Caddis Flats awarded tax credits on first attempt

Location a big plus for the State

The Caddis Flats affordable housing apartment project next to the True Value in Crested Butte is a go. The Gunnison Valley Regional Housing Authority was awarded $5.3 million in tax credits by the Colorado Housing and Finance Authority (CHFA) last week. That means the housing authority will receive $539,165 in annual tax credits for the next ten years. The money will be spent on design, construction and management for the workforce housing project.

According to GVRHA executive director Karl Fulmer, the project will move ahead on a timeline that could have people leasing spots in the project by the spring of 2016.
Fulmer and the primary development partner, Bill Coburn of Coburn Development, gathered support for the project from the region’s public governments and private businesses like Crested Butte Mountain Resort. The support was both financial and in spirit for the project.
“Given the support from the towns of Crested Butte and Mt. Crested Butte, the city of Gunnison, the County and CBMR it was clear at last week’s presentation before the tax credit award committee that this was brought forward as a community effort,” he said. “The broad base of people involved was clear evidence to CHFA that our residents and elected officials in Gunnison County understand that our economies are interconnected and that our overall community relies on its workers for continued balance and economic success.”
Fulmer said that while the local partners are excited with the award, the state agency seemed very impressed with the proposal.
“We’re all extremely pleased with the announcement of a first round award for the tax credits,” Fulmer stated. “It shows the strength of the community effort but it also shows that the state agency believed that the location is a prime spot for workforce housing. They loved the amenities surrounding that site. Renters will be able to walk to the grocery store, the arts center and parks. The free bus across the street was also a big plus for the awards committee. The awards committee seemed impressed with the project and the location. It was what we were hoping for. We applied for exactly the amount that was awarded for our project.”
“This type of project is perfect for Crested Butte and the valley,” added Coburn. “The state recognizes the difficulty of providing workforce housing in mountain resort towns and they saw this as a good opportunity to address that need. Everyone put in a lot of work and it’s paid off.”
Fulmer anticipates gathering bids for the construction of the project and going through the town’s building permit review this summer and into fall. He hopes to break ground on the project a year from now in May 2015. The completion of the project is slated for May 2016.
Ultimately, there will be 30 units in the 21,000-square-foot building. The majority, 24 units, will be one-bedroom/one bath units. There will be six two-bedroom/one bath units. They will be eligible to rent for people making 50 or 60 percent of the valley’s AMI [annual median income] That means a single person making $25,200 qualifies in the 50 percent category while a single person making $30,240 meets the requirements for the 60 percent AMI. Rent for a one-bedroom unit in the 50 percent category would be $615. A two-bedroom unit for those in the 60 percent AMI would be $880.
“This project provides an enormously important piece to the sustainability of Crested Butte,” said Coburn. “If we don’t have local housing for the local work force, we lose a piece of what makes Crested Butte special.”
Fulmer explained that tax credit awards are distributed in 10-year streams of credits to whatever investor/corporation buys the credits. “This investor buys the credits up front—paying a certain amount per dollar for the credits. For example, 90 cents for each dollar of credit,” he explained. “We anticipate between 89 and 94 cents on the dollar for credits to fund Caddis Flats. This means approximately $4.8 million to $5.1 million in direct subsidy to fund local construction, design and management.
“The roughly $5 million in direct subsidy is released much like staged financing is for any project,” he continued. “The developer [GVRHA] takes out a conventional construction loan. An initial pay-out of tax credits is made upon closing on a credit agreement (six to eight months prior to construction). Next, the largest pay-out is made upon construction completion and then a final pay-out is made after stabilization of lease-up for a property. Once a credit purchase agreement is executed, the amount dedicated to a project does not fluctuate.”
“Frankly, the project could not happen without these tax credits,” said Coburn. “So to see the support of the community and the state to make it a reality is vital to a new project that will help keep working people living in Crested Butte and the northern end of the valley.”
“We will begin construction design review in late summer once the pricing for our credits has been determined,” concluded Fulmer. “This, ultimately, dictates what the final construction budget will be. We anticipate lease-up to begin in the spring of 2016.”