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Durango City Council approves $5.2 million for housing projects

Funding could speed up city’s housing development goals
Construction was underway on the Animas City Park Overlook Townhomes located near East Second Avenue and 33rd Street in November. Durango City Council approved an appropriation of $5.2 million to benefit several housing projects on Tuesday. (Jerry McBride/Durango Herald file)

Durango City Council approved a budget appropriation totaling $5.2 million for housing initiatives intended to ramp up the housing supply in a growing community where affordable housing is hard to come by.

The city will direct $2 million in state and federal funding, including from grant and American Rescue Plan Act funds, and $3.2 million from the city’s opportunity reserve account to be used for housing projects.

Appropriating the funds will “demonstrate (council’s) commitment to housing,” said Scott Shine, community development director.

Specific projects the funding will benefit include Westside Mobile Park, where an annexation by the city could be pursued; developments in Three Springs for more affordable housing options in perpetuity; and the former Best Western Inn & Suites motel conversion into rental apartments priced at 30-60% area median income.

Shine said the Best Western conversion project (the apartments have been dubbed Residences at Durango) will serve “low- to very low-income,” while other projects target the “missing middle” income bracket that spans 80-120% area median income.

The city applied for Congressional-directed spending along with the Southern Ute Tribe to secure funding for a Wilson Gulch Drive road and utilities extension in Three Springs, he said.

Development projects in Durango ranging from “affordable-” to market rate-priced homes and rentals are “teed up, right on the cusp of becoming realities,” he said.

The $5.2 million appropriation will increase Durango’s housing supply on a faster track than the city is otherwise on. Shine said an average of 148 housing units have been built annually over the last 11 years.

At a production rate of 150 housing units per year, the city can reach 20% inventory for below-market housing rates at a cost of $4.2 million per year. After 13 years, the yield would be 400 units at the cost of $56 million.

If the city can keep up its momentum, which its new housing division has facilitated, it can more quickly reach a housing inventory with 20% being below market housing cost rates, he said.

Councilors Barbara Noseworthy, Kim Baxter and Jessika Buell voted in favor of the appropriation. Councilors Olivier Bosmans and Melissa Youssef were absent from the meeting and so the appropriation request was passed 3-0.

Buell said it is “astounding” that city staff members have been able to make as much progress as they have with available funding on housing projects, and if it comes to an election where housing funds are needed on a regular basis, she hopes the community will get behind the idea.

Last year, the city scored 34 below market units for $431,654, which Shine said was a “very good return on investment.”

Baxter said the city can be even more effective than paying $431,000 for 34 units, or just under $13,000 a unit. She acknowledged high construction materials, labor interest rates and the absorption rate, or the pace at which available homes are bought up, are challenging.

“Those are the two things that are going to hold us back,” she said. “And I think by showing our commitment to this, we will be attracting the kind of developers and the kind of support that we need to make this happen.”

She said the city is ahead of other communities in Colorado in addressing the housing crisis.

Noseworthy, the mayor, said the city has come a long way since just a few years ago when public-private partnerships between the city and developers were “unthinkable.” She said the partnerships are useful to developers who want Durango to be livable for workers, including police officers, school teachers and doctors.

She said four years ago, the city didn’t have an opportunity fund, and reserve funds had been “spent down significantly” to pay for street maintenance. She credited the city manager, finance department and staff for judicious management of financial resources.

“An opportunity fund allows us to respond to challenges and opportunities,” she said. “We never know what’s going to hit us. But we have a modest amount of funding available. And this to me is a wonderful use of that.”

She said the community is looking to City Council to demonstrate its priorities, and the city has heard workforce housing is at the top of residents’ minds.

“And what better way than to allocate $5.2 million to one of our top priorities,” she said.


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