From the President’s Holiday (Feb.) issue of the Mammoth Real Estate Times.

Q: In your writings you often use the term “affordable housing” and I’m not really sure what you are referring to. Can you clarify what it is you are talking about and what makes it so important to you in your discussions about Mammoth real estate?

A: I use the term “affordable housing” as a general term for housing that has some sort of government sponsorship. In Mammoth, like most mountain resort communities where private land is scarce and expensive, affordable housing is a critical issue for the resort’s success because the resort relies an army of working people and the people have to live somewhere–and preferably close to transportation an/or their jobs.

In Mammoth there are lots of terms tossed about in the “affordable housing” arena. A term you don’t hear much around town anymore is “inclusionary zoning”. But that is where it all started. In the early 90’s when the big development projects that are in process today were first being planned, the Town planners made inclusionary zoning part of the formula. Essentially, all of the new developments had to provide for new housing to help support the employment demand they would create. This housing is allowed to be built “off-site”, if the Town fathers deem it appropriate.

The new housing has to be “deed-restricted”, or in other words removed from the normal markets forces of rising rents and price appreciation, thus keeping it affordable to the common man. Today, the Town likes to call this “workforce housing”, and this housing is mostly overseen by an arm of the Town known as Mammoth Lakes Housing, Inc. But it took nearly a decade of special committees and meetings to get to this iteration.

The affordable housing story has other twists that can make it even more confusing. Besides the developers having to throw in (or meet their local inclusionary zoning requirements), there are State and Federal grants available that add names like Section 8 and HUD to the projects. They sponsor subsidized housing for low-income families and individuals, hence the usage of “low-income housing.” To make it even more confusing, there are tax credits available for entities like pension funds that can assist in financing these projects. The Town has even allowed some developers to acquire local condominiums and ultimately deed-restrict them for local housing needs.

But after all of the trials and tribulations over the subject, this housing program here in Mammoth is really coming to fruition. More and more units are being completed and occupied. And more units are planned. In fact, a lot more units are planned and likely to be constructed in the next few years. Developers have caught on that including deed-restricted housing within a project allows for “bonuses”. Those bonuses can include increased densities, increased building heights, decreased setbacks, etc. Look at the plans for the Clearwater project on Old Mammoth Road (Ocean Harvest, Rafters, etc.) and you will find many affordable housing units included in the plan. But you will also find some 100-foot building heights. That is nearly three times the heights of the surrounding buildings! I can hear (I have heard) the developers snicker, “If we include some affordable housing they (the Town) will give us anything we want.”

Like I said earlier, a great deal of this affordable housing thinking evolved in the 90’s when much of the resort development was being planned. At that time some people laughed at the whole concept because housing was dirt cheap in Mammoth–everything, in retrospect, was affordable. But few could really afford it. At that time, the biggest concern was what we referred to as “middle-income” affordable housing. The vision was that folks like middle managers, teachers, nurses, firemen, etc. would not be able to afford a home in Mammoth. Again, it seemed a bit preposterous in the mid-90’s, but that vision was correct. Today it is a BIG problem, and one that has yet to be resolved by the affordable housing programs in place. And even the down valley areas like Crowley Lake and Bishop will see these affordable housing projects in the future.
Back in the mid-90’s when I was more involved in all of this I completed a study of my own on condominiums in Mammoth that I felt would ultimately convert to housing rather than remain in the resort/second-home pool. I inventoried the condo projects and rated them “A” through “F” for their likelihood to transition to local housing. My casual study came up with about 2,000 units that would likely become permanent housing.

Looking back, many of those properties have transitioned that way, but there were also some unanticipated events that altered the course. First, the general appreciation of the 2000 to 2004 era priced many locals out–-even with very low interest rates, low-down programs and rising rents. Next was the advent of the MVP ski pass. That pass drove solid demand for the lower-end condos (I dubbed them “crash-pads”). And as the market has unfolded since 2000, many So Cal buyers realized that the new condo hotel product did not fit their usage needs–-and the demand swung back to the older, more spacious, park-in-front town homes–-like those that would appeal to also to local residents–-hence driving those values beyond affordability for many.

Looking at some larger views of the Mammoth market, if condominium inventory were to rise and values soften, then it is possible (by the laws of supply and demand) that the free market condo inventory could once again compete against the deed-restricted housing rents and values. If the inventory really increased, then many owners would likely turn those units (as they did in the past) into long-term rentals and in turn compete against the public sponsored housing and also the “investment” properties (like free market fourplexes). We’ll see.

In the meantime, mountain resort communities like Mammoth are always in “catch-up” mode when it comes to affordably housing local residents and seasonal employees. One of the planning axioms I use to like espoused how housing ties people to the community; “home ownership makes mayors out of ordinary citizens”. I don’t know if we need any more mayors, but I like the concept.