The Pagosa Springs Community Development Corporation’s (PSCDC’s) ongoing workforce housing project was a topic of conversation at multiple recent meetings, including the organization’s board of directors, the Archuleta County Board of County Commissioners (BoCC) and the Pagosa Springs Town Council.
Conversations included needed changes to the deed restrictions on the houses, as well as the PSCDC’s ability to sell them and challenges with the project.
The current initiative being spearheaded by the PSCDC is to build affordable homes for the area’s workforce on 35 lots donated by Archuleta County. Construction of 10 homes is currently underway.
The lots are located in the Chris Mountain II and Trails subdivisions, within the Pagosa Lakes Property Owners Association, and the homes are geared toward ownership for those in the workforce earning at or below 100 percent of the area median income (AMI).
Deed restrictions
During a regular meeting held on Jan. 21, the BoCC unanimously approved changes to the U.S. Department of Agriculture (USDA) deed restriction in place for the housing project.
Prior to the BoCC meeting, the PSCDC held a regular meeting on Jan. 15, at which Executive Director Emily Lashbrooke briefed the board of directors on the changes needing to be made to the USDA deed restriction.
“So, the USDA came back and [there’s] an issue with our deed restriction to where we capped the maximum amount that they could sell the house for,” Lashbrooke said, explaining that USDA loans normally pay market value on properties and carry a “silent second” amount that the buyer cannot afford to pay, “so they just have this main principal that is paid until house is sold” and then the silent second amount gets paid back.
“We’re selling this house ... below market rate, like by a lot,” Lashbrooke added, noting the USDA wants to be able to sell the home at market rate.
She indicated that the PSCDC is currently trying to close on a home with a buyer using a USDA loan and that the buyer is at risk of losing the funds if the home cannot be closed on before Feb.10.
Lashbrooke mentioned to the BoCC and the PSCDC board of directors that the deed restrictions needed to be modified before then in order to not lose the sale of one of its homes.
“I do have to modify the deed restriction,” Lashbrooke said during the Jan. 15 PSCDC meeting, adding that the USDA now “understands they’re getting this discounted house,” and therefore not putting a silent second amount on her finance package.
Lashbrooke then briefed the BoCC on the matter during a work session the morning of Jan. 21.
“They kicked back our Archuleta County phase one deed restriction because there’s a couple rules that they had that we weren’t aware of,” she said.
County Attorney Todd Weaver mentioned the changes “weren’t significant.”
Lashbrooke noted one of the “biggest” changes is that the USDA does not want to have any responsibility to notify the county if a home goes into foreclosure, with that responsibility falling on the homeowner.
“The homeowner will sign this deed restriction understanding that,” she said, explaining that the county would receive written notice within 45 days of the home going into foreclosure, noting the county would have the option to purchase the home.
Lashbrooke went on to mention another change in the “Rights of Mortgagees and Other Lien Holders” section of the deed restriction that initially stated if the home goes into foreclosure the banking institute that becomes the owner of the property will “make their best effort to keep the integrity of the deed restriction intact.”
There is no mechanism to do that, she noted.
Lashbrooke explained that the new paragraph states that it protects the USDA’s interest in the loan product.
“This is done on every Habitat for Humanity loan agreement and deed restriction,” Lashbrooke said.
According to the deed restriction attached to the Jan. 21 BoCC meeting agenda, the new paragraph states, “In the event of foreclosure or acceptance of deed in lieu of the first holder of the deed of trust on such property or unit; holder of such deed of trust acquires property through foreclosure or acceptance of deed in lieu, all restrictions pertaining to new purchaser (income limits, ownership, leasing, equity, resale etc) will be released.”
Fair Housing Act change
Lashbrooke then indicated to the BoCC that she would be approaching the board in February in regard to another change on the master deed restriction involving a Fair Housing Act violation.
She explained that it is a violation of the Fair Housing Act to require someone to work within Archuleta County.
“So, we’re going to have to remove that,” Lashbrooke said.
Weaver commented that the issue “really didn’t cross any of our minds” in that if the person is on disability and can’t work, then it is discriminatory.
He noted that someone drawing disability income can use that as qualifying income to apply for a home.
