La Plata County
3-Year Workforce Housing Investment strategy
La Plata County Economic Development Alliance
Investment strategy orientation & contents
This housing investment strategy prioritizes the key steps necessary to maximize the creation of housing affordable to the local workforce across La Plata County. The overarching strategy addresses rental housing, homeownership, a concerted effort to initiate a large-scale housing development, the preservation of existing affordable housing options, and the creation of a local housing fund. Successful execution of the strategy will require coordinated action across jurisdictions and between the public and private sectors.
La Plata County and its local governments need to be intentional about creating below-market housing wherever possible. We are defining below-market housing as all housing that is created and delivered to the consumer that is below the existing market prices. increasing housing supply may eventually soften prices, but in a new post-COVID world, markets have shifted and communities cannot assume that more housing necessarily means less expensive housing.
Furthermore, water scarcity and infrastructure capacity issues will eventually require local governments to prioritize what housing projects should have access to infrastructure. As such, each government should consider setting a goal of creating a specific number of below-market housing units through the private sector development pipeline by providing direct subsidy. This is often referred to as a “buydown program.”
Priority housing strategies
This summary provides an overview of the different components needed for a coordinated housing effort across La Plata County.
- Coordinate the allocation of Private
Activity Bonds (PABs) through a regional agreement.
- Coordinate countywide support of housing projects applying for tax credits, prioritizing those with community sponsors and those which assist in recruiting developers for specific projects.
- Enact uniform local government policies for below-market housing fee waivers.
- Establish a Housing Catalyst Fund to support non-tax credit rental projects with predevelopment costs, including employer-initiated below-market rental development
- Support Fort Lewis College’s efforts to develop below-market rental housing for staff and faculty in the next 18 to 24 months on campus land.
- Coordinate the allocation of Private
- Provide technical assistance to municipalities to support subdivition development, identify development partners, find funds to subsidize projects, set below-market pricing, and develop resale controls while engaging in other activities that will result in the production of more below-market units for-sale across La Plata County.
- Support homebuyer and mortgage assistance programs provided by the HomesFund.
- Complete feasibility study on modular housing produc options to create more affordable housing.
Land Development Initiative – Commit to “Big Idea” Projects
- Coalesce around “big idea” regional projects that bring together municipal and county resources as well as private funds to create development at scale that focuses on addressing the significant need to create development at scale that focuses on addressing the significant need to create for-sale housing highlighted in the Root Policy study and affirmed in stakeholder interviews.
- Provide local funding for technical assistance, predevelopment, resident organizing, and permanent financing for mobile home park preservation.
- Provide Private Activity Bond allocations to preserve existing affordable rental housing.
Local Housing Trust Fund
- Develop and implement a local housing trust fund to support below-market housing.
Ongoing Education and Advocacy
- Continue and expand efforts for broader community engagement in housing initiatives.
Current housing initiatives
Fortunately, housing work throughout La Plata County has been underway for some time and there are many existing policies, programs, and initiatives that have been very successful. The following chart shows existing initiatives and initiatives under consideration by local governments and housing agencies:
Housing education & advocacy
Policies & programs
Coordination & funding
The success of this overarching 3-Year Workforce Housing Investment Strategy is predicated on the coordination of policies and resources around each strategy component.
The Regional Housing Alliance is currently defining its role, which will likely include some level of coordination among the regional governments. Emphasis here is on the opportunity for much broader coordination to increase affordable and workforce housing initiatives that lead to more units being built while engaging public and private employers, nonprofit organizations, private funding and philanthropy. The consulting team suggests establishing a cross-sector housing committee that would meet regularly to review progress on this plan and mold strategies responsively as more state and federal funding becomes available in the coming months.
The team believes that coordination efforts could fit neatly into three different arenas:
- Regional Housing Alliance (RHA): this agency is best positioned to (1) coordinate local government technical assistance, (2) track a countywide project pipeline and request for requests for competitive federal and state programs, and (3) implement a long-term funding source for housing initiatives in La Plata County. RHA is working on creating additional capacity by hiring an executive director to manage several activities, including grant writing to support member projects, assist in sponsoring, funding or providing development services for projects, and providing technical assistance through shared contracts with third-party consultants when possible.
- Housing Coalition: The second coordination effort is yet to be developed, but there is the opportunity and a need for a grassroots coalition to help guide this work. This coalition could be composed of community members committed to ongoing education and advocacy work, and who will help push local leaders to implement the Three-Year Workforce Housing Investment Strategy and additional bold actions in response to this dynamic funding environment. Through the interview process, we did hear about new efforts to establish a housing coalition. Existing nonprofits provide some advocacy but it is not formalized or coordinated. A more formal coalition will likely be developed organically as a result of future conversations regarding a dedicated housing trust fund later this year.
