Friday, August 7, 2020

Brush Creek compromises: option to own is on the table

Gates responds to public comments and some community concerns

by Mark Reaman

In an effort to address concerns expressed over the proposed Corner at Brush Creek affordable housing project, developer Gary Gates is making some significant adjustments to the plan that is before the Gunnison County Planning Commission.

Gates plans to now include some for-sale units in the project; solidify the deed restrictions so they cannot be eliminated in a foreclosure or economic downturn; reduce the density slightly from 240 to 220 units; and agree to rent all of the units, including the 80 free market units, to people who are from or have a job in Gunnison County.

Gates plans to officially submit the changes to the county at the Friday, March 2 public hearing.

“This is an attempt to address concerns we heard from people at the last hearing,” explained Gates. “These changes will probably result in another continuance of the county public hearing to give the public time to respond. I have tried to focus on issues brought up by both the towns, particularly Mt. Crested Butte. We want to make this project happen because we believe it will benefit everyone in the county.”

Under the changes, the Gatesco team will reduce the total number of dwelling units on the 14-acre property at the corner of Highway 135 and Brush Creek Road to 220 units. One hundred forty of the units will be deed-restricted based on household income and Area Median Income (AMI). The current plan is to achieve the 20-unit reduction by shrinking the two largest buildings from 32-plexes to 22-plexes. Gates said the exact bedroom mix in the buildings is still being finalized.

Gates said he would dedicate 20 of the units, most likely 10 duplexes, as for-sale units that he would help finance at a low interest rate. Under his plan, the development team would construct and finance the two- or three-bedroom dwellings that would include a garage.

“By us doing the construction and carrying the paper, we think that helps overcome the biggest obstacle to successful deed-restricted for-sale programs: the inability of prospective occupants to qualify for financing, particularly a construction loan,” Gates explained in an email.

“No buyer will be required to finance through us; it is simply an option made available to them. The proposed financing terms would be a 3 percent down payment, 30-year amortization, and a low interest rate. The proposed interest rate is a fixed rate, determined as the 30-year Treasury Rate plus 60 basis points at the time of acquisition. Today, that would be a rate of about 3.85 percent.

“These 20 units will all be deed-restricted,” Gates continued. “These are anticipated to be along the eastern edge of the property. Details regarding pricing and household income targets are still being worked out. It is anticipated that the units will be affordable (cost is less than or equal to 30 percent of household income) for households making approximately $80,000 per year. By way of example, a family of four with a household income of $84,960 would have been 120 percent of AMI in the year 2017.”

Gates said he has heard concerns that out-of-county people might be able to rent the free-market units and use them essentially for a vacation home. To rectify that, he said his team would pursue restrictions based on local residency to the maximum extent allowed by all applicable laws, regulations, and policies.

“By way of example,” Gates explained, “some federal loan programs prohibit absolute local residency requirements, but allow local residency preferences that have been approved by HUD to ensure that they do not have a discriminatory impact.” He reaffirmed the commitment made at the public hearing that the minimum lease term would be for six months.

The changes do not come without a cost. Gates has long claimed he is making a minimal return on the project and by reducing the density, even by just 20 units, and getting involved with financing purchases, he is seeing a hit to the financial feasibility of the project.

“The reduced density and other concessions reduce the pro forma revenue for the project. In order to maintain project viability, it is necessary for the project costs imposed on the applicant to be reduced,” Gates said. “By way of example, we are proposing that the park-and-ride/intercept parking lot be severed and retained by the county, to be developed by the county or other entities (such as RTA) at a later date. It is similarly imperative that the impulse to demand that countless other exactions be imposed on the project applicant be tamed. For example, many have called for the cost of providing RTA service to the property to be imposed on the developer. This would not be fair or conducive to providing affordable housing. No other property owner in the county is required to directly pay the RTA for the service that is currently provided.”

Gates also brought up the parking requirements that the team has consistently claimed are overly burdensome, due to the small affordable housing units that include several studio and one-bedroom units. With such units he said, it does not make sense to require two parking spaces per unit and doing so adds to the cost of the overall plan.

Gates also said he is open to not closing on a contract for the property until after the project clears the county Land Use Resolution (LUR) process.

“Other than density, I hope I’ve addressed many concerns expressed by the community,” summarized Gates. “We realize we can never make everyone happy but we are listening and we really want to make this project happen.”

The county is holding a continuation of the public hearing on the plan this Friday, starting at 9 a.m. in the Lodge at Mountaineer Square in Mt. Crested Butte.

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