The Pagosa Springs Community Development Corporation (PSCDC) continues to move forward with phase one of its community workforce housing project.
At its meeting held on June 12, Executive Director Emily Lashbrooke provided the PSCDC Board of Directors with updates on the project and discussed what the drawing process will look like for their first 10 homes being built.
Lashbrooke began by explaining that the PSCDC has been approved by the Colorado Department of Housing (DOH) for its housing proposition one, two and three for an award of $550,000 “to offset the cost of our houses, to bring them into the affordable range.”
The first 10 homes will be priced to sell in the 80 to 100 percent of area median income (AMI) range for Archuleta County, according to the PSCDC.
Lashbrooke mentioned there was a delay in that process for unknown reasons.
She explained that after what “should’ve been a four-week process” turned into a 12-week process because of the delay in the DOH, “it threw us into a default position with our contractor and we had to pay a penalty fee.”
In a later interview, Lashbrooke explained that when the PSCDC originally submitted its application to the DOH earlier this year, there was an expedited process for applications under $750,000 being offered.
However, she noted, “with no explanation or information our application was not submitted” on the DOH side for review.
She explained that the DOH then hired new personnel, which nixed the expedited process and now required all applications to go through the full vetting process.
Lashbrooke also mentioned that she testified to the DOH on June 11 and that the PSCDC’s application was approved.
“We are full steam ahead,” she added.
During the meeting, Lashbrooke noted that the PSCDC was required to break ground and be under contract with a builder for that application to be approved.
“Our workforce housing project will now go to our construction funding and everything gets released, and we are going to build affordable houses,” she added.
Lashbrooke mentioned that with that approval, the PSCDC was able to move forward with purchasing lumber packages needed for construction, and are now negotiating with its concrete contractors to get them back on the job.
“We’re starting to press forward and get things going,” Lashbrooke said.
Lashbrooke noted that the delay was in no way the fault of the construction partner, BWD Construction.
“We could not be working with a better partner,” Lashbrooke said, adding that BWD’s patience and communication throughout the process has been exceptional.
She explained that with the delay, BWD requested its deadline be pushed back four weeks, which Lashbrooke noted is a reasonable request and that BWD could have chosen to scrap the deadline altogether according to the terms of their contract, “but they still want to get these houses into the market as soon as possible.”
She added, “They are carrying some of the funding,” and explained that BWD took on some of the funding needed to get the first 10 foundations poured.
“They are carrying some of that,” she said.
Lashbrooke added that the PSCDC just recently received the contract for its $2 million infrastructure improvements in the Trails and Chris Mountain II subdivisions and that engineers from Archuleta County and La Plata Electric Association (LPEA) are beginning to map out the area.
She indicated that the road improvements in the area will be the responsibility of Archuleta County, and the broadband and electric improvements will be the responsibility of the PSCDC.
She noted that work will be contracted to LPEA and the broadband management office.
Lashbrooke also mentioned that the PSCDC hopes to trench for broadband and electric at the same time.
Housing Opportunity Process
The PSCDC will be holding a drawing to determine which qualified applicants will be given the opportunity to purchase one of these first 10 homes being built.
The PSCDC is referring to this drawing and the steps involved in becoming a qualified applicant as its Housing Opportunity Process (HOP).
During the meeting, Lashbrooke provided more information on what the HOP will entail and what will be required to become an eligible applicant.
She explained that she has hired a consultant, Jennifer Kermode of Kermode Consulting, to assist in drafting the HOP guidelines and adhereing to the Fair Housing Act, as required by the DOH.
Lashbrooke indicated that the PSCDC will be working with the Archuleta County Housing Authority (ACHA) as its third-party verifier to verify income and residency of all applicants.
Lashbrooke also mentioned that the HOP will take place for the first 10 homes, but that the PSCDC will be working with the ACHA to take on a list of prequalified buyers and “go to a first-come, first-serve as we move forward.”
Kermode highlighted some key steps in the HOP for applicants along with some specific scenarios that the PSCDC might encounter while attempting to fill all of its homes.
“There’s a lot of steps,” Kermode stated, noting that the administrative guidelines being laid out are “somewhat malleable” and can change as the PSCDC moves through different phases of finding people to fill its homes.
Lashbrooke noted that the DOH is requiring the PSCDC to fully define its HOP by the end of June.
“Everything we do in the housing world is tied to AMIs, and AMI categories,” Kermode said, also noting that parameters are set around employment and residency in order to identify the target audience.
She indicated other parameters such as what people can do once they are living in the home are also defined in order to ensure the homes are serving the people PSCDC intends to serve.