- La Plata County Economic Development Alliance: The Economic Development Alliance is uniquely positioned to coordinate local employers and the private sector for specific initiatives and focus on providing predevelopment funding and technical assistance in support of both private and public sector initiatives.
We recommend that RHA and the Economic Development Alliance formalize their coordination with each other and co-manage a cross-sector committee that meets quarterly to review progress on this plan, coordinate new efforts and identify funding as opportunities emerge over the next three years.
Overall funding strategy
There are three primary funding sources for creating workforce housing in La Plata County:
- Local government funds such as general funds, local infrastructure funding, American Rescue Plan Act (ARPA) funding, Durango’s Fair Share fee-in-lieu receipts, Twin Buttes and Three Springs Affordable/Attainable housing fees. Local ARPA funds should be prioritized to create immediate capacity for housing projects and initiatives, support predevelopment, match requests for funding to the state for housing projects, cover the costs of fee waivers and offsets and provide infrastructure to new developments in exchange for below-market housing.
- Private funds from sources such as the Local First Foundation, employer-funded initiatives, local philanthropy etc. Employers are a significant resource and should be engaged in implementing these strategies. The Local First fund and local employers have already invested more than a million in housing activities and many others have indicated interest in providing land, programs and additional resources. Private funds can help initiate new projects by financing predevelopment, assisting with creating capacity, providing sites for development, funding mortgage assistance programs and providing rental assistance or housing subsidies while units are being developed over the next few years.
- State and federal housing funding such as the Low Income Housing Tax Credit (LIHTC) program, grants and low interest loans, $90M State Housing Trust Fund, State ARPA funds. State programs leveraging ARPA funds need to be expended by 2026, giving the local community less than four years to access these additional resources.
|Revolving Loan Fund||$150,000,000|
|Innovative housing (manufactured)||$35,000,000|
|Resident Owned Communities (ROCs)||$25,000,000|
|Workforce Housing Trust Authority||TBD|
Existing State Housing Fund
These funding sources will each have specific guidelines and requests for applications throughout the year with deadlines.
To track these opportunities please visit:
We recommend adhering to the following guidelines for local investments in below-market housing opportunities.
While local governments are currently allocating Private Activity Bond (PAB) resources and providing support for LIHTC applications, directly funding infrastructure, providing fee waivers and offsets, funding predevelopment activities and providing gap funding for projects, we recommend that they formalize their funding strategies. It is important that funding availability is predictable so that underwriting criteria between different funds can be consistent whenever possible. This document provides a framework for local governments to design their own programs based on funding needs by project type and funding availability at the state level.
State and federal funding should be prioritized to create housing now. Even though funds can be used for land banking, there are enough opportunities in the existing development pipeline (over 1,600 units) to buydown units immediately and to start alleviating the housing crisis.
Below is a table showing
a high-level overview of
available and the eligible
uses for each:
LTD = some limited funding may be available
meet specific needs:
In 2007, the Regional Housing Alliance hired a consultant to develop a model for measuring the gap between what a household can afford and what was then available on the market. This tiered income affordability matrix was used to develop a second mortgage program for the HomesFund. This analysis, included below, is still conducted annually to determine gap needs and appropriate second mortgage amounts and is provided below to set the context for current homeownership gaps in the community.
2022 Tables (updated annually)
|Household Income Tiers||Max AMI||1||2||3||4|
|Maximum Affordable Price|
|Price Tiers || ||0-1 BR||2 BR||3 BR||4 BR|
The consulting team used the same income tiers as those above to determine affordability for rental housing. The analysis below does not include rental units developed for 60% AMI households under the LIHTC programs as these projects are primarily funded by state and federal resources. The first section in the table below shows rental prices that would be affordable to each income tier, and the second section shows the per-unit development cost gap that remains after calculating the dept that can be borrowed based on rent levels and operating income.
|Max Affordable Prices for Rental||Max AMI||1||2||3||4|
|Price Tiers||0-1 BR||2 BR||3 BR||4 BR|
|Per Unit Development Gap Based on Affordable Rents*|
|Price Tiers|| ||0-1 BR||2 BR||3 BR||4 BR|
To evaluate the success of the 3-Year Workforce Housing Investment Strategy, it is important to understand the baseline numbers of new and preserved affordable housing units expected over the next three years, and estimate how adherence to this plan can increase the number of below-market units in the community.