During its meeting on Jan. 15, the PSCDC board discussed the change needed on the master deed restriction involving the Fair Housing Act violation of requiring someone to work in Archuleta County.
Lashbrooke explained that she had been in contact with the Department of Housing in addressing the issue.
“They uncovered that requiring the individual to work in Archuleta County eliminates handicapped or elderly from being able to purchase these houses,” she said, adding, “my argument was, this is workforce housing, we’ve defined that from the very beginning.”
Lashbrooke mentioned that the requirement will have to be taken out and is a direct violation of the Fair Housing Act, adding, “We have to. We have no way around that.”
PSCDC board treasurer Chelle Keplinger commented, “So, we could sell these to people that ... have no intentions of working here.”
Lashbrooke mentioned that the deed could be changed to say that it is a requirement to live in Archuleta County beforehand, which was pushed back by board president Sherry Waner, who expressed that businesses may be trying to bring employees in from outside of the county.
Board member Rosanna Dufour mentioned that the violation wasn’t “caught” by the consultant PSCDC hired to assist drafting the deed restrictions.
“Like nobody caught this,” Lashbrooke added.
The issue of the homes being built to Americans with Disabilities Act (ADA) requirements was then discussed, with Lashbrooke explaining the 10 homes already built or currently being built have ADA-compliant front doors and hallways that make the homes “visitable” for persons in a wheelchair.
She noted that it is not a requirement to have the homes built ADA-compliant, mentioning that a home can be retrofitted to accommodate a person with a disability who is a qualified buyer.
Lashbrooke also noted that the amount of retrofitting needed to a home would also depend on the disability, noting the plan is to keep building homes with ADA-compliant front doors and hallways.
Keplinger noted that the PSCDC would be “happy to retrofit the house.”
Lashbrooke noted that the wording in the deed restrictions could potentially stay the same, with the addition of a clause that states “unless you are unable to work because of disability” or are retired.
Town council update
At the Jan. 21 town council meeting, Lashbrooke gave an update on the project.
Over the past year, the PSCDC partnered with BWD Construction to build 10 homes that are now available for ownership for those within the designated AMI level, Lashbrooke said.
“All 10 homes will have a [certificate of occupancy] by the end of January,” Lashbrooke told the town council, adding that two of the homes are under contract and that she is working with four other potential homebuyers on finalizing contracts.
For the remaining four homes, Lashbrooke explained that she’s beginning “a full-court press” on marketing to get the word out about these available homes.
The three-bedroom abodes range in price from $389,000 to $394,000, and the smaller homes, “just a hair under 1,000 square feet,” are listed at $320,000, she said.
She added, “They are very nice homes. They’re pretty. And I think people will be proud to live in them.”
To help make this project “pencil,” the PSCDC has relied on various grants, such as Stronger Communities, More Housing Now and Local Capacity grants, as well as land donations from the county and fee waivers from the Pagosa Area Water and Sanitation District, she explained.
The Stronger Communities Grant will go toward finalizing a housing assessment survey, expecting to be finished by the end of February, a slide show shared by Lashbrooke at the meeting states.
She also explained that the Local Capacity Grant funded the hiring of Jeff Sams as the multijurisdictional housing coordinator.
When opened to questions from the council, which is involved in a workforce housing initiative of its own, Mayor Shari Pierce asked Lashbrooke to describe “some of the biggest challenges that you might give us advice about as we’re moving forward.”
Lashbrooke noted that the biggest challenge was “dealing with the Department of Housing, and dealing with the grant funding that it took to make the project happen.”
She said that “the rules changed four times while we were in the middle of a contract. That is very challenging.”
She added, “Even last week, they sent my deed restriction back, which they had approved in September, so now I have to bring it back to the county commissioners to take one line out that says you’re required to work in Archuleta County.
“That has been the biggest challenge and it almost made me want to quit my job, but I’m not a quitter,” she said.
She also mentioned “funding” as a big challenge and suggested planning on having enough funding “for things that you didn’t see coming.”
Pierce asked, “How many grants did you guys pull together to be able to build 10 homes?”
Lashbrooke replied that the total amount of grants that the PSCDC received was about $2.2 million from five separate grants.
Pierce thanked Lashbrooke “for sharing that insight.”
“It will be helpful to us as we move forward with our project,” she said.
