FEATURE: Building Blocks

By on July 7, 2015

Can private developers build a way out of a housing crisis? Do they want to?


Jackson Hole, Wyoming – For the most part, Jackson Hole is a happy, healthy place to live. Neighbors help neighbors, the post office is still a place to catch up with old friends, and a cordial raised-finger salute remains an enduring backroad ritual between passing vehicles.

But a blight threatens the very fabric of this community. It’s a cancer gnawing away at valley values and fellowship. The growing ranks of the neoteric homeless couch surfers, campers, and those choosing to move away are whittling away at a set of Jackson Hole values that was once stuff of legend. These aren’t urban panhandlers with shopping carts and rags. This is the new homeless – accountants, architects, business owners, prominent generational family names – bought out, cast out or shut out of anywhere to call home.

Teton County Housing Authority executive director Stacy Stoker sees it every day. “The Comp Plan talks about ‘generational continuity,’” she said. “People are moving away when they can’t find homes. People with a stake in this valley. People who have lived a long time in this valley. My own sister lost her home and has moved away.”

Bureaucratic solutions have been only marginally successful against a bizarro real estate market fueled by worldwide wealth. When the Dow is down, affordable housing mitigation appears burdensome. We need to create jobs and spur the economy, everyone says. When the market is buzzing, we are suddenly reminded of our housing crisis. We kick ourselves, why didn’t we build more rentals?

“The temperature of the community is very reactionary to what is going on,” Stoker said. “Just a couple of years ago when the economy slowed people were saying, ‘We don’t need housing’ and ‘Mitigation rates are too high.’ The climate has changed now but how long will that last? We have to keep working methodically to keep our workforce housed.”

Greg Prugh, broker/owner of his own full service real estate firm, agrees. More housing is and will always be needed.

“We should be building affordable and deed-restricted housing in good times and bad times,” Prugh said. “Today may not be the best time to build with high land prices, high cost of construction, and yet we should be building just the same.”

Big Brother a bust

But government efforts may have reached a standstill. A recent town meeting to discuss zoning changes in commercial districts went heavy toward lodging despite the chambers being clearly packed with sign-toting citizens demanding more housing.

Town councilman Jim Stanford has often been the lone voice on the council for reining in bureaucratic measures that allow for more commercial development without getting affordable housing in return.

“Big picture, long term, we have to take a more restrained approach to growth,” Stanford said. “The town should not be fanning the flames of commercial development and then complaining that the room is too hot, and we hold a two-day summit to figure out how to build a really expensive and complicated cooling system.”

The Housing Trust hasn’t been the same since their grandiose plans for McCabe Corner crumbled. The organization has since been dogged by accusations of too little building and too much land banking. Habitat for Humanity recently announced they don’t see a viable way to build in Teton County anymore, and the Housing Authority is undergoing a likely organizational restructuring in light of cost overruns at its latest development, The Grove.

Subsidized housing doesn’t sit well with some taxpayers no matter how dire the straits. As the cost per unit of The Grove climbed ever higher, commissioner Paul Vogelheim, who was liaison to the housing authority for two years, said enough is enough.

“We are subsidizing some of those units to the tune of $300,000 each,” he said. “Some people say that’s not a big deal, we’ve been doing that all along. Phase II has just tapped us out for $10 million dollars for not that many units. If we are going to really get after this – and there is talk that we are going to need 280 units per year to maintain the status quo of workforce housing if we want to keep 65 percent of our workforce here – we need the private sector. It’s critical. It’s the missing piece.”

But will private developers be willing to build affordable housing, to put low- to mid-range apartments on the ground instead of swank ski-in condos? A great number haven’t bothered. It’s not financially viable, they say. The town and county exactions and mitigation rates are too prohibitive, they say. The cost of land, the cost of construction, and the availability of labor and materials when the market is boiling steers developers straight to high-end projects with juicy backend promise. Erecting tenements in Jackson ghettos for dishwashers and sheetrock hangers isn’t high on their lists.


Prugh is one guy who thinks he can make affordable housing pencil out. He wants to. And he’s done it before with 810 West.

“The only way we could make that work was because the town essentially gave us the land and we used that to build the buildings,” Prugh said of the 2005 development, which was highly criticized for its look and business model.  “We handed back to the town what we said we would. I think we were a little short. We said we would give them a million and ended up paying them back $986,000 or something like that.”

Prugh’s taste for deed-restricted or affordable housing has soured since. After losing money on the Pine Box live/work project, and waiting endlessly for a new Comp Plan and LDR revisions to bring clarity to Jackson’s future, Prugh only now is beginning to see a scenario where he can build much-needed housing. It will require a shift in thinking bordering on what he refers to as “heresy.” The 41-year-old says the key is getting smaller and taller: Density packed into vibrant corridors of downtown Jackson where land is impossible to find.