Approximately 170 affordable rental units—LIHTC funded—are in the pipeline. This affordable housing pipeline assumes the creation of units for households below 60% of AMI and the use of tax credits and private activity bonds to finance the development. With these types of projects, the funding gap per project ranges $35,000-$75,000 per unit.
Workforce rental housing, or 1-2 bedroom units from 80% AMI to 125% AMI, in the current market would require around $72,000 of subsidy per unit based on the gap model on the previous page and current construction prices (see page 37 for a detailed gap analysis). For instance, if the community wants to increase the current pipeline by 10%, approximately $1.4M of additional subsidy will be required. Workforce rental housing models have not been executed yet, and will be piloted with Fort Lewis College this year (50-70 units).
The HomesFund anticipates 90 affordable homeownership opportunities through their mortgage programs over the next three years. FLC’s new initiative (15 mortgages), Bayfield’s efforts at Cinnamon Heights (30 units), and the City of Durango’s programming (60 deedqualified units) over the next 3 years would create 195 homeownership opportunities in total. The average subsidy required to create affordable homeownership opportunities is nearly $200k per home. Increasing this existing pipeline by 10% would require approximately $3.5M of additional subsidy.
Planning for a coordinated land development initiative that will provide an estimated 300 additional units of rental and for-sale housing is a significant undertaking that will need the combined resources of local and state governments as well as support from the private sector. If the community wanted to provide more than 300 units, we estimate a per-unit subsidy that averages the amounts needed for rental and for-sale units, resulting in a $134,000 per unit cost.
La Plata County is actively supporting nonprofit mobile home park preservation efforts which are also reflected in unit counts for the next three years on the chart on the next page. Costs for acquisition per unit/lot is $118,000. What is not included on the chart are costs for park improvements and lot replacements. We do not have cost estimates, but wanted to create a placeholder and highlight that this will be a funding need in the near future.
Development & preservation pipeline
|Anticipated Below Market Units||Subsidy needed per unit||Subsidy to support existing pipeline||Cost to increase units by:|
|Land Development Initiative||300||$132,500||$39,750,000||$3,975,000||$7,975,000||$19,875,000|
|Mobile Home Park Preservation Via Acquisition||70||$118,000||$8,260,000||$826,000||$1,652,000||$4,130,000|
|Mobile Home Park Rehab||TBD||TBD||TBD||TBD||TBD||TBD|
|Total New Units/Mortgages||715||—||$88,635,000||—||—||—|
|Total Units Preserved||120||—||$9,360,000||—||—||—|
Approximately 50% of required subsidy may be available from state and federal resources. Reaching these subsidy amounts will require leveraging local, state, federal, private and philanthropic resources.
How we got here
A five-county housing needs assessment conducted by Root Policy and published in the summer of 2021 serves as the most recent comprehensive dataset on housing needs for La Plata County. It provides important context on broader regional trends, too—many of which are relevant to members of the La Plata County workforce residing outside of La Plata County who commute in to their places of work. Some key takeaways from the report that are relevant to this strategy are:
- La Plata County will need 570 new permanent units and 45 seasonal surge beds in the next three to five years to accommodate workforce growth and address some of the county’s unmet housing needs.
- Over the last decade, La Plata County has seen a decline in families with children and an increase in senior adults moving to the area.
- A significant amount of the region’s forecasted demand falls in La Plata County.
- There is significant housing need for the “missing middle”— those earning 80-120% of area
median income (AMI).
While the data collected in the 2021 assessment is not without flaws, it points to a clear and urgent need for additional units often deemed “workforce housing,” referring to housing for those earning moderate incomes–approximately 80-120% of area median income (AMI)—and who comprise much of the area’s workforce. These earnings are too high for subsidized housing opportunities such as vouchers, and too low to afford current options on the open market.
The Project Moxie and Cappelli Consulting teams kicked off this engagement in early October of 2021 by undertaking an “environmental scan,” which is an in-depth interview and research process to better understand the local context and inform the strategic planning effort. To accomplish this, the team reviewed existing plans and documents, conducted one-on-one interviews with key stakeholders in the local community, and solicited opinions about challenges and opportunities to increase housing for the local workforce.
To support these efforts, the team worked closely with the La Plata County Economic Development Alliance, the organization that commissioned this study, to develop an advisory committee (deemed the “Kitchen Cabinet”) and identify key stakeholders to interview as part of the environmental scan.
