Buy low. Sell higher.
That’s been the city of Fort Collins’ strategy for two decades when it comes to amassing land to help mitigate the city’s growing affordable housing problem.
Since the city land bank was created in 2001, the city has bought five parcels at fair market value and held on to them for at least five years as property values skyrocketed. In 2016, it sold its first parcel to Housing Catalyst for 96 affordable rentals on Horsetooth Road at 90% of fair market value.
The city bought the Horsetooth parcel in 2003 for $750,000 and sold it for $1.1 million, a $350,000 profit.
Now the city is ready to sell 5 acres on Kechter Road to TWG, a for-profit development partner, to build 54 for-sale, permanently deed-restricted townhomes. In 2002, it paid $566,735 for the site, which appraised for $1.2 million in 2018. The city is expected to sell the parcel for $25,000, a real loss of $541,735 and potential loss of $1.17 million.
“We expect this to be a one-time thing,” said Sue Beck-Ferkiss, the city’s social policy and housing program manager, explaining the change in strategy.
The difference between the Horsetooth and Kechter properties, she said, is the type of affordable housing to be built.
‘Love your neighbor’:Fort Collins churches offer land to affordable housing efforts
Affordable rental properties can tap into low-income tax credits from the state that for-sale affordable housing cannot, she said. “That’s why it’s so difficult to develop permanently affordable for-sale product.”
“If the city didn’t wish to donate most of the land, additional subsidies would be required to make the project viable,” Beck-Ferkiss said.
Other development partners, including Housing Catalyst, the state of Colorado Division of Housing and Elevation Community Land Trust, are providing $4.1 million in subsidies to get the project done.
“The partners worked together to determine project feasibility, and it was quickly determined that substantial subsidy would be required to offer homes at affordable sales prices,” according to city documents submitted to the finance committee.
“The city would need to donate most of the value of the land,” the documents state. In all, the city’s total subsidy amounts to $1.17 million.
City Council’s finance committee is recommending the sale, but it will be up to full council to make the final decision. The sale is expected to be on council’s agenda sometime in May.
The homes are intended to be sold to households making less than 80% of the area median income, or AMI. The 2020 AMI for a single person in Fort Collins is $65,900.
Indiana-based TWG Development, which specializes in affordable housing development, was selected through the city’s request for proposals process.
Once the project is built, TWG will sell the units to Elevation Community Land Trust, which will retain ownership of the land and sell the homes to qualified low-income buyers. Elevation Community Land Trust will certify buyers, confirm sale prices and be the long-term steward of the community, according to city documents.
The city typically uses profits from sales to buy additional land to restock the bank, which currently has four parcels, including the one on Kechter.
“We do expect to continue to work the program in that vein,” Beck-Ferkiss said. There are enough assets in the land bank now, and there is the ability to seek funding through the city’s general fund. “We believe the program can maintain its purpose and allow this contribution.”
The city approved buying 5 acres on North College Avenue last year for nearly $1.3 million. That sale is still pending. When it’s finalized, the land bank will be back to four parcels.
The city’s biggest need is for affordable rentals, but for-sale affordability “is a response to systemic racism and other barriers to helping people achieve homeownership,” Beck-Ferkiss said. “We would like to supply both opportunities in our market.”
Fort Collins Land Bank properties
Properties included in the Fort Collins Land Bank, which could be used for affordable housing development:
- 4.7 acres, 3620 Kechter Road, purchased in 2002. Sale to TWG is pending. The property is expected to be sold and developed with 54 for-sale, permanently affordable homes.
- 17 acres, 6916 S. College Ave., purchased in 2002. Could hold an estimated 170 to 204 units.
- 16 acres, 5630 Tilden St., purchased in 2006. Could hold an estimated 150 to 191 units.
- 2.7 acres, 1500 block of West Vine Drive, purchased in 2006. Could hold an estimated 52-63 units.
- 5 acres on the west side of 1475 N. College Ave. City Council approved the purchase in 2020 for up to $1.27 million. Purchase is pending.
Affordable Fort Collins housing in the works
Opened this year
- Mason Place: 60 units at 3750 S. Mason Place for people with disabilities who were experiencing homelessness. Developed by Housing Catalyst of Fort Collins.
- Lakeview on the Rise: An 80-unit low-income housing project at 6740 S. College Ave., just south of Trilby Road on the east side of College Avenue.
- Harmony Cottages: 48 new units being built by Fort Collins Habitat for Humanity on the southeast corner of Harmony and Taft Hill roads. Status: Some units are done and occupied. Buildout expected in 2022.
- Volunteers of America: Located on the west side of the intersection of Drake Road and Joseph Allen Drive, this project is designed to house up to 55 lower-income seniors. Status: Closing on land near the end of February. Construction began in late March.
In the pipeline
Pat Ferrier is a senior reporter covering business, health care and growth issues in Northern Colorado. Contact her at firstname.lastname@example.org. Please support her work and that of other Coloradoan journalists by purchasing a subscription today.