“We need smaller spaces all the time,” Prugh said. “The problem with The Grove is the spaces are too large. A two-bedroom is 1,300 square feet. We are going to build a two-bedroom unit at 811 square feet [at his latest East Jackson trailer park development]. We are going as simple as possible. When I spent two years in Japan I lived in a very small space. What we need here are not larger units.”

Prugh’s redevelopment of the trailer park at Kelly and Milward will swap seven razed trailers for 12 small apartments. He wanted to put in twice that but changing the zoning for increased density was an all-out war he barely won on a 3-2 council vote.

“We’ve built lots of things but what we are focusing on today is by-right development because we don’t want to ask permission,” Prugh said. “I don’t want to go through nine months of trying to get zoning changed. It took us seven years to change the zoning on the trailer park. Seven years ago I didn’t have a kid. I have three now. That market risk is an important thing to us. In 18 months this market could look very, very different.”

The grind of getting a new development through town or county bureaucracy is backbreaking. SR Mills, who heads Bear Development out of Kenosha, Wisc., has worked with numerous public housing authorities putting affordable units on the ground in places like Snowmass, Colo., and Peoria, Ill. His first foray into Jackson Hole was a purchase of Painted Buffalo Inn in 2006 – a proposed four-story redevelopment project that faced every speed bump imaginable from community outrage to lawsuits.

“It is a grind,” Mills said. “We get that mountain resort towns are unique. You are going to have to have a higher tolerance for pain and unknowns. You are going to have to work through that. The one good thing about Jackson is all we ask is for people to do what they say they are going to do and to have some consistency. Even if that consistency is ‘we don’t know, but we are going to try to figure it out together,’ that’s much better than telling us it’s black when it’s really white, and they pull the rug out from under you.”

The unknowns brought about by LDR and zoning revisions have put every developer in a deep freeze. Still, Mills is hopeful his company can be a part of the future of Jackson Hole.

“While it’s very difficult with the LDR situation, and it’s tough to deal with because it’s an absolute unknown, the redeeming factor has been the people we’ve dealt with,” he said. “I’m very sincere on that. The vast number of electeds – you can get a hold of them, nobody is on airs, everyone is generally trying to do what’s right and in general nobody has agendas they are trying to push. From that standpoint it’s been pretty spectacular to work [here]. We work in a lot of other cities where we are not so lucky.”

Mills’ recently backed out of a deal to purchase the 10-acre Forest Service parcel on North Cache. He said he just couldn’t make it work at the $12 million asking price.

“We had been working on it for some time,” he said. “We still have an interest. We learned a lot about that property. We are very respectful of any new buyers. We needed a site modification for this deal to work and at this point the seller was not willing to grant that. I’m not sure if they ever will.”

Prugh watched the USFS parcel dealings from afar. From Jerry Johnson’s failed play to Mills’ retreat to Mike Halpin’s current interest, Prugh says the property has some special characteristics.

“That’s not an easy one,” Prugh said. “SR Mills is a smart guy. He’s run all the numbers. Mike Halpin is a smart guy, too. I think between the two of them they could probably figure out something. But what about the market risk? Think about 2007. We were all geniuses, and then … it was like getting shot with a gun in October of 2008. It took us four years of bleeding out. That project may take three years to run through a process.”

Halpin declined an offer to participate in this story. Speculation from real estate developers in town is he may be angling for yet another high-end hotel or convention center. A recent offer to slice out part of his subdivision development in Alpine for affordable housing suggests he may be buttering up local officials for the news that he, too, cannot see a way to build affordable housing at North Cache.


The Grove has become a whipping boy, for all that’s wrong with public meddling in the private sector. It has shaken the confidence in the housing authority for a few county commissioners and town councilors.

“I’ve had questions about the Authority for some time,” Vogelheim said. “It hasn’t been about the board. We have some dedicated and committed members of that board who have done a great job. It’s been more of an issue of the independence of the staff at the housing authority. It’s become a culture of unresponsiveness and not being held accountable. They have, at times, been leading their board as opposed to the board being the boss.”

Stacy Stoker took over as TCHA’s director when Christine Walker resigned one year ago. It’s mostly Walker’s mess to clean up, and she continues to work as a paid consultant on the project. As for Stoker, she hopes to head the agency into a new future that will include some restructuring. She has heard the criticism that the Authority operates too much in a vacuum.

“I can see how that might have been the case,” Stoker said. “I don’t think we’ve very open with our communication. We could have done better to keep the community and the electeds informed. I honestly don’t know why it has been the case, though. It was not something done willfully, to hide anything. Some people are just better at communicating than others.”

Prugh is even more skeptical of government being able to fix the valley’s housing shortage. He is not keen on dependence on public money and an “open checkbook.” We should have a fiduciary responsibility to make sure taxpayer dollars are used in the most efficient way possible, he said.

