Town to finance duplex project

Housing Authority to get commission

By Mark Reaman

Given the reserves in the town of Crested Butte coffers, financing for the four affordable housing duplexes being built in Crested Butte this summer will come directly from the town. The $1 million move will save financing costs and decrease the original sales prices on the units.

The original plan was for the town to directly pay for each construction draw on the two units it planned to retain, thus avoiding construction interest. The school district was planning to do the same for the two units it committed to purchase this month. According to town manager Dara MacDonald, this left the burden of the financing costs to be absorbed by the remaining four units and would have resulted in about $12,500 in additional cost to the sale price on each of those units.

“The town will now contract directly with High Mountain Concepts for the construction and we will pay cash for the construction,” MacDonald explained. “We will invoice the school district for their proportional share each time we get an invoice from the contractor. We expect this will cost the town about $1.5 million. We were planning to spend $500,000 for the two units we will be keeping as employee rentals. We expect to recoup the additional $1 million through selling the other four units for approximately $250,000 to $260,000 each.”

MacDonald said the staff is comfortable with the new arrangement since the $1 million represents about 5 percent of the town reserves and cash on hand. Some of that cash is restricted or earmarked for specific funds in town. The expectation is that the duplexes will be sold in the spring of 2019, at which time the money will replenish the reserve fund.

“If this effort is successful, the town may consider this method in the future when developing smaller numbers of for-sale units,” MacDonald said. “The town and Housing Authority are grateful for the two local banks that provided terms for financing the duplex build project. Although we determined that was not the best path for this particular project, we are heartened by the interest from our local lenders and have shown that, given the appropriate collateral, utilizing that tool may be possible in the future.”

So, the transfer of the property will not go through the Gunnison Valley Housing Authority as planned. But MacDonald said the Housing Authority will remain closely involved through their expertise in creating the pipeline of homebuyers. The GVHA will provide homebuyer education and vet the prospective buyers to ensure they are prepared and have financing available. They will also administer the lottery to select the buyers. For all of this effort, GVHA will receive a 2 percent commission on the sales of each of the four publically offered units.

The duplex project is on schedule for the summer. Two of the duplexes have already been approved by BOZAR and the remaining two will be considered at the end of this month. The town expects it will see the construction agreement with High Mountain Concepts on the April 19 Town Council agenda.

“In the meantime, we plan to proceed with development of Block 76 next to Rainbow Park and a few lots in Block 80 in 2019,” added MacDonald. “That project should garner somewhere around 20 units. There will be a public process to involve the neighborhood and select the developer for that project later this summer. We expect the developer to provide financing for that project.”

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