Fraser discusses funding options for affordable housing development
A parcel of land beside the Fraser Post Office that has remained stubbornly undeveloped is expected to be transformed into affordable housing. Deals have fallen through over the decades, but urgency creates opportunity — officials from the town of Fraser are planning to interview developers Wednesday, Nov. 30.
The groundbreaking for Victoria Village is slated for September 2024. The 11.3-acre parcel is at the intersection of Park Avenue and Zerex Street. It will include 105 to 130 deed-restricted units, with the potential for commercial or mixed-use properties.
Fraser purchased the property in May for $3.8 million, thanks to a Colorado Division of Housing grant called Operation Turnkey. In September, Fraser was reimbursed by Operation Turnkey, which covered 80% of the cost to purchase the property. Since then, town trustees have held multiple meetings about how to fund the next step in the process: development.
During a public Q&A session in September, trustees met with potential developers and organizations they could join forces with. Town manager Ed Cannon and assistant town manager Michael Brack described the project.
“This is our first opportunity for us to have been able to leverage grants from the state to create a partner,” said Cannon. “I look across this room, I look across the Zoom, and I say, we’ve got a partner here, … somebody that can make this dream a reality.”
The development’s driving force is to create affordable housing within a two-year time frame. Fifty percent of the units in the development must be available to people earning 120% or less than the area median income of $71,769 per household — about $86,120. The other units are unrestricted, but the town would also like to keep those at the same median income limit.
All units will be deed restricted in perpetuity. With deed restrictions, only full-time residents who work 30 or more hours per week in Grand County can rent or buy in the development. Remote workers can’t live in the Village, and units can’t be converted to short-term rentals. If an owner sells the home in the future, the deed restriction carries on. Fraser officials plan to construct high-density apartments, townhomes and some single-family cottage-style homes.
The parcel also contains 2.6 acres of protected wetlands. Although the wetlands have hindered the parcel’s development, Brack believes the lush meadow enhances Victoria Village.
“This wetlands has Saint Louis Creek that runs through it and it’s a beautiful creek. It could make for a great amenity to the public,” he said. “Being able to enhance this as open space (is) a huge benefit to the community, to that local development and people … visiting the Fraser Valley.”
Brack says another benefit of the parcel is its proximity to public transport. There are two bus stops near Victoria Village and the town plans to create a couple more stops there.
“It’s right next to our downtown; lots of easy walking access for employment opportunities,” added Brack.
During the board of trustees meeting on Wednesday, Nov. 16, Cannon laid out possible funding sources and partnerships the town could pursue to ensure the affordable housing stays within the desired income limits.
Since the town owns the land outright, it does have some advantages, but they still must budget carefully during development. One cost reduction option is waiving the developer’s fees, which are projected at a minimum of $2 million.
“Interest rates are going up, construction rates are high, we’ve got a short construction season here, it creates problems,” said Cannon. “If you really want to have a robust affordable housing policy, we need to consider things like, what are we willing to do for waiving fees or use taxes … especially if it’s for affordable housing.”
Another way to assist the developer is by donating or leasing the land to them, removing their land acquisition costs. Cannon said this can reduce housing prices by as much as $36,000 per unit.
The town can also pursue multiple grant opportunities. These include planning grants (for master plan development), infrastructure grants and federal grants available through both the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
Another option is to collaborate with local housing entities, like the Fraser River Valley Housing Partnership.
“They did just pass (Ballot Issue) 6A, so they’re going to have $1.2 million at their disposal and they’re going to be looking for projects and partnership opportunities,” said Cannon.
Cannon also said the town could also create a Downtown Development Authority, which would last 30 years.
The DDAs are funded using tax increment financing. The incremental tax revenues are created each year as assessed values of properties go up and as new commercial and residential businesses are built. Currently, there are five developments in Fraser that could generate millions of dollars for the DDA.
The meeting documents explained a DDA could use those funds for construction, improvement and development fees, wetland mitigation efforts and possibly a future parking garage.
One downside is that the DDA funding would mean there would be fewer funds available for other for special districts, such as fire, library and school districts during its 30-year existence.
Cannon explained that DDAs are formed by election, either in the next election cycle or a special election. Only voters in the downtown district can vote on the DDA.
“If it’s not for this funding mechanism, growth and development’s just not going to happen. Victoria Village is a good example of a piece of vacant land that’s been sitting out there for more than 20 years unsellable because of the wetlands,” Cannon said. “The combination of the Turnkey Grant and putting the (tax increment financing) in place, you can really leverage that land and get that housing cost down towards at least those AMI levels.”
Cannon’s last funding recommendation is converting Fraser into a home rule town, which would mean the town would be less constrained by state requirements than it currently is. This could be accomplished through the election process if Fraser voters approve.
Fraser is currently a statutory town, which means it’s restricted by state statutes in what taxes they can levy. Home rule towns can also levy taxes on short-term rentals to create affordable housing, which statutory towns can’t do. Currently, Winter Park is the only home rule town in Grand County.
“Home rule creates a little bit more flexibility … and self-determination. It can create better partnerships … it can actually partner with a developer over a business,” Cannon said. “It has other funding opportunities like lodging taxes, excise taxes.”
The town is hoping to lock in a contract with a developer by early January. At the Wednesday board meeting, trustees will interview four developers they’ve selected from the initial list of 10: WC Johnson, LLC, 20/10 Development, Elmington Capital Group and Mountain Affordable Housing Development.
Residents can watch the meeting in person, via Zoom or on YouTube live from 6-9 p.m.
“When we’re looking for a developer, part of that is to make sure that we’re in alignment with the (Operation Turnkey) grant agreement and we’re also in alignment through community engagement to create this master plan,” Brack said.
This winter, town officials will gather additional public input as they work to finalize a master plan for the development.
Those who want to attend the meeting over zoom can register at FraserColorado.com/202/board-of-trustees.
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