“The Grove is what, $11 million over budget? That’s a really big number,” Prugh said. “If I was overrun like this on a project I would be getting sued by investors. I wouldn’t be working right now. [In private development,] each project has to hit its budget or we get wiped out. We can’t go sit on a project for three years and all of the sudden say, ‘By the way, we are $4 million over budget.’ I think what’s wrong today with the public market, with the housing authority and housing trust, they can’t lose their jobs. They may not get additional funding, or they may not get SPET tax or donors, but no one is going to go bankrupt over it.”

Prugh’s proposal – and he’s not alone – is to harness the private sector’s budget-conscious leanness and pair it with government’s ability to purchase land or upzone existing properties.

Vogelheim sees great potential in public-private partnerships.

“We keep hearing from the private sector that it’s very difficult to pencil out and be somewhat profitable with a rental complex,” Vogelheim said, “but leasing the land long-term might make it work. The Grove has served as an example of why government should not be in the development business. I think there are other ways we can approach projects for workforce housing where we could bring land to the discussion. Similar to 810 West, which I was a critic of initially but have grown to appreciate over time, if we bring the land with a 50- to 75-year lease, a developer could come in and build the improvements at their expense and then give us back a percentage of their revenues. I like that model.”

So does Prugh.

“If the town really wants to buy land why don’t they just buy two lots here, four lots there, and put that into their long-term land lease plan? Then do a [request for proposal] that Habitat and the housing authority or the housing trust can go compete for along with private developers.” Prugh asked. “The town can say, ‘We’ll buy the land and Prugh, you are going to build the building.’ And the building has got to be right because I’m going to own the building and be taking care of the leases long term. Maybe the town or the county gets a first right of refusal for every vacant unit that pops up. Remember, I can go to them with a little bit different plan because I’m not a quasi-government entity and I’m not a group looking for a hand out.”

Stanford says he is open to any idea that gets affordable housing built as soon as possible.

“It’s possible that a housing agency could use public funds to buy land for more housing to be built by a nonprofit or a private developer,” Stanford said. “I’m always open to a discussion. Bring us some ideas. We have to be careful, though, about using public dollars to subsidize developers’ profits.”

Vogelheim says the county is ready to roll with available land waiting: five lots needing a clear definition of TCHA’s new structure. He is eager to see what tools the private sector can bring to the table.

“The private sector has capital they can bring,” Vogelheim said. They are the ones that have the financial leverage and capabilities. People like SR Mills; there are folks out there who are in this business, with tax-deferred credit, plans and ideas. We need those folks participating with their sophistication and know-how.”

Stoker still has faith in The Grove (“We built 20 units in Phase I,” she said) but would also be open to whatever public-private partnerships would build affordable housing. “Right now we are waiting on a consultant and public input [regarding an impending joint town-county restructure] and all future plans are on hold,” she said. “All our money is going toward The Grove.”

Stanford also is supportive of public agencies that have made an impact in difficult times.

“Public subsidies play a role,” the councilman said. “The town put up $1.65 million two years ago to buy land at Redmond and Hall streets, and the housing trust is raising millions to build at least 20 affordable rentals. I supported that purchase. The housing authority has built several great neighborhoods around the community, from Sage Meadows to Wilson, the Village Road and Hall Street. Where would we be without that housing? I applaud the efforts of all three housing agencies.”

The perpetual problem: homeless in Jackson

Those opposed to change say Jackson has always been a tough place to live. Internet trolls and haters write things like: “Move, if you don’t like it.” Opinions are many, solutions, few.

“It’s always been a challenge to live here going back a hundred years,” Vogelheim said. “I had to live outside the area for 10 years until we saved enough money to afford to move in. That was back in the 1990s when things were a little more affordable. Is it the worst now than it’s ever been? Not quite yet, I don’t think. I thought 2008 was a little bit more challenging. But this summer could really exceed that.”

Stanford’s inroad to Jackson housing is typical of most without means. The 23-year resident camped, bounced from couch to couch, and finally scored a home from the housing trust. “Back then there were more rentals advertised in the paper, and a person with decent employment (and a family) usually could secure a steady rental,” he said. Rents were lower then. So yes, I think the situation has gotten worse.”

Prugh has seen the effects secondhand.

“I’ve got a guy that’s been living in one of our bedrooms for six months because he can’t find a place to live,” he said. “He’s a good friend. He’s a CPA in Jackson.

“He was living up in Curtis Canyon before that. That’s not fair to go live up there. Yet the next thing they talk about is camps?” Prugh said, in reference to the idea of a tented labor camp in downtown Jackson proposed by Stanford. “If we’re really discussing camps then fine I’m all for it. Then we should start camping first in the square. If we’re really discussing camps then we’ve fundamentally failed. The zoning has failed and the leadership has failed because we haven’t kept up with our need.”

