The city of Durango unlocked a bureaucratic achievement on Tuesday when City Council approved a novel agreement with the state for workforce housing on three state-owned parcels on Main Avenue.
Specifically, City Council authorized a memorandum of understanding with the Colorado Department of Personnel and Administration for what’s been named the North Main Housing Project ‒ the first agreement of its kind for the city, according to staff.
The MOU establishes a partnership with the CDPA for “planning, financing, development, and operation” for an undetermined number of rental and homeownership housing units, as the document describes.
Details about the North Main Housing Project are scant. It concerns three parcels: 3801 and 3803 Main Ave. and 3727 West Second Ave. ‒ approximately one-quarter of a mile southwest of X-Rock in north Durango. The two former sites are owned by the CDPA and the latter is owned by the Colorado Department of Transportation, said Brian Devine, housing policy and planning administrator for the city.
He said the project is in a preliminary stage and site planning, and predevelopment work will commence with the MOU being finalized.
Devine said MOUs typically fall under the city manager’s purview ‒ not City Council’s. But because the agreement states the city will investigate new financing sources it hasn’t used before ‒ and because the MoU itself was the first mention of the project to City Council ‒ staff brought the agreement to councilors for approval.
He added City Council would review and approve any future financial elements just as it does in any other normal budgetary and appropriations processes.
Mayor Gilda Yazzie asked if any housing developed through the project would count toward the city’s Proposition 123 affordable housing commitment to increase its housing inventory by 3% annually from 2024 through 2026.
Devine said it is not yet clear if any units would contribute to that commitment, but that is the city’s goal.
The city will benefit from the MOU because it can influence the project’s design to reflect Durango’s housing needs as defined in its housing needs assessment ‒ as opposed to the state designing the project solely with state housing needs in mind, he said.
“Our expectation is that this approach will produce a project that’s a better fit for Durango from a housing needs perspective,” he said.
The MOU outlines a financing framework that includes tax-exempt bonds to finance development costs, complementary funding from state and federal housing programs, a lease of a portion of the property to the city or subsidiary, and homeownership models for at least some units built.
A summary of each party’s roles and responsibilities says CDPA will retain ownership of the land, prepare and issue requests for qualifications and manage developer selection with consultation from the city. CDPA intends to lease the property and will provide technical support during financing and entitlements.
The city will be the principal project sponsor, explore bond financing for development costs and other funding sources; enter a development agreement with a selected developer; and oversee compliance with affordability, construction and operation standards. It will also work with the selected developer to create a single-purpose vehicle subsidiary for controlling and financing the project, according to the agreement.
Likewise, the selected developer will design, finance and construct the project, provide property management and reporting, and manage the sale of homes to buyers while the state retains ownership of the parcel.
cburney@durangoherald.com
