The sprawling, multi-level home commanding a corner lot on Kit Carson’s Main Street had seen better days. A double-whammy of passing time and pervasive asbestos long ago put to rest any thoughts of even a massive remodel.
So Amy Johnson, whose relatives once inhabited the stucco home nearly a century ago, resolved to start from scratch.
Johnson, the volunteer chair of the local economic development organization, found grant money from the state health department to clean up the asbestos, leveled the house – and then steeled herself for yet another difficult exercise in fundraising and number crunching — to build just one more new home on the housing-starved Eastern Plains.
But then, inspiration struck. And suddenly, Johnson last week sealed the deal on a new and more efficient model that will create five new houses – a significant spike in inventory – on this slice of rural Cheyenne County 60 miles southeast of Limon.
Conversations with an old college classmate illuminated the promise of private loans, an idea Johnson previously shied away from, as a building tool to augment grant resources. At the same time, connecting with a growing modular home manufacturer in Buena Vista revealed a more cost-effective way for new houses to rise in the town of 250 residents.
Starting in July, Fading West Development will begin assembling the modular pieces of five new homes – two of them on that now-vacant corner lot – thanks to multi-level designs that maximize the footprint of the homes. Three more Fading West homes will sit on a half-acre parcel in another part of town. All five come with looser strings than the conditions traditionally attached to affordable housing funding.
Kit Carson Rural Development, the volunteer organization that Johnson leads, can offer the homes with less stringent income restrictions than some loan programs. Those and other rules, like prohibiting a mix of sale and rental properties, can pose barriers to rural towns that don’t have full-time public housing management structures to police them.
The arrival of the new units can’t come soon enough.
Johnson recently did a housing inventory for the town and found that, of 134 houses, 33 sit vacant – with just a handful of those even habitable, if the absentee landowners were willing to invest in a fix-up. Most prefer to pay a pittance in property tax and hold on to them. The asbestos-filled house on the corner lot had sat empty for decades before the current owner decided to sell.
Last June, Andrew Paredes, Johnson’s fellow Colorado College alumnus who is director of housing finance and sustainability for the state Department of Local Affairs, visited her in Kit Carson, where she gave him a tour that included drive-bys of the many vacant properties slouching on the landscape like so many missed opportunities.
“It’s very evident there the way the town must have looked 40 years ago, when it was a lot more thriving and inhabited,” Paredes said. “You can see houses that have been long since abandoned, weeds grown over, broken windows, just right next to a house where somebody lives.
“If that property were in Aurora, there’d be a huge incentive, as well as developers and investors knocking down the door, every day for that dilapidated property’s owners to sell.”
That kind of organic turnover doesn’t happen in many rural communities. As the next point of interest on their town tour, Johnson pointed out the house where a retired teacher lives. The Kit Carson School – opened in 2020 as a pre-K through 12th grade hub of regional life – will need to hire five new teachers in the next five years as even more educators retire, testing the town’s ability to provide enough housing just to maintain its critical workforce.
“That’s always something that’s on our mind because when the teachers that are currently working retire, it doesn’t mean they leave,” she said. “The people that call this home, this is their world and their community. We don’t want to lose them. But I can’t imagine being a first-year teacher and expecting to buy a house. That’s why we want to make stuff available for rent.
“Right now in Kit Carson there’s nothing for rent. Nothing. There’s one house available for sale. So how do you grow a community with that?”
A solution appears
The answer, Paredes told her, could be to revisit the way KCRD constructs its deals to incorporate bank loans into her plans for new housing. DOLA views locations like Kit Carson as an inverted housing market, where the cost to build exceeds the appraisals of finished homes, leaving little incentive for outside developers to come in and build communities.
“In the case of Kit Carson and Amy,” he said, “they never really thought of getting a loan from a bank until we talked through it and she realized that that could be relatively lower risk, high reward and it made the thought worthwhile.”
Paredes, with a background working in community banking, recognized that smaller banks sometimes have more leeway to tailor their services – in this case, to a housing project that could end up including both rentals or sales.
“They know their local community,” he said. “So being able to connect the local developer with their local bank, who can then kind of craft a loan that they are comfortable with because they also live to work in that community was kind of a win-win for everybody.”
He also explained some new financing resources that DOLA could offer in the wake of 2019 changes to the way Colorado collects sales tax and vendor fees that allows more state money to flow to affordable housing. Those changes added up to significant dollars even for the relatively small-scale KCRD projects.
DOLA’s former guideline for grant investment was up to $15,000 per unit for standard affordable housing – something Johnson didn’t figure was worth jumping through bureaucratic hoops to obtain. But DOLA’s staff last summer did a deep dive into actual costs around the state for different types of housing and changed those guidelines to think more outside the box – particularly for inverted, small-town housing markets.