Packing it in

The Comp Plan’s mandate to house at least 65 percent of the county’s workforce in town will mean drastic rethinking. Four stories and density options have been taboo for decades. A shift in mindset may have to take place if forecasts are true: that three “Groves” will be necessary each year for the next 10 years.

“We are not going to be able to keep up with it,” Prugh said. “So how do we at least get what we want out of it without fundamentally changing the valley? The last thing we should be doing is looking at green space and saying, ‘OK, now we are going to upzone the Porter Estate or Seherr-Toss.’ It’s not a simple conversation. But I would rather see [town] redeveloped and ‘densified’ with three- and four-story buildings before we get anywhere close to south of town. Once you take that property it will never be the same.”

If Prugh’s penchant for modern design and contempo construction has ruffled a few feathers, his solutions for future housing in Jackson will be admittedly too radical for some. For one, he’s not about to put a moratorium on commercial development, which some say will only exacerbate the valley’s housing woes.

“Why is everybody talking about how we should limit the amount of commercial space?” he asked. “We’ve got 12 people working out of a 1,200-square-foot office right here. They would move in a heartbeat but there’s no new commercial space. You can’t build any new commercial downtown. They say if we limit the amount of commercial we will limit the amount of workers. The answer is no. We have a two percent lodging tax that we’re using to create opportunities for more people to come to Jackson. You just built a $50 million airport but you want no new commercial downtown? That makes absolutely no sense.

“And the county can’t just say ‘moratorium.’ Moratoriums are not planning solutions. They’re not tools. Moratorium means: ‘I was elected to make a decision and I can’t right now so let’s not make it.’ Everyone is going to have to give something to make that happen. What it’s going to take is pain.”

Pain means packing more people into tighter spaces, he said.

“We have to think higher; more density, less landscape and parking,” Prugh said. “We have to act more urban today. That’s going to freak everybody out because they are going to say more development just means more people.”

Both Prugh and Vogelheim eagerly anticipate the town’s discussion on districts three and four, where development tools like incentivizing apartments and allowing guest houses to be rented legally are the issues of the day.

“Government does have a role in this; a necessary role in terms of leadership,” Vogelheim said. “How do we help facilitate solutions from the private sector? We’ve done six or seven studies on this. We have looked at this long enough. We need to have a more action-oriented, forward-thinking group that can advise town and county on this challenging topic.”

Mills is one developer who says he is ready and able to put rentals and subsidized housing on the ground in Teton County.

“From an affordable housing side, we are still very eager to work to try and come up with a solution whether it’s in conjunction with the housing authority or the housing trust,” he said. “I think we can have a role, bringing some of the techniques and things we do in other areas, that, while more difficult in Jackson, will still be applicable. For instance, we’ve worked for public housing authorities who are looking to rehabilitate their existing product, taking it from some pretty tough public housing stuff to rehab it, and layer in a variety of capital sources to be able to pay for it and do the construction.”

Many of the solutions to easing the housing crunch still hinge on government decisions. Town and county planners are wrapping up district rezoning and LDRs and finalizing a Comp Plan that has lumbered with tolerance during the economic downturn, but the process seems agonizingly slow for homeless people and hungry real estate developers alike.

One town revision potentially destined for a green light is upzoning some residential areas in formerly quiet East Jackson neighborhoods. These zones would allow for garage apartments or accessory rental units (ARUs) to be built on existing single-family lots. Stanford calls it a practical step toward adding to the rental pool. Prugh would push the envelope even more.

“Who’s building between $500,000 and $1 million dollars today?” Prugh asked. “The answer is, aside from affordable housing, nobody. What if we take single-family neighborhoods and made them into duplexes? That’s heresy. Get ready for [pushback on] that one. Or what if we gave homeownsers the ability to build accessory units by-right and let it out separately?  I’m all for that.

“There are 1,100 guest houses in Teton County but you are not allowed to rent them legally today. Yet it happens every day. Maybe we should just say, fine, everybody gets a guesthouse now. Let it becomes a [homeowner’s association] issue.”

Paying for it

Former START Bus director Michael Wackerly suggested a dedicated penny tax toward transit and housing. A few politicians became intrigued by the idea after a Housing Summit in June. Would citizens vote to tax themselves to house themselves?

Vogelheim had a warning about the proposal.

“There’s been a lot of talk about how we need to throw another penny at this,” he said. “I’m not a fan of having that conversation until we redefine things, until we can prove to the public that we have a much more efficient and accountable process for delivering workforce housing than what has been exhibited by The Grove. I don’t even want to have the discussion until things have changed and we’ve demonstrated we can be good stewards of the taxpayer dollar, because we haven’t been with The Grove.”

About Jake Nichols

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