Valley Housing Fund kicks in $100K to help with shortfall
By Mark Reaman
The Crested Butte town council is using another mechanism to help fund the Mineral Point affordable housing project that should start construction north of the Gas Café in the spring of 2024. Council on Monday, December 4 approved a so-called “gap funding loan” for $500,000 to the project’s developer TWG of Indianapolis. There is little expectation that the low interest loan will be paid back in the near-term, but the loan agreements provide an avenue for eventual repayment and it covers needed financial obligations to make the project work at the current time.
The interest rate is 2% and the loan document states the 40-year loan could be paid back at the end of the term or at the time the project is sold or refinanced. While loan payments could be made immediately, the town made clear in a staff memo to council from housing director Erin Ganser that “operating costs on a project like Mineral Point tend to be quite high when measured against the rent restrictions and it is not likely that the net cash flow will be sufficient to pay debt service on the town’s loan. Repayment will most likely occur at the time of a refinance or sale.”
The loan will also be subordinate to loans provided by the state for the project. Ganser explained in her memo to the council that the loan is not taxable to the project and the town is “empowered to act as a lender in this capacity because the public purpose served by the development.” The $500,000 is accounted for within the 2023 Affordable Housing budget.
Meanwhile, the Valley Housing Fund announced this week that the board approved a $100,000 grant request “for its Partner Support Program to assist with an unexpected budget shortfall in the project.” According to a press release, board president Scott Desmarais stated the community still has a major affordable housing crisis in Gunnison Valley and that “getting Mineral Point across the finish line and having these homes available for community members is absolutely critical.”
When allocating Partner Support grants, VHF prioritizes community housing projects that emphasize sustainable design, access for residents with disabilities, and quality of life. The all-electric project includes a 30% reduction in indoor water use, low energy lighting, and photovoltaic and EV charging infrastructure.
Additionally, six of the 34 apartments at Mineral Point meet accessibility standards for people with disabilities, and two meet standards for individuals with visual and hearing impairments.
According to the VHF executive director Lauren Koelliker, VHF’s Partner Support Program has contributed more than $3.1 million to local affordable housing projects since 2010. “Private funding, even on a small scale, benefits overall project success by allowing developments to be more responsive to local needs, adding amenities, unlocking larger funding sources from state and national entities, and shortening the timeline for development,” she noted.
Ganser told the VHF she was appreciative of the grant. The VHF press release stated she also said it will help to complete the project. “The saying ‘it takes a village’ couldn’t be more applicable when it comes to building workforce housing,” she said. “The headwinds on these projects are persistent and the Valley Housing Fund’s participation will help get Mineral Point to the finish line. The Town sincerely appreciates their donation to the project.”
The $500,000 loan brings the amount provided by the town for the project to $5,860,000 thus far. State grants and tax credits have offset some of that contribution so Ganser is estimating the town is in for $1.9 million so far to support the development of 34-low-income workforce rentals or a cost of about $56,000 per unit. The expectation is that the Mineral Point apartment building will start construction next spring and be completed by the end of 2025. The units are in part being funded through Low Income Housing Tax Credits like those used to help fund Anthracite Place so the project will serve residents making less than 60% of the Area Median Income, or about $40,000 per year for a one person household.