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Renters become owners through fair-share funding

In-lieu payments have helped buy 11 Durango homes

Since the policy’s 2008 adoption, about $136,400 in fees collected through the city’s fair share ordinance have helped 11 local families find homeownership in Durango’s challenging housing market.

Through the Regional Housing Alliance of La Plata County, those households have left renting behind by using the fee-in-lieu payments collected from developers through the city’s fair share ordinance.

The local law requires 16 percent of all new residential units to be affordable to the local workforce – those households earning at or below 80 percent of the area median income – or else the developer is charged an in-lieu fee.

Payments are directed to a local mortgage assistance program orchestrated by the RHA, which oversees a $5.1 million loan fund with multiple local contributors to assist home buyers throughout the county. For every dollar of in-lieu fees, the loan fund collects $40 from federal, state and private sources.

Martin and Deb Moses rented in town for six years, paying about $1,200 to $1,300 monthly in rent, until 2012, when a real estate agent suggested they take a class with the RHA to qualify for the loan program.

“We had a boy just six months before and wanted to buy a home, which was important to us,” Deb Moses said. “Mostly, we wanted to invest in Durango financially and emotionally.”

Deb Moses, who holds four part-time jobs, wanted a garden and chickens, and her husband, a wildlife biologist, wanted to do home repairs without a landlord’s permission.

The couple received a $10,000 loan to help them with their down payment on a $240,000 house on East Fourth Avenue. The timing was also right: In the past two years, the median home price in Durango rose by 15 percent, according to the Durango Area Association of Realtors. For the first quarter of 2016, the median price for an in-town single-family home is $415,000.

“Had we not gotten this assistance, there was a good chance we would have left the area, even though my husband got a good job,” Deb Moses said. “It’s just the cost of living and finding work, we would have probably left, which would have been a huge bummer.”

The Moses’ loan payments, plus interest, are returned to the loan fund.

The city received its first fee-in-lieu payment in 2010 for the Metz-Briggs development. Subsequent building in Three Springs and on Florida Road also padded the funding pool.

In-lieu fees grow in proportion to new construction, of which there is a shortage in Durango. The maximum credit available from in-lieu funds was $15,000 per applicant until this year’s increase to $25,000 to try to keep pace with the market.

But combined with other local lending programs, like one funded by payments collected on building permits issued at Durango Mountain Resort, some households can receive as much as $50,000 in assistance.

As a resort employee, that option was available to Purgatory rental shop manager Jordan Foster and his partner, Bridget Averill, who purchased their first home together in Three Springs for $325,000 in 2015 after eight years of renting.

The couple was eligible for a total of $55,000, and like the Moses family, said home buying in Durango would not have been possible otherwise.

“Rent was obviously very high; it’s ridiculous,” said Averill, who said she and Foster paid about as much in monthly rent – $1,325 – as they do for a mortgage payment. “When our landlady decided to sell, we started looking into buying because it was impossible to find a solid rental where we could keep our four dogs and not have a significant commute.”

Since 2006, the county has collected $417,000 in Durango Mountain Resort building fees, which assisted eight of the 11 households, including Averill’s and Foster’s.

The 11 houses were purchased at an average price of $303,000.

As the fair share ordinance stands, it is cheaper to pay the fee than to build price-capped units, which consequently discourages building affordable, so city planners have been re-examining the policy in recent months. Some officials say the in-lieu payment and affordable development costs should be comparable in order to find balance.

“I think the need for workforce and affordable housing is extreme in our community, and I’m supportive of the city looking at a variety of options to both increase the opportunity for greater density in the city and creating revenue streams to provide the subsidized housing we need,” RHA Executive Director Karen Iverson said.

The housing market has changed since the policy’s adoption, and she hopes the city’s restructuring of the ordinance addresses that for the public’s benefit. Right now, she said, the fair share regulation has a defect:

“The highest affordability tier (outlined in the ordinance) seeks to create units up to $380,000 for a three-bedroom, but they’re already building at that price point in Three Springs,” Iverson said. “We need to create units below market rate. When policy overlaps with market rate, it creates an unproductive system.

“Many of our loan recipients are essential workers, people that are critical to keep in the community.”

jpace@durangoherald.com



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