Eagle River Water & Sanitation District workers pay taxes on their subsidized rentals and purchases under Section 119 of the U.S. tax code, which regulates taxable benefits.
Eagle River Water & Sanitation District housing program:
For-sale properties have an appreciation price cap of 3 percent of the original sales price per year.
For example, two-bedroom, two-bath units at Red Sandstone Creek Condos sold in 1998 for $145,000. Appreciation is $4,350 per year.
In 10 years, the homes appreciate $43,500, selling in 2008 for $188,500.
In 50 years, they can appreciate only $217,500 ($4,350 x 50), selling for $362,500.
Other condos in the same complex with the same configuration currently sell for $450,000 to $600,000, depending on improvements that have been made.
Rentals must return 5 percent each year on the original property investment.
As an example, say the district buys a one-bedroom condo for $300,000 on the open market.
To get a 5 percent return, rent is set at $1,250 per month plus any homeowner’s association dues. The ski-season market rate for a one-bedroom condo is $1,500 to $1,800 in Vail, based on classified ads in county newspapers.
Sources: Eagle River Water & Sanitation District, newspaper classified ads
