The La Plata Economic Development Alliance Housing Catalyst Fund Committee completed the first round of funding for housing projects this summer.
The Catalyst Fund provided grants to four local projects to help pay for predevelopment expenditures, which helped determine the viability of early worker housing development projects around the county.
The catalyst fund was developed through a partnership between the alliance and the Regional Housing Alliance of La Plata County.
Four initiatives, including Durango Crossings, Pine River Commons, Rivergate and Rock Creek, received money from the Catalyst Fund’s inaugural round. There are both rental and for-sale units available in these housing complexes.
The alliance currently has $625,000 in fund donations, and it estimates it may reach $1.25 million in total donations by the end of the year.
Grants helped provide funding for eligible activities, including environmental studies, site preparation, market studies, surveys and legal fees.
The committee believes the stage costs are critical to determining project feasibility. These are often underfunded or not funded at all, creating a barrier that prevents projects from getting started.
“The Catalyst Fund concept came from our Workforce Housing Investment Strategy, and we are delighted that it is now a reality and at work in our community,” LPEDA Executive Director Michael French said in a news release Friday. “The first round of funding through the Catalyst Fund provided much-needed capital to area workforce housing projects that will help ensure we have below market housing available to working members of our community. This attainable housing will be built in Durango, Ignacio and Bayfield.”
Last year, the alliance put together a three-year workforce housing investment strategy, in part to develop a catalyst fund to help get workforce housing projects off the ground.
The three-year strategy recommends that local governments be intentional about creating below-market housing wherever possible.
The alliance defines below-market as “rental housing that delivers new rental units that provide rents affordable to households earning less than 140% area median income and for-sale housing that delivers affordable housing units available to households earning less than 160% area median income.”
The alliance lists 140% area median income as a one-person yearly income of $101,920 and 160% as $116,480.
Because of a shortage of labor and materials, those upfront costs could be even higher for developers. The strategy will also help fund the upfront work needed before developers start building. This includes looking at infrastructure costs and evaluating what requirements the development must follow based on the municipality that oversees the land.
“Financing for predevelopment activities has always been hard to come by on account of the significant financial risk it presents to the developer,” said Pat Vaughn, Regional Housing Alliance of La Plata County chairperson. “With high interest rates, inflation and increasing complexity, predevelopment activities are arguably harder to fund than they’ve ever been.”
Eligible applicants for the Catalyst Fund using state and federal subsidies must promise to offer at least 25% of available units at below-market rates.
In order to use private or local funds for a proposed project, applicants must disclose the number of units that will be set aside as below-market.