Ignacio housing market study presented to town trustees
Workers commute TO Ignacio
A lot more people commute to work in Ignacio than commute from Ignacio to work elsewhere. Some of the in-coming commuters might want to live in Ignacio, but there's nothing available, Regional Housing Alliance director Karen Iverson told town trustees on July 22.
She was there to present results of a housing market study to determine how much demand there is and whether construction of housing is economically feasible based on what people would be willing or able to pay.
"Yes, there's market demand," Iverson said. "You probably knew that." But it has to be documented for the state and potential developers. She referred to this as a preliminary study, with the likely need for a more detailed market study.
The preliminary study included review of available demographic information plus interviews with major employers and managers of rental properties in Ignacio.
Local major employers were asked what needs they see. "The majority reported lack of housing for their employees is a major concern, that there's a large imbalance of jobs and housing," Iverson said. "Seventy percent of employees are commuting here from somewhere else."
Consultant Melanie Rees, who led the study team, said by phone conference call that, "Commuting the other direction wasn't particularly common. It's a fairly small number compared to the number commuting in."
Eleven property managers accounting for 66 percent of the rental units in Ignacio also were interviewed.
"Rental vacancies are extremely low," Iverson said, with only one vacancy identified during the study. "It's been that way for a long time. When there's a vacancy, it's very quickly filled."
Rees said, "Everyone was consistent in what they said. The 11 said the same thing over and over again. That gave me a great deal of confidence in what I was hearing."
Rees said most of the renters were long-term. When rentals turn over, it's usually to other long-term town residents by word of mouth. She speculated that the rental supply is so tight that it would be hard for anyone else to find a place. Most of the renters are low income, she said.
Most of the rental units are older and not in particularly good condition, Rees said. There's little diversity in prices. "While it's clear there's a need for additional rental housing... there's absence of evidence that people would pay more for a new unit."
She continued, "In doing the research, it became clear there are four segments of the market. Each needs a different approach for more documentation." Each has different potential sources of outside funding and different requirements by those funders.
The first and largest segment is low-income employees, which Rees listed as income of $25,000 to $35,000. "That's who lives in the area now," she said. That segment needs a more detailed study to get Colorado Housing and Finance Authority loan for construction of more than about 25 units.
In addition, she said, "Employers see a need for entry-level professionals making $40,000 or more. They are all commuting in. We don't have enough evidence of units being filled by employees in that income range, that they would live here." Targeting this segment also needs a more detailed study.
The third segment is tribal members. There's a long waiting list for Tribal Housing Authority units, Rees said.
Southern Ute Growth Fund Executive Director Bruce Valdez was at the meeting. He said plans for more housing in the Cedar Point area should alleviate that.
The last group, Rees said, is seniors and disabled or special needs people. They are not employed and are very low income. "Just because there's market demand doesn't mean that a project that would address the demand will be feasible. Given low rents and high construction costs, if it could be break-even, you'd probably see someone doing it."
If low-income housing tax credits are the only way to get a developer, Rees said the focus would be on the low-income employee segment. But she recommended holding off on spending for a more detailed market study until a construction cost analysis is done.
Iverson said, "Once you have a generally feasible project, you go out for an RFP (request for proposals) for a developer to construct, own, and manage the project. You can impose affordability requirements, and the state will have requirements. There are very well-established developers who know how to pull together the funding and make a project feasible. ... Many developers do make money at it."
But there has to be other funding along with what the developer brings, she said.
"I really want to see this happen here," Iverson said. "I think you have so much going on in the community," such as plans for the new grocery store.
She said the cost analysis will probably be $10,000 to $15,000 to determine the funding gap remaining for units to be affordable if the developer gets tax credits, and whether the funding gap can be surmounted.
Rees commented, "I've seen projects with 13 different sources of financing."
Other funding sources are needed to attract a developer, Iverson said. "I'm a dollar person. Once we identify the gap, we can start fundraising" to fill the gap.
"I think it's going to be a long road," she said. "I know you've already been on the road for a long time."
Ignacio has been trying since 2003 to create more low-income and workforce housing. The town bought 70 acres on Candelaria Heights back then, mostly paid for by a State Department of Local Affairs (DOLA) grant with a requirement to provide at least 60 affordable housing units.
Unable to manage the cost of developing streets and utilities on the land and with the national real estate bust of 2008, the town sold 54 acres to the Southern Ute Growth Fund in 2011 and has been working toward developing a remaining 5.6 acres northwest of the Adult Education Center, still with at least 60 affordable units to satisfy the original grant requirement.
The town installed the street and utilities to the property line last year, using money from the sale to the Growth Fund. It will be up to a developer to do the street(s) and utilities within the 5.6 acres.
Town Finance Director Lisa Rea said the town still has around $100,000 left from the sale to the Growth Fund.
Trustee Tom Atencio commented, "I think since we've already started and it's needed very badly, we need to pursue it." Trustee Edward Box III agreed.