Kermode mentioned that at some point the PSCDC will need to develop an exit strategy for scenarios that cause buyers to leave their home after purchasing it.
Kermode spoke about the importance of having the PSCDC mission and purpose stated in the governing elements.
“It’s not something where you want different agendas or ideas to come in when you’re a year and half, two years into the project and say, ‘No we need to change things,’” she said.
Kermode noted that part of the requirements to become an eligible buyer is that the applicant must have lived in Archuleta County for at least “one consecutive month.”
Lashbrooke explained that this requirement was incorporated to hopefully accommodate people who have a job lined up in the county, but are not currently living in the county.
She used the example of someone taking a job with the Archuleta School District who would otherwise qualify as an eligible buyer in terms of AMI.
Kermode added that in cases like that, it may not be in the applicant’s best interest to rent while they wait for the opportunity to buy a home and will potentially have that opportunity sooner rather than later.
“You’re looking for somebody who is calling Archuleta County ... their primary residence,” Kermode said, explaining that there are a number of ways to verify that.
She went on to explain that at the time of purchase, 80 percent of all of the buyer’s income must come from working at least 1,500 hours at a job located within Archuleta County.
“That’s pretty much a full-time position,” she said, adding that would cover school teachers as well.
She further explained that verifying the applicant’s employer is “how we make sure we’re targeting the local workforce.”
Another key requirement for applicants noted by Kermode is that they cannot own any other developed real estate property, noting that vacant land is not included in that requirement.
“We do not want them to own interest in other development property,” she said, explaining the only exception to that is if the applicant has a co-borrower listed. In that case, the co-borrower would not be allowed to be the primary occupant of the home.
She noted that in some cases co-borrowers are likely the parents of the primary applicant.
“We don’t want to prevent Mom and Dad from helping our people get into housing, so they can own other property. That’s the exception,” she said.
Kermode stated that the purpose of this project is not to “help anybody become a real estate magnate,” but to give them a nest “so they can start building their egg.”
Kermode went on to explain that there are net-worth limitations in place, as well.
Lashbrooke indicated that there is a net-worth limitation of $175,000 for applicants to be approved.
Kermode explained that any down payment amount provided by the applicant will not count toward their total net worth.
“We don’t want you to provide a lot of gap financing to build housing for a trust fund baby who could pay cash; that’s just all there is to it,” Kermode said.
She mentioned that this is very common in resort areas, noting that these parameters are set in place to “make sure we’re serving who we really need to be serving.”
Town of Pagosa Springs Planning Director James Dickhoff brought up the scenario of people living in Archuleta County, but working outside of the county limits, such as Wolf Creek Ski Area employees, noting those people are “definitely residents of our community.”
Kermode explained that that is a complicated situation at first and that the PSCDC would potentially have to work with a multijurisdictional housing entity and that intergovernmental agreements would likely have to be put in place.
“It’s possible to do; it may not be something you want to do right out of the gate,” she said, noting that it is definitely an option that the PSCDC may want to look into given that mountain communities “operate regionally.”
Kermode noted that Leadville is a community where the majority of people work outside of that county and it was able to structure its affordable housing program to allow for people to work outside of Leadville but still qualify for an affordable home.
Archuleta County Commissioner and PSCDC board member Warren Brown asked Kermode if the language used in the guidelines drafted by the PSCDC is standard across the industry.
Kermode indicated that the language included is “extremely intentional” to make sure the target audience is being reached.
She also noted that the language included in the guidelines has been “vetted” by a variety of attorneys.
“It read as though it’s a very refined and purposeful document,” Brown stated.
Kermode went on to clarify that income and asset limitations are only applied at the time of purchase, and that once a buyer gets into a home, it is encouraged for them to increase their income and “build up wealth in other areas.”
She noted that the home must serve as the primary residence and that these homes are not intended to serve people who live here for six months out of the year and travel the other six months.
Kermode explained later in the meeting that buyers are able to take vacations, but an absence lasting longer than 90 days would require notifying the ACHA and asking for an exemption, based on the circumstance.
She noted that “life happens” and in some cases a homeowner may have to leave for an extended period of time to take care of ill family members, but plans to return to Pagosa.
In such a case, the ACHA would decide if the homeowner can rent the home as a long-term rental at a certain price point to a tenant that also meets the PSCDC requirements in terms of living and working in Archuleta County full-time.
“We don’t want to underutilize property,” she added, explaining that if a home is rented as a long-term rental, it can only be listed at a rate that covers the mortgage payment, homeowner association fees and an additional $150.
