring back some form of income threshold for Timber Ridge residents to receive a discounted rental rate at the Residences at Main Vail.