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Colorado lawmakers are betting millions that factory-built homes are a solution to the housing crisis

House Bill 1282 would give $40 million in funding toward modular housing initiatives

Workers build a modular home at the Fading West factory in Buena Vista, CO. (Courtesy of Kim Schaefer, Fading West)
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Colorado lawmakers are aiming to increase the state’s stock of modular homes amid a statewide housing shortage that’s left many residents priced out of the market.

House Bill 1282, known as the Innovative Housing Incentive Program, would create a $40 million loan program that modular homes manufacturers could use to pay workers and cover operating expenses, including payroll, inventory and materials.

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“I think that we all recognize what an amazing place Colorado is to live,” said state Rep. Kyle Mullica, D-Federal Heights, who is one of the bill’s prime supporters. “But we want to make sure that people aren’t having to leave here because they can’t afford to live here.”

The measure comes as lawmakers this year are looking for innovative ways to fund affordable housing with hundreds of millions of dollars in federal coronavirus aid. The prices of homes in mountain towns have doubled in the last two years, leaving the locals and lower-wage workers who keep the communities running in a tough spot. The new program would attempt to help open the door to home ownership to Coloradans who can’t afford their own place, are stuck in a cycle of renting, or are considering moving away.

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The bill proposes the creation of a program within the Office of Economic Development and International Trade that would give grants or loans to new or existing businesses to develop innovative housing solutions, including modular housing. Modular housing is built in a factory before being shipped to a neighborhood to be assembled.

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Only a small handful of companies in Colorado currently build homes in factories. One of them is Fading West Development in Buena Vista, which will build approximately 250 homes in 2022. The construction cost for the company’s modular houses is 15-30% lower than traditional homes.

“By manufacturing houses and doing it in a repetitive fashion, we can keep costs down and we can get the number of houses out quicker,” said Eric Schaefer, a vice president at Fading West Development.

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Inside the Fading West modular housing factory in Buena Vista, CO. (Courtesy of Kim Schaefer, Fading West)

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Schaefer said the bill would help cover operating expenses for businesses like his, in turn creating jobs, funding factory development and, finally, lowering the costs of houses for customers.

The $40 million funding the program is slated to come from federal coronavirus aid sent to Colorado through the American Rescue Plan Act.

The bill specifies that grants must be at least $50,000 and are limited to 20% of a company’s operating expenses. In coal-transition communities and in areas with less economic opportunity and high quality housing, grants must be at least $75,000.

In addition to Mullica, the other prime sponsors of the bill are Sen. Jeff Bridges, D-Greenwood Village, and Larimer County Republicans Rep. Mike Lynch and Sen. Rob Woodward.

Mullica called the bill a win-win for addressing the affordable housing crisis while also creating jobs. He said he estimates to see more units being put out into the market within the next six months.

“It was kind of odd, because you think about business, and individuals in business don’t want competition,” Mullica said. “But you talk to all these factories and they want competition, because there’s such a huge demand that they can’t keep up.”

Installed modular houses built by Fading West. (Courtesy of Kim Schaefer, Fading West)

Fading West began as a developer focused on providing workforce housing, especially for locals in mountain towns. After trouble with contractors, the company started making modular housing in Nebraska before opening their own 110,000-square-foot factory in Buena Vista in November.

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Time Magazine listed Fading West as one of the world’s most influential companies of 2022 last month, alongside giants like Amazon and Pfizer.

“We clearly must be onto something,” Schaefer said of the rankings. “I think it’s a Colorado problem, but I think it’s a national problem.”


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