Craig City Council took some of its first steps on Tuesday, June 28, to establish a city housing authority, which would give Craig more control over incoming affordable-housing projects.
Covered during a City Council workshop, the discussion about a city housing authority was sparked by the housing action plan city officials have been working on to help make local sites more attractive for developers.
Alex Gano, an attorney who has been working with the city on some real estate matters, joined the workshop virtually. According to Gano, a housing authority could have a wide spectrum of roles in the community.
“There is a whole suite of things that you can get involved in as a housing authority, but the main thing would be to attract developers to build housing,” Gano said.
One of the biggest benefits of a city housing authority would be that the city would have more control over the standards of quality with affordable housing developments.
Also during the workshop, Ricardo Diaz, project manager for Evergreen, spoke about a development that is in progress with Columbine Apartments in Craig.
Evergreen is a development company that owns and manages multi-family housing units and specializes in affordable housing. According to Diaz, Evergreen also has a construction arm that renovates and improves the company’s development projects.
“We are excited to get to work on this property with you all to help promote affordable housing,” Diaz said.
For multi-family housing developments, investors can often secure a low-income housing tax credit, in addition to taking on their own debt component for financing. According to Diaz, there is usually a gap in the financing, so investors frequently need to incorporate other resources to make projects like this work.
One of those resources could be a property-tax exemption from partnering with a local nonprofit like a housing authority on the project.
Under state tax law, if a housing authority is a partial owner of the project — no matter how small — and provisions are provided for affordable housing, the property can get an exemption from property taxes, along with sales and use taxes, during the construction period.
If the sale of Columbine apartments goes through, Diaz said, as a part of the tax-credit structure, Evergreen would provide rehab work on the property. Right now, the company is looking at $55,000 in improvements per unit.
This would be the largest capital investment made to this property over the last several decades. Typically, when the property has changed hands, there have been minor capital investments, but generally, the property has depreciated between the sales.
“I do feel like this is one of those cases, where if you don’t invest the money now, it could be a problem later,” Diaz said.
Under the proposal, a newly created housing authority would remain an owner for a 15-year compliance period in order to receive the property-tax exemption. There are benefits that could come back to the housing authority too, including a potential first right of refusal for a future purchase of the property.
Currently, the Columbine property is not listed. Evergreen has entered into conversations with the seller through a “quasi-broker,” according to Diaz, who added that if the sale with Evergreen doesn’t go through, the owners would likely list the property on the open market.
Craig Mayor Ryan Hess said that in the past, some of Columbine’s owners haven’t managed the property at all, and it has attracted a lot of police attention as a result. Hess said the current ownership has done a good job of managing the property, and it has gotten a lot less attention from authorities since then.
In the past, the city hasn’t had any control over the management of the property. Depending on how the city housing authority is set up, the city could help negotiate the management and a sale of properties like Columbine so that certain requirements are met.
“My understanding is that there is no disadvantage to the city establishing a housing authority,” County Attorney Heather Cannon said. “It can open up benefits that we don’t currently have access to. The county has a housing authority, but the city doesn’t have any say about what they are involved in.”
The Moffat County Housing Authority currently owns and operates Sunset Meadows senior housing. Officials at the county housing authority have expressed that they do not want to expand its portfolio or services.
For some, establishing a city housing authority seems like a reasonable alternative.
A city housing authority would be a separate entity from the city with its own liabilities. There would be no operating costs for having a housing authority, which would have control over the projects it is involved in.
The city originally talked about starting a housing authority to help attract developers to a housing project at the Woodbury site with a tax incentive, and so there would be control over the covenants of the development.
City Council expressed some concern about the effects of the tax exemption on the other districts, including EMS and the school district. However, Mayor Hess said that typically multi-family units don’t bring in enough tax revenue to cover the services they end up utilizing.
Council member Tom Kleinschnitz said a housing authority could be poorly perceived in this regard, but for the Columbine project, it’s a good thing and what the city needs to improve upon existing infrastructure.
One of the biggest hurdles moving forward, according to City Council, would be the community’s perception of low-income housing, though a housing authority’s ability to be involved in improvements may shift some of those negative perceptions.
“We’re finding that kind of perception in our community because of the history of that particular property,” Hess said.
During the regular City Council meeting, the council members all agreed to move forward with the process of establishing a housing authority.
“I’m very positive about it,” Kleinschnitz said. “It sounds like it will be a very good move for us to take advantage of some development that is sorely needed.”