Photo: Deed-restricted housing in Pagosa Trails subdivision, built by BWD Construction and the non-profit Pagosa Springs Community Development Corporation.
What are the options available to a small-town non-profit organization that has received grants and subsidies and donated public land, and has successfully built ten so-called ‘affordable workforce homes’…
…and has plans to build 25 to 30 more similar subsidized homes…
…but can’t seem to find ‘workforce’ households that find these completed homes attractive, and can also afford to buy them…?
Here are some ideas, shared during the Archuleta Board of County Commissioners (BOCC) May 6 work session. Commissioner Veronica Medina was speaking with Pagosa Springs Community Development Corporation (PSCDC) Executive Director Emily Lashbrooke.
Commissioner Medina talked about investors and business owners who “would like to help with our problem of affordable housing”.
“One constituent said, they would be willing to buy one and then rent it, but they were worried about all the new rules that just came down from the Governor for renters. Renters have more protections than landlords. So they wondered, since this is affordable housing, were there any protections for the landlord as opposed to the tenant?”
Colorado’s state government recently approved additional protections for rental tenants, including:
- Cause For Residential Evictions (HB 24-1098): Under this law, Colorado landlords cannot refuse to renew a residential lease or evict a tenant without cause.
- Warranty of Habitability (SB 24-094): This law, amended in 2024, clarified a number of provisions of Colorado’s statutory warranty of habitability. For certain dangerous conditions, repairs must be started within 24 hours.
- Reasonable Modifications (HB 24-1318): Landlords are now required to pay for reasonable modifications requested by tenants with disabilities. Previously, landlords could require the tenant to pay for them.
- Broadband Services: (HB 24-1334): Colorado landlords who rent out multifamily properties must allow tenants to choose their own internet providers.
Ms. Lashbrooke:
“If a business or individual wants to buy a house and rent it out, it’s still going to be ‘income restricted’ upon entry of the home.”
When the renter first moves in, they must meet the income restrictions related to the grants and subsidies. The renters household income can increase later, without loss of the rental unit.
Ms. Lashbrooke:
“And in the deed restrictions, it states that the landlord can charge no more than the mortgage, plus $100. So can ask $100 more than the mortgage, but you cannot charge any more than that, for rent. That’s an effort to keep the housing affordable.”
Commissioner Medina:
“Again, the whole purpose for this person, is not to make money. They have the means to be able to buy it and rent it for what it needs to rent at.”
According to NerdWallet.com, and based on current interest rates, the cheapest PSCDC homes — priced at $320,000 — would have to rent at $2,300 a month, if the landlord charged the cost of the mortgage plus $100. That’s with a $64,000 down payment.
According to Calculator.net, a household earning 100% of the Area Median Income for Archuleta County should keep their rental payment “below $1,697 per month.”
Ms. Lashbrooke:
“We do need rentals. We saw that in our Housing Needs Assessment. I really want to reach out to the Archuleta Housing Corp, who manages [low-income] properties and find out just what this might look like. How can we create some rentals out of these houses, that would still meet the threshold of workforce housing?”
Commissioner Medina:
“In the beginning, that was my hope, that we were going to have rentals. Not homes for sale. Because I saw, from the beginning, that’s what we need in this community. I know people are just not ready to buy; they’re just not there… It’s unfortunate that we had to come all this way, to find out that this is where we’re at.
“Now we need to figure it out…”
In defense of the PSCDC, they were provided — by the BOCC — vacant tax lien parcels in the Trails/Chris Mountain subdivision, which is within the Pagosa Lakes Property Owners Association. Multi-family apartments are not allowed, and single family homes must meet the aesthetic standards, dimensional standards, and development standards set out by the PLPOA. It was, “from the beginning”, impossible to build new, conventional, stick-built homes on these parcels that can rent out for $1,697 per month, unless the new landlord was comfortable losing money on the deal.
Or so it would seem.
Ms. Lashbrooke reminded the three commissioners that at least five of the 2024 homes still are without qualified buyers.
“With this power of brains here, if you guys have any other ideas on the last five units here… I can tell you, our banks will not fund on Phase Two until we get rid of all of Phase One. We were scheduled to start in May, it is time to start digging, and we can’t do that yet. Any good thoughts or anything you can suggest will be welcome at this time.”
For some reason, Ms. Lashbrooke turned in her chair and looked directly at me.
“In fact, anybody who has thoughts on this would be welcome.”
Commissioner John Ranson:
“That may not be a bad thing, you know, holding up the financing. You can get out on a limb, if you’re not careful.”
Ms. Lashbrooke said she is seeking more information about how the single-family homes could become rental units, and Commissioner Medina suggested any potential rentals could be managed by the Archuleta County Housing Authority. She also noted that PSCDC has a long list of potential buyers for Phase Two, but none of those buyers seem ready for the five vacant homes already built in Phase One.
Commissioner Ranson:
“So, if the five homes don’t get sold in the near future, who’s liable for the debt on that?”
Ms. Lashbrooke:
“The CDC.”
Commissioner Ranson:
“What is the debt on that? Is the CDC making payments, now?”
Ms. Lashbrooke:
“This month we will make our first interest payment out of our funding. We did wrap our interest into our construction loan, so that we weren’t continuously paying out. May is the first month that we will have to pay… I have asked the bank if they can grant us an extension. Especially, if we have people under contract.
“The CDC is currently holding about $100,000 in costs and fees, and holding fees, on this project. And we cannot recoup our fees until we sell the last home…
“And we hold all the liability.”
Commissioner Ranson:
“That is a concern, that I have…”
Read Part Five, tomorrow…