State funding continues to flow into Ouray County for affordable housing projects, including more than $8 million in grants and loans recently awarded for the proposed Ouray Waterview Homes development.

Rural Homes, a nonprofit project launched by the Telluride Foundation in 2021, plans to build the neighborhood on a nine-acre lot north of the former Biota building, between the Uncompahgre River and Highway 550.

The first phase includes 22 homes in a mix of duplex and single-family units on the southern end of the parcel. The second phase is expected to include up to 47 more homes, which can’t be constructed until Ouray’s new wastewater treatment plant is complete. All homes will be deed-restricted and buyers must meet income limits and work requirements.

The State Housing Board voted unanimously on Feb. 28 to approve a $6 million short-term construction loan and a grant of $1.15 million to Paradox Community Trust, a subsidiary of the Telluride Foundation, for the Waterview Homes project.

The board previously approved a $1.9 million loan to purchase the Ouray property in December 2021.

According to the latest funding request to the board, the Telluride Foundation is providing a loan of $3 million to the project, and other grants totaling almost $600,000 have been committed. Ouray County has also committed $500,000 to be used to help pay back the loan used to purchase the property.

Conditions of the funding include city approval of the development, review and approval of the deed restrictions for the homes, and repayment of a loan the organization received for its Norwood project, Pinion Park. There are 24 homes in that development; so far, they’ve closed on sales for three of them, and made the first payment on that loan.

Paul Major, the former Telluride Foundation CEO leading the Rural Homes initiative, told the board he hopes to start construction this spring, and said the Ouray homes will sell for $275,000 to $480,000.

The $7.15 million will come from Housing Development Grant Funds, which are administered by the Division of Housing and funded by money appropriated by the state legislature.

The city of Ouray also received $1.05 million to go toward the project’s infrastructure costs from Colorado’s Innovative Affordable Housing Development Incentives Grant Program.

That program was created in 2021 by House Bill 21-1271, which set aside almost $40 million, most of which was dedicated to grants.

In order to qualify, local governments must show they have strategies in place that promote affordable housing. Developers, including Rural Homes, are not eligible recipients, but municipalities can apply for funds for specific projects. The money must be spent by April 2024.

Both Rural Homes and the Home Trust of Ouray County were initially seeking money for housing projects in Ouray from the program, which has limited funds and is competitive. After a meeting with the Department of Local Affairs, the city was advised to choose one project for its application, Community Development Director Lily Oswald said. Waterview Homes was selected because it was closer to construction, and shovel- readiness is one of the criteria for selection.

The city applied for $1.5 million, and received just over $1 million. In its application, Ouray pointed to the use of short-term rental excise tax revenue for housing programs and water and wastewater infrastructure, as well as land use policies including the allowance of duplexes and accessory dwelling units, as some of its strategies to promote the development of affordable housing.

Major said the financial support for the project shows “the state wants this approach to succeed.” He and project manager David Bruce praised the city’s willingness to pursue the funding.

Oswald said details of how exactly the money will be spent are still to be determined, but it will defray the project’s infrastructure costs, bringing down the ultimate sales price for buyers.

Because of the property’s location, “there are a lot of infrastructure needs,” she said, including water and sewer line extensions, internal roads and connections to the existing river trail, which the money can be put toward.

The Ouray Planning Commission unanimously approved the sketch plan for Waterview Homes in January, but through the engineering process, the developer has made changes, including to internal roads, alleys and locations for water and sewer lines, Oswald said. An amended sketch plan will be brought to the commission at a meeting on March 21 for consideration, she said.

Waterview Homes is the second Rural Homes project to receive funding from the Innovative Affordable Housing grant program. The town of Ridgway was awarded $750,000 for infrastructure for the Wetterhorn Homes project, where the organization is building 14 deed-restricted homes.

That project has also received Housing Development Grant funds: In June 2022, the State Housing Board approved a $4 million loan and $700,000 grant to Paradox Community Trust for the Ridgway development.

Work is underway on the oneacre lot on the northeast corner of Frederick and North Laura streets, starting with utilities.

At an information session in Ridgway on Tuesday, the Rural Homes team said the modular homes are complete and ready to be shipped from Fading West Development in Buena Vista, which is expected to happen in June, when foundations are finished and ready.

While there is uncertainty from spring weather and potential groundwater issues, they anticipate the first homes to be ready by mid-August. The goal is to have the development completed by the end of the summer.

Bruce said that timeline is neither a best or worst case scenario, but said homebuyers should anticipate a four to six-week buffer around those projections.

A lottery to select buyers for the homes is expected to be held in mid-June, which will be run by the San Miguel Regional Housing Authority, Major said. In order to participate, interested buyers must be pre-qualified for a mortgage and must meet the income limits and work requirements for the project.

Anyone who earns up to 120% of the area median income can qualify. That number, which is set annually by the U.S. Department of Housing and Urban Development, varies by household size: In 2022, an individual earning up to $74,500 per year, or a four-person household with an income below $106,300, would be able to qualify to purchase one of the Wetterhorn Homes. AMI limits for 2023 have not yet been released.

Prices could still fluctuate due to costs of construction and subcontractors, but are expected to cost about the same as the Ouray homes.

School district employees, first responders, nonprofit healthcare workers and government employees who work within the Ridgway School District’s geographic boundaries will have priority in the lottery.

More information, including income limits, deed restriction requirements and details about preferred lenders and mortgages, is available at wetterhornhomesridgway.co.

Liz Teitz is a journalist with Report for America, a national service program which places reporters in underserved areas. You can support her work with a tax-deductible donation. Email erin@ouraynews.com for more information.