Throughout the project, the team held numerous Kitchen Cabinet advisory meetings; developed and administered a survey on housing with local employers (takeaways are included in the appendix of this document); facilitated a luncheon discussion on employer-sponsored housing initiatives; reviewed identified parcels for development readiness and feasibility; reviewed data on housing needs; and narrowed in on key stakeholders whose activities relate to housing activity in La Plata County. These targeted stakeholder conversations led to a more complete understanding of what housing activities are happening now and what’s in the near-term pipeline throughout the county allowing for opportunities for synergy and partnership to emerge.
Finally, in April of 2022, the team hosted two community engagement events (one for key stakeholders and another for the general public) wherein the proposed strategies were presented and time was allotted for feedback and questions. These meetings played a pivotal role in identifying strategy implementers and aligning on the key recommendations contained in this report.
How we got here
Coordinate the allocation of Private Activity Bonds through a regional agreement
Private Activity Bonds (PABs) are a public funding resource that is allocated to La Plata County and the City of Durango by the State of Colorado. The Colorado Division of Housing (DOH) also allocates separate PABs in a statewide pool. This resource alone is not adequate to fund projects but combined with the 4% Low Income Housing Tax Credit (LIHTC), it is a powerful tool to support larger affordable rental developments. The PAB allocation process for housing is managed by the Colorado Housing and Finance Authority (CHFA) and the Colorado Division of Housing (DOH). Local governments have the choice to allocate PABs to a local project or assign them back to CHFA to support affordable housing statewide.
The community has a track record of coordinating PAB allocation with the first housing project in 2019; the use of PAB allocations to preserve Tamarin Square Apartments (68 units of low-income senior and disabled housing) was a significant win for the local community. In 2022 the community again coordinated PAB allocation for use by TWG development in its efforts to convert the Best Western into affordable housing through a PAB/4% LIHTC funding model. The team is hopeful that there will be more opportunities to use this limited resource to either preserve or promote rental housing projects, and also expects pressure from out-of area developers and projects who have the ability to ask local governments to transfer their PAB cap to projects on the Front Range in Colorado. The consulting team recommends as a powerful yet simple action that the City of Durango and La Plata County coordinate their allocations annually by using a shared process for inviting applications from project developers, and jointly evaluating and selecting projects to increase resource leverage for both entities. As part of the appendix to this report the team is providing a draft template for coordinating PABs for future years.
Coordinate countywide support of housing projects applying for tax credits, prioritizing those with community sponsors and those which assist in recruiting developers for specific projects
Low Income Housing Tax Credits are the most widely used subsidy for affordable housing rental development in the country. Annually, this tool produces thousands of units of affordable housing in Colorado. Every year, the federal government allocates credits to the state to distribute through a competitive process to projects. These projects are typically between 30 and 150 units and must restrict rents to certain income levels for 30-40 years, depending on their financial model. The 9% LIHTC model provides anywhere from 50% to 75% of the required equity for a project. Development partners are allowed between 10% and 15% of development costs as a fee for providing the units. Communities benefit from well designed, affordable rental communities and investors receive a double-digit federal tax write-off. Because of these enormous benefits, LIHTC is a competitive program and is oversubscribed 4:1 in Colorado. The good news is communities have some control over the allocation process because CHFA, the allocating agency, gives significant weight to support from local communities and local governments for specific projects.
In our interviews for this report, we heard interest in using the 9% credit from several key players, which led us to recommend that local communities coordinate a development pipeline for the LIHTC program. Because we are in a rural region, we can expect to receive one 9% allocation every two to three years. There are strict requirements about local market demand, and with the LIHTC program being in high demand, many of the resources are allocated to the large population centers in Colorado. By coordinating a local LIHTC pipeline, the community will help prevent competition among local projects, can clearly support a project (giving it a competitive advantage), and will inevitably end up with higher quality projects and more community benefits for the projects that are funded.
Enact uniform local government policies for workforce housing fee waivers
In our interviews, we learned that many local governments were providing some kind of fee waiver or fee offset for below-market or affordable housing. This has very positive impacts, and our recommendation suggests building on the public goodwill generated by this activity and improving upon this practice in multiple ways:
- Formalize the practice at the local level. Which fee offsets are available for which types of units, and what is expected in return for that waiver or fee offset? Bayfield has some very straightforward fee waiver practices in place that could provide a good template for other communities.
- Budget for fee-offset program costs based on the projected development pipelines or funding available.
- Fee offsets are critical to projects applying for competitive funding like LIHTC allocations; having a set program for waivers or offsets will make local applications much more competitive and will create a smoother process for the development team.
