The Pagosa Springs Community Development Corporation’s (PSCDC’s) affordable housing project has paused moving forward with phase two of the project until eight of the 10 homes from phase one are sold, Executive Director Emily Lashbrooke explained during a regular work session held by the Archuleta County Board of County Commissioners (BoCC) on June 17.
During the work session, Lashbrooke informed the BoCC that the PSCDC “Board of Directors decided to pause on phase two.”
Commissioner John Ranson noted that it may be a “blessing in disguise” for the PSCDC to put a pause on its housing project.
In an email to The SUN, Lashbrooke explains that phase two of the housing project had been on pause for 60 days, as of June 20, in order to sell the remaining five homes from phase one.
She also mentions there are currently eight applicants.
During the BoCC work session, Lashbrooke commented that pausing the project will give the PSCDC more time for other potential solutions in finding gap funding needed for the homes to be sold at an affordable price point.
She also mentioned that the PSCDC may pursue other building options.
The PSCDC partnered with a local builder — BWD Construction — to build the first 10 homes of the multiphase project
During a PSCDC board meeting on June 11, Lashbrooke presented a different building option for modular homes through Clayton Homes, based out of Albuquerque, N.M.
She explained that BWD submitted a proposal to build five of the phase two homes that included a 2 percent increase in costs and was sent to the PSCDC’s attorney for review.
In the meantime, Lashbrooke explained she had met with modular home manufacturers to see if they could “make this [project] more affordable.”
Lashbrooke also provided the PSCDC board with information in regard to its predevelopment loan for phase two, noting that it was approved in May “and this board said to move forward; we need to keep building houses.”
She added, “We do have our award of $675,000 with the Department of Housing.”
Lashbrooke explained that award allows the PSCDC to contribute $67,000 toward the cost of each home.
Lashbrooke went on to provide the PSCDC board with more financial information related to different building options for phase two of the housing project.
She explained that the pricing included with BWD’s proposal includes the cost of constructing the entire house and foundation, but does not include water, sewer or electrical connections.
The proposal from Clayton Homes includes the cost of constructing the foundation, freight and a site crane to stitch the home together and set it to the foundation, she explained.
Lashbrooke explained that the new cost of a three-bedroom home to be built on Domicile Circle from BWD would come out to $431,500, which includes the proposed 2 percent increase. The award from the Colorado Department of Housing would knock off $67,000 of that price, bringing it down to approximately $370,000, with Lashbrooke noting that folks in the 100 percent range of the area median income (AMI) would not be able to afford that.
She then noted that the same home built through Clayton Homes could be sold for around $250,000.
“We can sell to 100 percent AMI no problem,” she said.
Lashbrooke also noted the difference in the size of homes that would be built by BWD compared to Clayton, explaining that a three-bedroom home built by BWD is roughly 1,176 square feet, while a two-bedroom home from Clayton would be roughly 1,400 square feet.
“And it’s $167,000 difference,” she added.
Lashbrooke then mentioned that Clayton Homes is anywhere from 75 to 90 days out from being able to start production on the project.
“We could try this,” she said, noting that once production is started, five homes could be rolled off and have each home set to its foundation consecutively.
Lashbrooke also noted that it does not change the fact that the housing project is going to be “in the exact same position” as it is now, noting that it is hard to find the “unicorns” and “leprechauns” that are able to qualify to purchase one of these homes.
“It has to be very unique situations,” Lashbrooke said in regard to finding buyers.
Lashbrooke also mentioned that soil testing has been performed on Travelers Terrace, which confirmed that the ground is good to build on.
She then noted that the PSCDC could use another five homes this year if it is able to sell the first 10 under phase one of the project, but, “if we can’t move these 10, then we shouldn’t.”
PSCDC board member Mont McAllister mentioned he is worried about always having to find the “unicorns,” asking why the PSCDC would want to build something like that “when we can do this and they’ll fit,” he said, referring to the modular home option.
PSCDC board president Sherry Waner asked if there would be any difference in the loan value for a stick-built home compared to a modular home, with Lashbrooke explaining there would not be any difference between the two.