The agency was able to offer $45,000 per unit in Kit Carson, which proved to be a game-changer for Johnson, who praised DOLA for “the amount of work they’re doing to really make things realistic out here in rural Colorado.”
Andrew Atchley, a housing development specialist with DOLA based in San Luis Valley, gets calls from rural groups across the state, and notes that different sorts of projects are springing up across the Eastern Plains – some of them powered by the collective economic development clout of cooperating governmental agencies.
One example is a six-county cooperative effort that aims to use funding from the American Rescue Plan Act to build 127 new homes in southeastern Colorado. While individual jurisdictions may lack funding capacity to entice development, he said, joint efforts that envision larger-scale projects provide new models for additional housing.
Scale can be critical.
“You might have a housing organization that owns four units and they have an executive director and a maintenance person and they haven’t developed any new units in 30 years – so they don’t have that kind of institutional knowledge,” Atchley said. “So connecting those organizations with consultants in some sort of capacity, building funding, is a huge part of what we’re trying to do.”
In Kit Carson, DOLA grants added $225,000 to its effort. KCRD also leveraged $500,000 from a federal HUD grant plus additional funding from a variety of foundations and regional governments, added that to its own investment and the $300,000 loan from Eastern Colorado Bank to grow a project that started as just three homes to a total of five.
Pricing for the units has yet to be determined. Although the homes were ordered at a set price per square foot, additional costs include delivery, HVAC work and “set and stitch” costs to piece them together.
Johnson, who spends weeks writing grant applications, is on her third HUD grant, and the flexibility of the federal money – income limited only to a home’s initial occupants – has been a boon. Of the eight houses built through the last two HUD grants, none have sat empty.
“We just want our houses filled,” she said. “We don’t want to miss out on people that want to move to our community. So it’s just key to have a lot more flexibility in the house.”
New housing crucial
Creating new inventory remains a challenge, which is why the newly announced five-home project has come to fruition at a critical time. Kids who grew up in Kit Carson and left after graduation sometimes want to return – but see no place to live. And the sparse availability of housing can send key local workers miles away to find anything at all.
“One of the local deputies they just hired has five kids and they moved (25 miles away) to Cheyenne Wells, because we have nothing here,” Johnson said. “His kids are coming to school here right now, but I always worry if someone’s not living in the community they send their kids to, how long is that going to last?”
With a new financial plan in place, Johnson mulled how to build the new homes. Her research took her to Buena Vista.
Johnson had initially looked at modular options from a company in Kansas, but preferred to stay in Colorado. She reached out to Fading West Development last spring and arranged to visit the company’s headquarters and signature development in Buena Vista.
Over the past 8-10 years, Johnson said, she’s seen the costs of building homes from scratch double. That meant either building half the number of houses or building them half as big. So she started looking at modular homes as a more affordable option.
But the typical modular models were single story and required a larger lot. What she saw when she visited Buena Vista was that Fading West’s designs included two stories and had a smaller footprint, which would enable her to place more houses on a limited amount of land.
“If I’m trying to infill my Main Street area and I’m knocking down one house on a half-acre lot, I can put three houses in there and not feel like they’re still too cramped,” she said. “It’s still a nice fit, so I don’t feel like we’re sacrificing anything to build on a smaller footprint. We could fence it off and do some landscaping and still make it a really decent, nice house.”
Originally, Johnson considered building duplexes. But the one shared wall yielded minimal savings, and the aesthetics of introducing duplexes into the small-town landscape – particularly on the town’s Main and Park streets, just a block apart – seemed unappealing.
“If there was no cost savings and I had the room, I figured I might as well separate them,” she said. “So it was their multiple-level design that was kind of a game changer.”
Fading West, which normally deals with larger orders, was willing to work with Kit Carson on the initial three-house project, and then added two more homes in its queue for the asbestos-tainted corner lot. A series of meetings led to design based on one of the company’s basic models, tweaked to fit Johnson’s requirements. With the help of its design partner, EV Studio, Fading West also adapted one of the houses to comply with federal accessibility standards – a requirement for the HUD grant.
“We’re small beans for them,” Johnson said, “but we’re excited.”
Fading West stresses the importance of keeping its manufacturing pipeline going consistently, which makes a combination of larger and smaller projects essential to keep its workforce of 75 to 80 people busy, said Eric Schaefer, vice president of sales and strategic partnerships.
The Kit Carson project marks the company’s first on the Eastern Plains, and price-wise falls in the lower range of AMI — area median income — compared to other developments. Schaefer said Fading West started with what the community’s workforce could afford and worked backwards to design homes that would meet Kit Carson’s needs.
“We’re trying to find strategic partners throughout the whole state,” Schaefer said. “Part of our mission is to provide high quality, attainable housing, workforce housing, so we’re thrilled that this worked out. Our hope is that the initial project in that part of the state goes well, and will lead to more and bigger projects.”