Durango, CO: TWG Development, LLC, in collaboration with the City of Durango, has acquired the former Best Western Motel, located at 21382 US Highway 160. TWG is moving forward with plans to rehabilitate the existing 72-room motel and construct 48 new units, resulting in a 120-unit vibrant affordable housing apartment community called Residences at Durango. The development will serve households earning 30% to 60% of the Area Median Income (AMI).
This will be the first hotel-to-residential conversion in the state to utilize tax credit financing and is the largest ever tax credit project in Southwest Colorado. The City of Durango actively facilitated the purchase by initiating a real estate offer to accomplish housing goals. While searching for the right development partner, the City funded the due diligence and took on some pre-development work to ensure the project could be completed.
In the fall of 2021, the Best Western Motel was offered for sale and the City of Durango, in partnership with local housing consulting firm Project Moxie, submitted an offer to purchase agreement for the hotel. The city then issued a Request for Proposal (RFP) and selected TWG Development, LLC, a real estate development company headquartered in Indianapolis with a presence throughout the U.S. The contract was then transferred to TWG in February 2022 and the purchase was completed in November 2022 with Department of Housing Operation Turn-Key (OTK) Funding.
The anticipated development costs are estimated to be $35 million and there are various additional funding sources and key partnerships such as, Division of Housing, Housing Authority of the County of Montezuma, $18 Million in Private Activity Bond Allocations (PABs) from the City of Durango, La Plata County, and Colorado Housing (CHFA) Finance Authority.
“We received bond inducement for Residences at Durango and completed our application for the CHFA Risk Share loan,” said Ryan Kelly, Vice President of Tax Credit Development at TWG.
Meanwhile the City of Durango submitted a $3 million request in June 2021 for Congressional Directed Spending (CDS) and was selected in July 2022 by the U.S. Department of Housing and Urban Development to apply for this funding opportunity. The city received the award notice for the full requested amount in October 2022 that provided a pivotal funding gap.
TWG Development will utilize private activity bonds (PABs) and 4% low-income housing tax credits (LIHTC) provided by the Colorado Housing and Finance Authority (CHFA), as well as a $3 million congressional appropriation spearheaded by Senators Bennet and Hickenlooper.
“This project has site control, zoning in place, an experienced development team, a
recent 3-million-dollar congressional appropriation, and significant support from the local community,” said Ryan Kelly, Vice President of Tax Credit Development at TWG. “We are pleased to partner with a community that was and continues to be proactive in creating an environment that facilitates public/private partnership and innovation at scale.”
The Residences at Durango’s New Construction and Rehab will meet at least the bronze certification under the National Green Building Standard program (NGBS) and will be contracting Group 14 as an energy rater for both construction phases. There will be LED E-Star lighting, low flow features, and E-Star appliances. In addition, there will be EV Charging Stations for future use as needed.
“The Residences at Durango motel conversion project is part of the City’s multi-pronged strategy to address housing challenges throughout our community,” explained Eva Henson, Housing Innovation Manager for the City of Durango. “Housing is a top priority for our City Council, and increasing the community’s inventory of below-market housing units is crucial to ensure that everyone in Durango has a secure, affordable place to call home.”
This is the first affordable housing development in the Highway 160 West corridor and will provide much needed affordable units in a mixed-use neighborhood within a one mile of downtown Durango. Renovation work will begin in Spring 2023 with completion in 2024.
Housing Innovation Manager
Phone: (970) 375-4857