New Gatesco affordable housing project ready to roll

Gary Gates excited for 77-unit development

by Mark Reaman

The basic infrastructure is in. Large machinery is moving dirt across from the Gunnison Recreation Center with the intent to see scores of affordable rental housing units pop out of the ground within the next several months for local workers. Foundations are expected to be poured this week and framing to begin next week on the county’s latest affordable housing project. The developer of the 77-unit complex, tentatively called Paintbrush, hopes to be renting the spaces by February 2021.

Developer Gary Gates of Gatesco Inc. said Monday that while there were some delays with road and irrigation ditch issues, everything is wrapped up and it should be smooth sailing, weather permitting, to get the units vertical and workers living in them before the end of next ski season.

“If the weather is good and the coronavirus situation doesn’t shut us down for some reason, we can go pretty fast,” Gates said. “There is no bank involved right now so we don’t have to wait for lender approvals. I think we have the people to get it done. The city of Gunnison and the county have been very cooperative, so we don’t have any obstacles. It is nice to get this going.”

Located across from the Gunnison Recreation Center near Walmart, the approximately $15 million project will have almost 90 percent of the units under a deed restriction. The units range from 375-square-foot efficiency units to 1,268-square-foot single-family homes with three bedrooms and two bathrooms. There will be everything from tri-plexes, to buildings with 16 units, to detached single-family homes.

There is a LIHTC (Low Income Housing Tax Credits) project going up in Gunnison so the idea is to fashion most of the Paintbrush units toward what might be considered middle-income workers making between $17 and $22 per hour. Twenty-nine units are meant to be rented for people in the 80 percent AMI (Area Median Income) category with a 60 percent or below AMI floor; 30 units will be restricted to those making less than 120 percent AMI, but more than 80 percent AMI; nine will be set aside for people making no more than 200 percent AMI but more than 120 percent; while the remaining nine units will be free market with no deed restrictions. As was the idea with the proposed Gatesco Corner at Brush Creek project, utilities will be paid by the landlord, so water, natural gas and electric will all be rolled into the rental rate.

Gates said his original intention to complete a quick construction process was to bring in crews from Houston. While he has typically purchased apartment complexes instead of building them, he owns 8,300 rental units in that city and has crews experienced in some construction. He said they might still be used but initially the construction workers in Paintbrush will come almost 100 percent from the Gunnison County area.

“With the coronavirus it seems work slowed down up here so people wanted to submit bids. They were all very competitive and I would have had more overhead bringing crews up from Texas. I was starting to look at hotels and other housing but this makes better sense,” Gates explained. “So right now A.J. Cattles is overseeing the day-to-day work and no one from Houston is on site working.”

Gates, who ran into headwinds with some strong opposition to his proposed Corner at Brush Creek affordable housing proposal, made it clear he has not given up on developing similar affordable housing projects in the north end of the valley. “This is probably my worst economic investment ever but I think it is important,” he said. “I just don’t want to lose money on the project. But this will, I think, address all the concerns brought up with the Brush Creek project. I’ve said to everyone that we need to knock this out of the park. It has to go beyond expectations.

“I feel an obligation to protect the people who are part of this and those who supported this,” Gates continued. “We have to go beyond expectations and I need to live up to the faith they put in me.”

Gates explained from his business perspective, it makes sense to own about 500 total rentals in the county with between 200 and 300 of them located in the north end of the valley. This is his first project outside of the Houston area. He admittedly still has his eye on the county-owned property at Brush Creek Road and Highway 135.

Gates said, given his business success in Houston where there is a minimal 5 percent vacancy rate in his 8,300 rentals, he can weather a slow start to the Gunnison project if the coronavirus puts a lag on housing needs for workers.

“There is some satisfaction to come here and do something a lot of other people, including some developers, can’t do, due to the unusual circumstances with the coronavirus and its impacts. I’ve run my business so when this struck, it hurt, but unlike some others I can wait this out. I’m not in this for the short-term,” Gates said.

“I understand that how Western Colorado University does this fall will have a big impact,” continued Gates. “There could be a lot of empty apartments if the students don’t come back to campus this fall. But I’m ready and prepared and in a position to think long-term. It will all come back. It may take a couple of years for the economy to fully recover but it will happen. I have the tools to get through this. And it is still important to get the project completed like we said it would.”

While Gates said he has worked well with the county and city and perhaps could have negotiated harder, he did not try to “squeeze” any of the fees or upfront costs. “It was more important to show this can be done, even in this coronavirus time,” he said. The county sold him the five acres of land for $10,000 instead of the original $100,000 price but he had to contribute to the road and irrigation ditch improvement costs.

Once the framing starts and he has an idea of how fast it will take to get the buildings up, Gates will start advertising to get a feel for the workforce housing demand. He predicts that phase of the project will come about the middle of August. “The goal is to have them ready and start renting them early next year. I think we have the labor to get there,” he said.

Gates also noted the design is meant to be used as a basic template for other future projects, whether in Gunnison County or Texas. He said while adjustments can be made to account for local regulations, having a workable basic design will save time and money in the future.

“The bottom line for this project is doing it right,” Gates concluded. “It will be something we all can be proud of. We want to make sure we don’t have anything to come back and bite us.”