Downtown dilemma: Market rate or workforce housing?
Downtown Grand Junction is a destination, but it could also become a lifestyle that sparks sustainable economic growth, urban planners say.
Upwardly mobile professionals with extra cash to spend could re-energize the metro area if they had a nice place to call home, so the theory goes.
That’s why the Grand Junction Downtown Development Authority punched the reset button this year on housing construction in the historic square mile considered the city’s commercial center.
The decision to terminate a 30-year joint venture with the Grand Junction Housing Authority last fall signaled a change in thinking about downtown residential construction, said Harry Weiss, the DDA’s executive director.
The DDA decided to research the feasibility of market rate, multifamily housing in the downtown core aimed at more affluent residents with discretionary funds to spend, Weiss said.
The decision marked a departure from the mission of the defunct joint venture once known as the Downtown Housing Effort, he said.
In 1983, the DDA and the Housing Authority launched a joint venture called the Downtown Housing Effort. The purpose of the effort was to provide new and improved housing downtown, according to public records.
In the early years, a loan program provided low-interest or no-interest loans to improve downtown housing stock. Initial funding came from federal Community Block Grants and the Colorado Division of Housing, public records show.
Several downtown properties were rehabilitated using the loan program, Weiss said.
All but $32,000 of those loans were repaid as of September 2013, leaving around $400,000 in the Downtown Housing Effort’s reserve fund, he said.
Since 1998, the DDA and the Housing Authority tried to identify joint opportunities related to housing that would advance the goals and objectives of both organizations, said Jody Kole, Housing Authority chief executive officer.
“The downtown housing effort had been mostly dormant for the past 15 years,” Kole said. “We had tried on a number of occasions to take those funds and reinvest them in something meaningful in the downtown and yet we were always stymied one way or another.”
The most recent attempt was the Catalyst Project, which fizzled in 2008 about the same time the national economy took a nose dive, Weiss said.
The project envisioned a new central library, a new senior recreation center, housing and retail space — all contained within a revitalized multi-block area between Fourth and Sixth streets and Grand and Chipeta avenues.
A number of stakeholders championed the project, including the Mesa County Public Library District, the Downtown Development Authority, the Grand Junction Housing Authority, the city of Grand Junction and Mesa County.
The downturn in the economy and cratering of the real estate market delayed the DDA’s attempt to purchase the former Assembly of God Church on Grand Avenue, a building key to the project, Weiss said.
In the interim, the Mesa County Public Library District decided to press ahead with a different plan to build its new library.
The DDA’s final offer to purchase the church building was rejected by a 3-to-1 ratio by the church’s congregation, Weiss said.
At that point, the Catalyst Project was dead, he said.
“When you’re looking at re-developing an area like downtown, that requires acquiring an asset like a building, like an older building that maybe needs to be demolished,” Kole said. “The economics are pretty tricky in those kinds of transactions. We were not able to collectively bring enough resources to bear at the right time in the economy to make that successful.”
By July 2013, Weiss said he and Kole began to think independently about the future of the Downtown Housing Effort.
Weiss and the DDA board of directors started to contemplate a vision of downtown that included development of market rate, multifamily housing.
Meanwhile, Kole and her board started thinking about future uses for the roughly $200,000 it had tied up in the housing effort’s bank account.
After much discussion, the boards of both authorities concluded that the DDA’s focus no longer overlapped with the Housing Authority’s.
The Housing Authority concentrates on affordable and low- to moderate-income housing, Kole said.
“A lot of folks, when they hear the word affordable, conjure up negative images that include people not working,” Kole said. “Affordable housing is for people working in front-line jobs.”
The most recent Housing Authority project, Village Park, located at the intersection of Patterson and 28 1/4 roads, boasts 72 apartments with rent structures that make the apartments affordable for most workers.
“As the Grand Valley’s economy goes up, goes down, the type of needs we have for workforce housing can shift, but it still is a significant issue for the Grand Valley, particularly when we have so many jobs that pay $10 an hour or less,” Kole said.
Village Park is the fourth workforce housing development the Housing Authority has constructed in the last 18 years, she said.
“The Housing Authority tries not to compete at the market rate level. We try to compete and serve people at the below-market levels, where folks’ needs are not being met in the marketplace. We try to fill gaps,” Kole said. “The (DDA) was trying to fill a different gap than was our mission and so we’re on happy terms, but it was time for them to go their way and for us to go ours.”
A survey of preferences for housing downtown that attracted more than 1,000 responses online and many more through the mail was completed Dec. 20.
DDA consultants are continuing to sift the data. No hard numbers will be available before mid-February, maybe later, Weiss said.
Nevertheless, more than 40 percent of respondents expressed a “strong interest” in market rate housing, he said.
Market rate housing means rental costs are based on current market prices, without income limits or special requirements common to workforce housing projects.
Market rate housing is more likely to attract upper-middle class residents with the ability to make discretionary spending decisions. Discretionary spending is spending on things that are not necessities, like enjoying cocktails at a downtown bar or dining out at a downtown restaurant.
“You want a population with discretionary income,” Weiss said.
“The goal of having housing downtown: There are multiple benefits,” he said. “One is you create a neighborhood. The more people you have, the safer it feels. The more it leads to additional housing investment. So it builds on itself. It’s sort of a critical mass deal.”
People who responded to the survey by expressing an interest in living downtown said the reason they didn’t live there already is because there aren’t any suitable places for them to go, Weiss said.
“There’s not a demand problem. There’s a supply problem because it was never developed,” he said. “The proper product at the proper price point. The right kind of finishes. The right kind of configuration. We just don’t have any of that stuff.”
Weiss hopes the survey results and other data now being synthesized will persuade developers that market rate, multi-family housing downtown could make a great investment.