Fee waivers and/or offsets have been funded in a variety of ways in other communities: (1) by establishing a local funding source versus reliance on local government’s general fund, (2) through state grants like CDBG, and (3) through subsidies provided by local governments’ infrastructure funds. To simplify paperwork and add capacity for all local governments, the Regional Housing Alliance might consider coordinating funding applications to the Department of Local Affairs for funding for infrastructure and fee waivers.
Establish a Housing Catalyst Fund to support non-tax credit rental projects with predevelopment costs
Predevelopment funding is the first funding for any project and also the riskiest funding. Predevelopment funding programs offer financing to cover a variety of development expenses—sometimes referred to as “soft costs”—incurred while determining the feasibility of a particular project, such as costs of preliminary financial applications, legal fees, architectural and engineering fees, and other exploratory work. Obtaining financing for these costs is difficult in good economic times and impossible in challenging times. A number of state and local governments have developed predevelopment loan programs to cover these expenses, thereby facilitating and expanding development of below-market housing. Our team has spent two decades doing predevelopment work and seeking predevelopment funding for projects throughout the Southwest. Our experience is that when a local community, agency or local government provides predevelopment resources, they have more influence over the project’s design and most importantly, can help a “stuck” project move forward and determine feasibility. One of the “best practice” models for predevelopment is the Section 4 program, a federal initiative under the Department of Housing and Urban Development. Section 4 funds are awarded competitively across the country to help projects with early feasibility and due diligence work. The challenge with Section 4 is that it is underfunded and only five to seven projects in Colorado receive funding each year. Section 4 was a primary funding source in the early days of developing the Regional Housing Alliance and the subsequent creation of the HomesFund.
The consultant team recommends that the Economic Development Alliance launch a Housing Catalyst Fund (Catalyst Fund). This would adopt the best practices of the Section 4 program while providing more resources to launch several projects throughout the county. The team recommends the following structure for the Catalyst Fund:
The Catalyst Fund would be administered by the Economic Development Alliance team and its consultants. The Catalyst Fund would be directed by a steering committee of representatives from the four governments (staff or elected), RHA, a local employer, a local nonprofit, a local bank, and a member of the Economic Development Alliance board. The Catalyst Fund will launch with a focus on rental housing, but could be used for any housing projects in the near future.
This steering committee would approve funding guidelines, review applications to the fund, and approve funding allocations. It is anticipated that this committee would meet monthly to launch this fund by July 2022 and then would shift to meeting every other month.
The team recommends that the Catalyst Fund be capitalized with up to $1,000,000 in the next 12 months with the following funding sources: local government contributions (ARPA), Funds from private sector (Local First Foundation and/or local employers), and a possible grant from DOH (requirements forthcoming this summer).
This fund would provide at least three levels of support for potential projects:
- Predevelopment grants of up to $25,000: These grants could be used to cover the costs of third-party studies, hire a development consultant, or hire a technical consultant to assist with early feasibility assessments. Eligible applicants include local nonprofits, private developers, and local governments. These smaller grants are targeted toward projects of less than 30 units, nonprofit partners, and/or rural projects.
- Predevelopment grants of up to $75,000: These grants could be used to cover the same costs as above, but projects must be larger in scale (31 units or greater).
- Predevelopment grants up to $150,000: Given this level of funding, the applications would be more competitive and would require a higher threshold for demonstrating a readiness to proceed. Project underwriting would be provided by the Economic Development Alliance consulting team. The goal of these grants is to catalyze large- scale projects over the next several years.
The Catalyst Fund committee would act as an advisory committee and would confirm each program application and assist with application review and overall program development. With this mix of funding supports it is anticipated that the Catalyst Fund could support five to seven projects annually. Currently, the Economic Development Alliance has secured $120,000 for this initiative and anticipates launching the committee in June of 2022 with a first funding opportunity in July. This program will not only catalyze projects but will help the county to track projects and the development pipeline, which will inform additional housing opportunities as well as notify the community of projects that are stymied by various constraints.
Support Fort Lewis College’s efforts to develop below-market rental housing for staff and faculty in the next 18 to 24 months on campus land
In 2021 Fort Lewis College launched an employer housing initiative with three primary strategies. One of those strategies is to explore a rental housing project on campus for faculty and staff. This project launches in May of 2022 and will require support and local funding. This project will target 80%-120% of area median income to meet a specific gap in rental affordable to this income bracket. The project will have a preference for FLC staff and faculty but will also serve employees from 9R and the broader community. As the first employer sponsored rental project; this will serve as a pilot that can inform the community on how to approach these projects and possibly replicate with additional employers in the near future.