At a work session on May 6, Pagosa Springs Community Development Corporation (PSCDC) Director Emily Lashbrooke provided an update to the Archuleta County Board of County Commissioners (BoCC) on the PSCDC’s progress in selling the first 10 homes constructed as phase one of the organization’s workforce housing project.
Lashbrooke also informed the BoCC about “another hiccup” with the deed restrictions put in place, explaining that the PSCDC has sold two of the first 10 homes constructed, with two more homes currently under contract.
Lashbrooke added that the first two homes sold by PSCDC were “very unique situations,” with one putting a large down payment on the home and the other using a U.S. Department of Agriculture (USDA) loan.
“So, this problem with the deed restriction did not arise until we went under contract with the next two homes,” she said.
Lashbrooke explained the “problem overall was” that the deed restriction was asking whichever banking facility is doing the final lending to be the second lienholder.
“Who knew that banks don’t want to be a second lienholder?” she added.
Lashbrooke explained that she consulted with “experts in the state” on how to fix the issue with the banks while still protecting the deed restriction, noting she was able to come up with a deed restriction with the banks’ approval “at this point.”
“The main cause they had a problem with was if the house went into foreclosure,” Lashbrooke said, explaining that the deed restriction previously stated that the lender had to notify the county to allow 60 days to “recover the deed,” noting the town could be included in that.
“So, we had to remove that,” Lashbrooke said, explaining the changes to the deed restriction allow the banks to go into foreclosure.
She explained that a lien and memorandum of acceptance were put in place, noting that “this lien will actually go on the property” and when a title company goes into foreclosure on house, they’ll see the lien, explaining it is “just a notification lien” and the title company would notify the county that the house is going into foreclosure.
“That’s our safety net,” she said, noting that the onus is now on the owner of the house to notify the county that the house will be foreclosed on.
Commissioner Veronica Medina asked if DOLA is “good with” the new deed restriction.
Lashbrooke explained that this “problem caused a ripple across the entire state,” noting La Plata and Gunnison counties are having similar issues.
Lashbrooke also noted that the Department of Housing is reviewing the deed restriction, but that it also withdrew its model of deed restrictions.
“I believe that the Department of Housing never ran their deed restriction by bankers when they put it into play,” she said.
She went on to mention that because the PSCDC was part of the first round of funding for these projects, “we’re feeling all the penalties.”
Commissioner John Ranson asked what impact these changes have on the owner of the home, to which Lashbrooke replied, “It really doesn’t have any,” explaining that the homeowner would now have to notify the county in the event the home goes into foreclosure.
Interim county attorney Lance Ingalls mentioned that he had reviewed the changes to the deed restriction and did not have any concerns with it.
Later that day during its regular meeting, the BoCC unanimously approved its consent agenda, which included the approval of the deed restriction changes discussed by Lashbrooke.
Housing update
During the work session, Lashbrooke also provided the BoCC with more information on phase one of the PSCDC’s housing project.
Lashbrooke mentioned that the PSCDC has four homes sold or under contract, describing those as a “guaranteed sale,” noting there is a fifth home ready to go under contract once the area median income verification is completed.
She mentioned that the 2024 buyers are “frustrated with the process,” along with other factors coming into play.
“We are finding that our homeowners are becoming more and more cost-burdened,” she said
Lashbrooke went on to explain that over the next six to eight weeks, the PSCDC is planning to target veterans as potential buyers for the remaining five homes.
“We believe that our veterans could qualify for these houses,” she said, adding, “This could be a really great solution.”
Lashbrooke also mentioned the PSCDC will be doing a campaign to “move these houses,” noting that a letter has been sent to all major employers in the county.
Ranson inquired as to who is liable for the payments on the unsold homes.
“We hold the liability,” Lashbrooke said, explaining the PSCDC will start making payments this month.
She also mentioned that the PSCDC is currently holding about $100,000 in fees on the project that cannot be recouped until the last home is sold.
Lashbrooke expressed the difficulties encountered throughout this project, stating, “I cannot believe how hard this is,” adding that it is a nonstop moving target.
Lashbrooke also commented on the economic state of Colorado and the nation as whole, stating, “One wrong move and we’re gonna go into a full-blown economic crash.”
Lashbrooke claimed that credit card debt is rising, while unemployment rates are stable and interest rates are on the rise again after briefly declining.
Lashbrooke mentioned that “people are not spending right now,” noting that businesses in main street portion of downtown Pagosa Springs are reporting up to a 60 percent loss in business due to the construction project, but that there may be other factors contributing to those reported losses.
Medina suggested that there may be some value in looking into having homes in the PSCDC’s second phase be available for rent, noting that based on the recent community housing assessment, “that’s what we need.”
Lashbrooke explained that the PSCDC can ensure the homes are built on time and on budget, but that it is not in the business of running rental properties.
“I can’t do economic development and build houses,” she added.
Medina noted that there may be an option to “hand off the second phase” to a different entity so that the PSCDC can get back on track with economic development.
clayton@pagosasun.com
