Glenwood Springs City Council unanimously voted Thursday to provide a $1 million grant in 2C funds to Habitat for Humanity for the purchase of an 88-unit apartment building during their regular meeting.

2C funds are collected from the city’s lodging tax and are administered exclusively for workforce housing. The workforce housing fund was approved by voters in fall 2022, after which the city formed the Workforce Housing Fund Advisory Board (WHFAB) to make recommendations on how the funds should be spent. 

The 88-unit project is one of the nonprofit’s many strategies to provide more affordable housing for the county’s workforce. 

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Currently, the city of Glenwood Springs lists its median home sale price at $899,000. The percentage of homes affordable to those earning a median wage in the valley is down to 9% in the Roaring Fork Valley and 37% in the Colorado River Valley according to 2022 data from Economic & Planning Systems. 

In the last 15 years, there has been only one for-sale multifamily development in Glenwood Springs, according to Director of Economic and Community Development Hannah Klausman. Turning an existing residential building into affordable housing units is a “low-impact method for increasing the stock of for-sale residential units in Glenwood Springs” without spending more funding and resources on new construction in a city with limited space for growth. 

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“This is an incredibly unique and creative opportunity for us for something that doesn’t need to be built,” Klausman said during the meeting. “We talk a lot about ‘development neutral’ — this is development neutral. This is a project that exists today.” 

The existing residential apartment building, which currently functions as a rental project, would be condominiumized and made available for purchase at “prices affordable” to buyers earning 80-120% area median income. For a two-person household, that equates to home prices between $250,000 and $400,000, according to a June 20 staff report. The condos would consist of studio and one-bedroom units. 

Prices would then be “kept in perpetuity” using deed restrictions set by Habitat for Humanity Roaring Fork, according to a June 12 letter of recommendation for project funding by the city’s Workforce Housing Advisory Board, who are tasked with evaluating projects for 2C funding. 

City council’s vote was partially based on a positive recommendation made by the advisory board, which reviewed the project funding request during their June 11 meeting. 

In exchange for the city’s requested $1 million contribution, Habitat will appoint 10 priority units for buyers employed at a business within the city limits of Glenwood Springs, or whose employers’ headquarters are located within the municipal boundary. This means that, at any given time while the 88 units are full, at least 10 units must be occupied by employees working in Glenwood Springs. 

The rest of the 78 units not included in the 10-unit local employment stipulation for funding would be subject to Habitat for Humanity’s standard deed restriction requirements. The regional employment area requirement for homebuyers includes Parachute to Basalt, according to the staff report. 

Gail Schwartz, president of Habitat for Humanity Roaring Fork, said they would honor the leases of existing tenants until the expiration date, after which residents would have the option to purchase their condominiumized unit only if they meet employment and income requirements.

The city’s 2C fund generates roughly $1.75 million every year according to City Manager Steve Boyd. The $1 million to Habitat would satisfy the 2C ballot-initiative workforce housing funding requirements, in addition to meeting several goals set by the city in its 2023 comprehensive plan update and the Proposition 123 housing commitments of increasing affordable housing units by 3% annually (through which Glenwood Springs committed to increasing affordable housing by 64 units by the end of 2026).

“What we’re looking for is this investment from the 2C fund that can do exactly what it was intended to do,” Schwartz said. “Stabilize your healthcare, stabilize your education, stabilize your economy and your main street.” 

Schwartz said they couldn’t yet disclose the location of the building in West Glenwood, but they confirmed that the property is less than three years old. 

Project funding and priority housing

“We have secured a loan with 1st Bank of Colorado for 70% of the purchase price. We are actively raising funds to close the gap, get to the closing table, and then cover the cost of the Condo Conversion. Our Gap at this point is $5.5 million. With your $1 (million) in support we will still be actively seeking an additional $4.5 million before closing,” Habitat wrote in a memo to the city. 

A few city council members expressed interest in asking for more priority units than the 10 proposed by Habitat in exchange for more funding, and others were hesitant with the stipulations of the 10 spots altogether. 

The Roaring Fork School District has also contributed financially to Habitat’s project as a partner in exchange for 10 priority units for their staff, though Schwartz said they are not at liberty to say how much money they contributed or who their other partners are. 

Habitat is hoping to sell 35 priority units, and have the rest be an open pool. The city’s 10 priority units would not make up part of the 35 units due to their status as an “investor” rather than a “partner” from their contribution of 2C funds. Were the city to “step forward with city funds” as an employer and pay for priority units for city employees, they would be counted as part of the 35, according to Schwartz. As things stand now, however, the city’s 10 priority units for employees working in Glenwood Springs could overlap with school district employees working in Glenwood Springs schools, and with the priority units of other project partners. 

Although council still voted in favor of approving the grant to Habitat because it felt “like the right thing to do,” a few voiced that the 10 priority spots felt more or less conceptual due to the likelihood that at least 10 people from Glenwood would purchase a condo regardless of the stipulation.

“It’s my understanding that the school district also uses their tax funds to support housing … I’m not trying to dispute it, (but) truthfully, I like the prioritization. I can’t help it,” Mayor Ingrid Wussow said. “For a million dollars, I would just like to have a guarantee that someone doesn’t have their name with a box that says, ‘I work for Valley View, but I also work for Glenwood,’ so they check two boxes.” 

First priority in terms of purchasing order would go to existing residents who qualify to purchase their units, many of whom already work in Glenwood Springs and would count toward the 10 guaranteed spots for city boundary employees. Of course, as people change jobs and move in and out, Habitat would need to reevaluate who gets priority for open listings. 

“We will do an audit every year to make sure there are 10 individuals that are owners that are currently working in Glenwood Springs or working for a business that is headquartered in Glenwood Springs,” Schwartz said. 

Schwartz emphasized that, in addition to serving the needs of the county’s workforce, the project would help keep the building from becoming less affordable under new ownership.

“When you have that number of unregulated rental units in this community, we competed to provide an offer on this,” Schwartz said. “The offering memorandum from the seller called Wall Street and (said) ‘You’re going to buy these rental units, and next year, you can increase the rent 6%. And the year after, you can increase the rents 4%, and 4% after that, and 4% after that.’ What that does to your workforce is it destabilizes it.” 

As part of approving the funding, Councilor Sumner Schachter amended the motion to ask that Habitat provide some form of public annual audit that reflects the project’s complying demographics with the city’s 2C goals.

“I can’t fathom that anybody is going to look at us and say that this was a bad deal,” Councillor Erin Zalinski said. “But there’s constantly an ask to make sure we’re serving the people of Glenwood Springs and not becoming a bedroom community … that’s where these questions are coming from, it’s not that I don’t believe in the integrity of what’s being done.”