She explained that the homeowner would have to check in with the ACHA at least once every 12 months, at which point the ACHA can decide to let the home continue to be rented or force a sale.
“They will never let a short-term rental happen,” Lashbrooke added.
Another circumstance nodded to by Kermode is the scenario of a homeowner passing away while occupying the home.
She explained that if there is another occupant in the household, that occupant will have one year from the time of passing to bring themselves into the PSCDC’s guidelines for in terms of AMI to be able to stay in the house.
Additionally, if a homeowner inherits another piece of real property while occupying the home, they will be forced to sell the property inherited within 180 days in order to keep their PSCDC home, Kermode explained.
If they choose to keep the inherited property, they will be forced to sell their PSCDC home.
“It’s harsh. It’s hard,” she said, explaining these parameters are set in place to keep things as fair as possible.
“If there is a limited resource, people get crazy to get it … housing is a limited resource,” Kermode said, noting the importance of following a transparent and equitable process.
Lashbrooke went on to explain that ACHA will be the entity performing the continued deed monitoring process to ensure compliance with the PSCDC guidelines set for occupying the home, noting the homes will be deed-restricted for 33 years.
Kermode also talked about the Department of Housing and Urban Development (HUD) guidelines for affordable housing.
She mentioned that if more than 30 percent of the household income is going toward housing costs, then that household is considered to be “cost-burdened.”
However, Kermode added there is “rumor” going around at the state level that HUD might be raising its guideline to 35 percent.
She explained that these guidelines will be what the PSCDC uses in relation to the local AMI to set initial sales prices of its homes.
Kermode also spoke about using the Colorado Housing and Finance Authority’s (CHFA’s) guidelines on affordability and AMI, and that figures might vary slightly depending on which system is used.
According to Lashbrooke, a 100 percent AMI for a four-person household in Archuleta County is $94,200 using the HUD figures.
She noted for a single person, the AMI for 100 percent is $66,000.
Kermode mentioned that household size will be determined by the standard of 1.5 persons per bedroom, meaning that a two-bedroom house is suitable for three people.
She explained that, with this standard, a single person will not be able to qualify for more than a two-bedroom house.
Lashbrooke noted that the PSCDC is using a variety of floor plans.
Kermode touched on the topic and issue of working from home, explaining that, basically, if someone is able to work from anywhere, meaning their job does not require them to live in Archuleta County, “you don’t need our housing.”
In the case of retiring while occupying a home, Lashbrooke explained that the occupant must hold a job in Archuleta County for at least four years from the time of sale, and if they choose to retire, they can remain in the home, so as long as they maintain the PSCDC’s residency requirements.
The PSCDC is also requiring applicants to complete a homebuyer education course in order to be approved for this year’s HOP drawing, Lashbrooke noted.
Kermode also mentioned that refinancing restrictions will be in place to prevent the property from being refinanced at a price more than the value of the property.
Lastly, Kermode talked about what the actual HOP drawing process will look like for this year, with Lashbrooke noting the PSCDC plans to hold the drawing in August.
Once qualified, the applicant will receive a certificate of eligibility and a ticket (one per household), which they will tear in half and place one half into the drawing bin, keeping the other half.
When someone’s ticket is drawn, they will be asked to mark which home they want that is in their approved category in terms of AMI and household size.
Kermode explained that this will be an in-person event and the applicant must be present to be entered into the drawing, or have someone there on their behalf.
Lashbrooke explained that those who are not drawn will be placed on the alternate list and will be contacted if a unit meeting their criteria becomes available.
Kermode explained that those who are drawn need to be prepared to “fork over some money” in writing an earnest check for at least $1,000.
She also noted that the recipient will have just three days from being drawn to go under contract on their home. If they are unable to go under contract, the PSCDC will choose from the alternate list for a new buyer.
Lashbrooke explained that ineligible applicants will have the opportunity to go through a grievance and appeals hearing process.
Lashbrooke indicated the PSCDC plans to use the same grievance and appeals process that is used by Archuleta County.
The PSCDC held a mock drawing on June 13 in which interested applicants were able to participate and ask questions about the process.
Lashbrooke mentioned that the meeting and mock drawing was recorded and will be posted on the PSCDC’s YouTube channel.
During the June 12 meeting, the PSCDC board voted unanimously to approve the draft guidelines, which were approved by the Archuleta County Board of County Commissioners (BoCC) at a June 18 meeting.
Earlier in the day, Lashbrooke presented an outline of the HOP process to the BoCC at a work session where the commissioners expressed general satisfaction with the process and with Lashbrooke’s work.