McAllister noted that the PSCDC has already paid BWD to come up with sketches of the homes, but has not completed a site plan yet.
PSCDC board member Rosanna Dufour commented that it feels like BWD “wants out” of the contract.
“They have been a great partner,” Lashbrooke replied, explaining that BWD carried $700,000 in loans for the PSCDC for 120 days during phase one.
Lashbrooke added that she does not want to “ruin” a relationship with BWD, but that “we are going to have to have a good conversation” about what to do for phase two.
Lashbrooke also directed the board’s attention to its banking situation and how to move forward without winding up in a similar situation.
“We’re losing money,” Lashbrooke said, explaining that raising prices will move the homes into a price range that is not affordable.
Lashbrooke then indicated that its current lender — the Bank of the San Juans — “cannot lend us anymore money until we move at least two to three more houses.”
She mentioned that RG Bank is willing to step in to fund phase two if the board decides to move forward with the project.
“Well, first I would say that’s pretty risky for us to do,” Waner commented, noting that adding approximately $2 million to have five more homes built under phase two would bring the total debt close to $6 million.
“We probably should move a couple more homes,” she added, noting that means “we probably have to stall our second phase.”
Waner also mentioned that it is “not wise” in her opinion to take on additional debt.
“That’s a gigantic amount of debt,” she said.
Waner added that she could be in favor of moving forward with a different builder if things cannot be worked out with BWD.
PSCDC board member and county commissioner Warren Brown mentioned that its “generous” of RG Bank willing to fund phase two, but would like to know more about interest rates, noting he’d be more comfortable if the PSCDC could sell some more homes first.
“There’s a lot riding on the success of selling the first 10,” Brown said.
In response to questions about warranties on the homes, Lashbrooke explained that BWD offers a one-year warranty on everything, while Clayton Homes offers a 10-year warranty on the structure of the home and a two-year warranty on everything else.
Waner went on to mention that the “general consensus” of the PSCDC board is that taking on more debt right away is too risky, adding that the PSCDC would like to give BWD an opportunity to come back with something different.
Waner also noted that at least eight homes from phase one need to be sold before the PSCDC begins phase two of the project.
“I’m trying to look for a better, affordable option that we can actually adhere to our grant requirements and get homes into the market that the 100 percent AMI can afford, or we’re building for the wrong people,” Lashbrooke said.
During the June 17 BoCC meeting, Commissioner Veronica Medina praised Lashbrooke’s efforts with the housing project, noting she’s done an “amazing job,” while also commenting on the AMI restrictions under Proposition 123, which provided funds for the PSCDC’s housing project.
Lashbrooke has expressed previously that the 100 percent AMI restriction has caused issues with potential buyers not being able to qualify for a home, with some reportedly making $500 too much, putting them above the 100 percent AMI for Archuleta County.
Medina noted that the 100 percent AMI limit, “doesn’t really work for our community.”
She then mentioned the properties that the county has donated to the PSCDC for the affordable housing project, asking if it would be open to having the 11 properties located on Bonita Drive transferred to the Archuleta County Housing Authority.
“They have the capacity and are able to do workforce housing,” Medina said.
Lashbrooke expressed that the PSCDC is ready to get out of the housing business and get back to doing more economic development work.
“We are absolutely ready and willing to get out of the housing business,” she said.
Lashbrooke went on to mention that the PSCDC was able to “unlock” the door to workforce housing, highlighting the collaboration between multiple agencies and partners needed to make the project happen.
She mentioned that there are now mechanisms in place that were not previously available for affordable housing projects.
“We would love to get out of the housing business,” Lashbrooke added.
“You have opened a door that no one was willing to walk through,” Medina commented, noting that power and fiber lines have been brought to new areas of the county, serving more than just the homes being built through the affordable housing project. “We appreciate all the hard work you have done.”
She went on to mention that she “was against giving all of the properties originally to the [PSCDC], because … the devil’s in the details,” explaining that in this case those details were that the PSCDC had to pay tap fees along with homeowners’ association fees.
Lashbrooke noted that the PSCDC was able to complete building all 10 of the phase one homes on time and on budget.
clayton@pagosasun.com
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