The lottery for Wetterhorn Homes, the 14-home deed-restricted neighborhood scheduled for construction in Ridgway this summer, will be held June 15 at Ridgway Town Hall.

Applications will open April 26 and close May 31, according to a schedule presented to the Town Council Monday night.

The project is the second from the Rural Homes initiative, which was launched by the Telluride Foundation in 2021. A 24-home development in Norwood was the first project, and the first residents of Pinion Park have moved in there. Wetterhorn Homes is set to be the second phase, followed by Waterview Homes, which could have up to 70 homes on nine acres in Ouray near the Biota building.

Paul Major, the former Telluride Foundation CEO leading the project, said work on utilities at the Ridgway site is ongoing, and he hopes foundation excavation can begin in the next few weeks. The modular homes, built at the Fading West factory in Buena Vista, are expected to arrive in June. The goal is to move residents in by August and September.

The council voted unanimously to approve more than $70,000 in fee waivers for the project, which Major requested and said will keep the ultimate sale prices lower. They waived more than $20,000 each in building permit and plan check fees, development excise taxes and equipment and labor for meter installations. They also agreed to waive outstanding legal and engineering fees; amounts were not available Monday night because multiple town employees are currently off, Town Manager Preston Neill said.

Major also asked the council to waive future legal and engineering fees, but councilors weren’t comfortable with an open-end- ed approval. They asked him to return and request again when the numbers are more conclusive.

Those fee waivers are in addition to a prior approval of waiving $168,000 of water and sewer tap fees for the project.

All homes will have deed restrictions that require working within the Ridgway School District’s geographic boundaries, mandate that the homes be owner-occupied and limit appreciation to keep the homes affordable upon resale.

In order to qualify for the lottery, buyers must earn below 120% of the area median income, a calculation set annually by the federal government. Qualifying individuals can earn up to $74,520 per year, while a four-person household can earn up to $106,320, based on the 2022 numbers; those could shift if 2023 numbers are released in the coming months.

Some of the houses will be set aside for buyers earning at or below 80% AMI, in order to ensure that they don’t have to compete with higher earners at the 120% level.

Once residents own the home, the income restrictions are relaxed. A buyer who earned 80% at the time of purchase isn’t limited to that once they own the home, but if they resell the house, the new buyer must meet the income restrictions.

To qualify to purchase and live in the Wetterhorn Homes, at least one member of the household must work within the school district boundaries for at least 1,200 hours per year. There is no preference for people already living within the town, but in order to qualify, at least one member of the household must be meeting that work requirement.

A current Ouray resident who commutes to Ridgway for work would qualify, for example, and would have the same chance as a current Ridgway resident who works within the town.

A Ridgway resident who works remotely from home for an employer in Denver would also qualify, as long as their physical work location is in Ridgway, but a Ridgway resident who works in Ouray or Montrose would not.

People who work for the Ridgway School District, and nonprofit healthcare employees, government employees and emergency responder employees who work within the boundaries of the school district will receive a second entry into the lottery.

A homeowner who retires or becomes disabled after purchasing a house can also go through a process allowing them to remain in the home without meeting the work requirement.

Impact Development Fund, a nonprofit Community Development Financial Institution, will administer the deed restrictions. San Miguel Regional Housing Authority Manager Courtney McEleney is assisting as a consultant.

Ross Valdez, IDF’s Business Development manager, will accept and process the applications, handle purchase contracts, and will be the first point of contact for the program.

He lives on Log Hill and told the council he’s excited to be “boots on the ground” with the program.

Valdez will also handle requests for exceptions if residents believe they should be exempt from certain criteria. For example, the homes must be owner-occupied, but an owner could request an exception to be allowed to long-term rent the property while living elsewhere temporarily to care for a sick relative.

During the lottery process, the only exceptions allowed will be for non-traditional financing or for having a co-borrower for a loan.

Once the homes are sold, owners will have compliance checks at least once every two years. If owners choose to long-term rent to a qualifying roommate, renters will have annual compliance checks.

After applications close on May 31, a list of qualified applicants will be published on June 6, and applicants who have been denied will have until June 8 to submit an appeal if they believe an error was made in determining their eligibility.

The lottery will be held at Ridgway Town Hall on June 15. Applicants will be assigned a number, matching a ball inside a spinner, which will then be drawn. A list of winners will be posted, and the home selection process will start the following week, on June 19.

At Monday’s meeting, some councilors raised concerns about some specifics of the deed restrictions, which they’d previously approved in August as part of the development agreement.

“Why are we being presented this when we should have input from the beginning?” Mayor John Clark asked. He said the town should decide how restrictions are administered, not the developer.

Neill said the restrictions had already been presented to the council eight months ago. “That would have been the appropriate time to nitpick,” he said.

The initial lottery will allow only individuals and households to apply; businesses that want to purchase a home to rent to their employees will not be eligible at this time, but could purchase a home when it’s resold and then rent to employees who meet the work and income criteria.

Councilors Polly Kroger and Beth Lakin both raised concerns about businesses being able to buy homes. Lakin called it “rife for exploitation,” and Kroger wanted to limit it to only certain types of businesses, such as nonprofits or school districts.

The council also questioned who would pay for IDF’s services to manage the deed restrictions.

Major said the developer is currently paying for that, in addition to a 1% fee on the sale of each home that goes toward that service. “In a start-up program like this, we’ve got to provide the funding,” he said.

He said they decided to use IDF because the town and county do not have housing authorities, unlike San Miguel County, where the authority is managing the restrictions for the Norwood project.

Major advocated for Ouray County forming a housing authority when it has a “critical mass” of deed-restricted housing.

Neill and Town Attorney Bo Nerlin said they’ve had multiple conversations with Major about the management plan, and said it’s clear the town will be able to move the management to another entity, such as an authority or a nonprofit, including the Home Trust of Ouray County, at a future time.

Neill is the town’s representative on the board of the Home Trust. He said when the development agreement was reached last year, the nonprofit was “probably not” ready to administer the process, but the nonprofit could be prepared to do so soon.

Home Trust Executive Director Andrea Sokolowski said the organization would be happy to play that role.

This isn’t the first time forming a housing authority has been discussed in Ouray County. One was created in 2007 but was never funded, and was replaced by a volunteer advisory committee in 2016. That committee created a strategic plan that included pursuing money for an authority, but elected officials made it clear at the time that they weren’t interested, citing concerns including funding and loss of control within their own jurisdictions. The committee formally disbanded in 2020.

Mayor Clark told the council at the time, “it became clear quickly that financially it didn’t make sense” to form an authority, but said he anticipates having the conversation again in the future.

While IDF will be the current manager of the deed restrictions, the council also voted unanimously to create a new Workforce and Affordable Housing Committee, of which the council will be the sole members.

That committee will hear and make decisions on appeals from Wetterhorn Home residents if they believe Valdez, as the administrator, has made an incorrect decision about their eligibility, or incorrectly denied them an exception.