Durango City Council is considering a proposal for a townhome development on Rosemary Lane off of U.S. Highway 160 in the western part of the city.
Of the 16 townhomes proposed, nine would have studio living spaces attached. The studios could be rented by the homeowners, thereby helping offset mortgages. And the rentals would help provide housing to lower-income individuals.
The developer of the project, Jake Lavin, proposed a design with studio living spaces to meet the requirements of Durango’s Fair Share Housing Program, which requires 16% of all new homeownership units be affordable to people who make a low or moderate incomes.
“The project needs to be affordable and has to be a benefit to the community,” Lavin said Tuesday during a City Council meeting.
In Durango, someone who makes $46,850 or less per year is considered low-income. Someone who makes about $73,200 is considered moderate income and is eligible for what is called attainable housing, according to the U.S. Department of Housing and Urban Development.
However, because the units would be rented instead of sold as separate living spaces, the attached studio living spaces do not fulfill the Fair Share Housing Program requirements. To Lavin, renting out the studio living spaces would “very significantly offset the mortgage” on the townhomes.
The HomesFund, a housing nonprofit in Durango that also functions as the housing authority for the city, would not be able to require private homeowners to rent out the attached units, let alone to a family or individual who qualified as low income, said Executive Director Lisa Bloomquist Palmer.
The HomesFund manages affordable housing units that are sold to buyers, but renting, particularly from private homeowners, brings its own complications, Palmer said.
“How would we monitor the basement of someone’s house?” Palmer said. “I don’t think this is viable as is.”
If the city required homeowners in the development to rent the studio spaces to low-income individuals, people might not want to buy a house with those restrictions, Palmer said.
Typically, under the Fair Share program, developers must make 16% of new units affordable to low-income residents, or they can pay a fee in lieu of including affordable housing units. The fee is calculated based on the number of units, the number of bedrooms, the income in the area and other qualifiers.
The money from the fee goes to the HomesFund to provide mortgage assistance of up to $25,000 to help new residents bridge the gap between high home prices and low wages in the area. The HomesFund has provided 29 assistance loans so far through the Fair Share fee-in-lieu program, helping 60 people reach homeownership.
If developers don’t want to pursue either of these options, they can submit a proposal that creates affordable housing for low- to moderate-income individuals, which the city has the option to approve.
Mayor Dean Brookie expressed concern that the reason the plan could not be approved for the private rentals is that the city does not have a separate housing department, but Palmer said a city housing department would run into similar problems.
“What it really comes down to is enforcement,” Palmer said, not the HomesFund’s capacity or desire to make the project work.
“We just don’t have the mechanisms right now to enforce something like that on private homeowners,” Palmer said.
If the plan were approved as it is now, it would be a missed opportunity to create accessible housing to support the local workforce, Palmer said.