Posted on Feb 22, 2023
On February 22, Max Moss braved the snow and cold to enlighten us about the issues around the concept of affordable housing, an important concept in the booming housing market of northern Colorado.  Max is the head of HF2M-Colorado, the company that is developing the Montava community on the north side of Fort Collins.  Part of his presentation dealt with the ways in which the Montava development is trying to address some of those issues.  He started his presentation by pointing out that, although he is not an expert on affordable housing, their team does include affordable housing experts and one of the Montava Partners is Caleb Roope with The Pacific Companies, one of the largest developers of affordable housing in the country. 
In order to quantify the scale of the affordability problem for the northern Front Range area, he quoted The Group’s Boulder Benchmark data, the recent sales prices of virtually the same house in Greeley ($361,000), Fort Collins ($574,300), and Boulder ($905,000).  A graph of the 13-year history of price appreciation for those three houses shows that prices in Fort Collins can expect to be the same as in Boulder some six-seven years later – the affordability problem is not going to go away. 
Before addressing Montava’s approach to affordable housing, Mr. Moss made the distinction between accessible housing and affordable housing.  Accessible housing is the housing stock available to buyers with various degrees of financial resources whereas affordable housing is the housing stock available to allow occupants to spend no more than 30% of their annual income on housing.  Their commitment is to have 15% of their dwelling units (some 600 units) be affordable for families of four earning 30% to 120% of the AMI (Area Median Income) with half of those units affordable at 81% - 120% AMI, half at 30% - 80% AMI with the latter averaging out to be affordable at 60% AMI.  The plan includes deed or covenant restrictions for at least 20 years.  In order to produce true affordable housing of acceptable quality, it must always be subsidized. 
They are working with the The Pacific Companies of Boise, Idaho, an organization that produces affordable housing across the western US, although mostly for California.  Across most of the western US, that means producing housing at around $300/square foot; in California, it is around $450/square foot.  Caleb has a huge operation in Boise where all of the materials for affordable housing are produced and then sent to the build site, saving time (all of the parts that need to be there will be there on time) more than money.  Montava will have a wide housing-type mix, including two-bedroom to four-bedroom houses and town homes. 
Diving into specifics for the Fort Collins area, he stated that affordable housing will be rented or sold at or below various income thresholds based on the AMI.  The AMI that he quoted for Fort Collins was $111,300, so 80% of AMI for a family of four (the upper limit of the low-income range) would be about $86,000 which would equate to a monthly rent of $2145. 
So where can the funding for subsidizing affordable housing come from?  One major new source in Colorado will be the voter-approved Proposition 1-2-3 funding, approximately $300 million per year.  This funding stream, which is said not to increase taxes, has many uses including helping to reduce rents and to support affordable homeownership.  This is state-generated money but will be administered through individual cities.  In order to qualify for participation in this program there are several criteria that must be met including, a city has to commit to increasing the affordable housing stock by 3% per year, create a much faster review process, and guarantee 99-year affordability, etc.  In order to qualify, Fort Collins will have to create a new Land-Use Code, the issue that was recently slowed down by concerns over additional dwelling units. 
Mr. Moss closed by showing how affordability issues fit within larger demographic trends as well as other lifestyle issues in the Fort Colling area.  The median age for first-time home buyers in the US has recently risen to 36 years from the long-time average of 32 years and there is a large cohort of individuals in the 27 – 33 age range who are approaching that new average.  That increase has been driven, in part, by interest-rate increases as well as availability of low-cost housing.  He compared the issue of affordable housing with the issue of city-owned natural areas in the Fort Collins area.  The natural areas are present because the citizens of Fort Collins were willing to tax themselves and visitors through a sales tax to make it happen.  He suggests that the same sort of mindset is required to make affordable housing more widely available. 
He then touted the Montava plan that will have a complete community ecosystem, a 15-minute community, so that residents won’t have to drive into Fort Collins city center to do most of the things of their lives. 
What about tiny houses?  Most of the tiny houses that you hear about are trailer-mounted and do not work out.  However, there are examples of 450-square-foot conventional homes that have worked out very well. 
What about condos?  There have been so many construction-defect lawsuits that builders are simply avoiding making those sorts of units.  They are simply not a market-based part of creating affordable housing. 
What about the impact of Montava on traffic on Country Club Road?  The traffic problem already exists and Montava is not even off the drawing board.  Montava will actually decrease the problem by creating a community that doesn’t need to commute on that road. 
What about manufactured housing?  Although they may be less expensive, they have been mostly a failure.  Timing of delivery has been challenging.  Although the approach by The Pacific Companies of centrally manufacturing the modular units and shipping them to a site has been successful, that has been largely because Caleb builds for himself rather than tying to third party customers in the market. 
What about investors pushing individual home purchasers out of the market?  Although this may be part of the problem, it is not the majority.  There is more of a problem of a locally constrained market. 
What about concrete homes?  They may be less expensive but they are also less beautiful. There is some sort of balance between the increased cost of making a home “beautiful” and the effect of reducing the affordability. 
In the affordable housing business, where does the profit come from?  Basically it has to come from all levels of housing cost. 
What about support of local lenders?  Montava is working with Elevations Credit Union in several ways including mortgages for homes and the infrastructure part of the development.  They will be focusing on local businesses in the community, expecting that there will be, among others, a local office of Elevations in the community. 
Is there a problem with availability of trades people to do the work in the development?  The Montava development partners with the builders who will provide the necessary trades people.  He pointed out that people in the trades can make a very good living and are a necessary part of the community.  One of the objectives of Front Range Community College is to train people in the various trades. 
What about the possibility of a more robust or integrated transport system for the Fort Collins area?  He pointed out that virtually the entire United States is so spread out that the density to support a local network is challenging for mass transit systems.  The concept of a 15-minute city (like Montava) and the ultimate necessity of building up rather than out reduces the need for some sort of unified transport system.