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Durango hires developer to assess cost of converting hotel to affordable housing

71-unit Best Western Inn & Suites could become city-owned property
The city of Durango has chosen developer TWG Developments based in Indianapolis to work on plans to convert the Best Western Inn & Suites on U.S. Highway 160 in west Durango to affordable or transitional housing. (Shane Benjamin/Durango Herald file)

The city of Durango has chosen developer TWG Developments based in Indianapolis to help plan the conversion of a 71-unit hotel to affordable or transitional housing in west Durango.

“They have other affordable projects going on,” said Nicol Killian, assistant director of community development. “This is the type of stuff they do. They’ve done a lot of conversions on properties from one use to affordable housing.”

In August, the city decided to move forward with a $70,000 earnest payment to purchase the Best Western Inn & Suites at 21382 U.S. Highway 160. The payment bought the city a 90-day due diligence period to evaluate the property and find a developer.

“We’re still working on due diligence, which they’re going to start pairing with us on,” Killian said. “Due diligence ends on Nov. 22, so we have to make a decision before then on whether we want to continue, or, if it’s just not going to work, we’ll have to back out.”

TWG’s role in the due diligence process will be looking at the engineering and design costs of what it will take to convert the hotel.

Current due diligence work being done by the city includes surveying the property, appraising the property and doing inspections.

“We’ve done some initial inspections to see what kind of condition the building is in,” Killian said. “We’re also working on a Phase 1 environmental study to see if there are any environmental issues on the site. Stuff like whether there’s asbestos in the building.”

Killian said there are no results to report from the property inspections yet.

The earnest payment is 1% of the building’s full $7 million price tag. If the city and its development partner determine the building does not meet requirements for the city’s plan for affordable and transitional homes, or funding for the building can’t be secured, the city will be repaid its $70,000 earnest payment.

There are 71 units in the hotel that could be used for housing, with a 62,000-square-foot adjacent restaurant building. The property is zoned for 5.3 acres of “commercial general,” with an additional 56.6 acres of “rural agricultural” land. There are some constraints to the rural agricultural acres because of hillsides and slopes.

In June, the city reached out to the offices of U.S. Sens. Michael Bennet and John Hickenlooper to apply for congressional funding for the project. The senators were responsive to the affordable housing project, and sent the city’s request for $9.6 million to the appropriations committee. There are a number of federal funding options the city qualifies for to help incentivize development.

njohnson@durangoherald.com

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