After reading Bill Hudson’s six-parter about the Town’s failing Servitas workforce housing project, it is easy to view Servitas as a classic real estate baddie. Servitas, we learn, won the competition for the project by promising to deliver smallish, scarcely affordable one- and two-bedroom apartments for a guaranteed price while assuming all downside risks for forty years. One year later, Servitas has apparently changed its offer, seeking large guaranteed profits by providing housing for outlandish prices for “workforce” tenants ($1900 for a 1B) and reserving half the units for upper-middle class tenants who will pay $2700 per month for a “value engineered” 580-square-foot unit (a niche population of intelligent, successful folks who prefer to sign real estate contracts while drunk.)
Servitas VP Garrett Scharton has become a figure of fun for suggesting the absurdly expensive studios ($1400 average) are “screamin’ deals.”
But is this fair? I’m going to be a contrarian and suggest that Mr. Scharton and his team have a colorable excuse to ask — a la the classic You Tube video — “Are we the baddies?”
It was, after all, the Town that chose Servitas, a firm whose exclusive focus is student housing. This means the tenants in all of Servitas’s other projects have one defining feature: they don’t actually pay their own rent. The rent in other Servitas projects is paid by the second jobs, overtime and home equity loans of frazzled and pressured parents and the generosity of Messrs. Ford, Perkins, Stafford and Pell with your income taxes.
And look at those rents! At UC Boulder the rent for half of a 250-square-foot studio, after subtracting the meal plan, is $1400 per month, or $2800 per studio.
That’s a neat $11 per square foot per month. Servitas is offering studios at $3.50 per square foot. Kind of screamin’ by comparison.
Let’s remember that the firms the Town rejected last year presented fully transparent bids while Servitas was allowed to present pages of “financials” which were blacked out like some Freedom of Information Act request regarding a new gain of function virology laboratory.
Despite this, Servitas was chosen by the Town Council… and a small subcommittee of Town Councilors, neither with any real estate development bona fides, was chosen to legally permit further discussions of the project while evading public involvement and oversight. No surprise here. The Town was engaged with Servitas for six months before informing downtown neighbors that half of South Pagosa Park was going to be given to the developers.
Let’s be fair, Servitas thought it had found the perfect partner for its first housing development for people who pay rent.
Servitas must have been impressed with the public dough available in Pagosa when it learned the Town Council had created an urban development authority for the single purpose of giving an Albuquerque developer an $79 million subsidy to construct a downtown development without a single square foot of affordable housing. They were probably more impressed when the Town scoffed at a 75% vote against that project by Town citizens and, for the next two years, discussed suing their own citizens in order to give that developer the requested subsidy.
Servitas might have noted that after this year’s election, Pagosa Springs remains the only large mountain town on the Western Slope whose town council has made no attempt to close the 75% short term rental tax loophole that has allowed almost 20% of the town’s homes to become mini-motels. A town which protects real estate tax loopholes is a promising partner.
Servitas must have taken a hard look at the finances of Pagosa’s ‘other’ workforce housing project at the old Pagosa Inn & Suites, which is regarded as a success by the Town Council. The Inn & Suites conversion is offering smaller studios which require tenants to pay all utilities, coming in at about $5 per square foot.
The $5 per square foot studios at the converted Inn & Suites… or the $3.50 per square foot studios from Servitas?
Is Servitas the only baddie?
Talking endlessly about workforce housing but delivering little, seems to be the approach both Servitas and the Town prefer.