{"id":13594,"date":"2026-02-09T10:00:00","date_gmt":"2026-02-09T17:00:00","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/durango-on-track-to-meet-states-prop-123-housing-requirements\/"},"modified":"2026-03-31T03:38:45","modified_gmt":"2026-03-31T03:38:45","slug":"durango-on-track-to-meet-states-prop-123-housing-requirements","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/durango-on-track-to-meet-states-prop-123-housing-requirements\/","title":{"rendered":"Durango on track to meet state\u2019s Prop 123 housing requirements"},"content":{"rendered":"\n

\"The
The Residences at Durango, a 120-unit apartment complex converted from a former Best Western motel, opened in summer 2025. The project, which utilized low-income tax credit funding, was a massive leap forward for the city of Durango\u2019s state Proposition 123 commitment of building 184 affordable housing units \u2013 3% of its existing housing inventory \u2013 by the end of 2026. (Jerry McBride\/Durango Herald file)<\/span>cca<\/span><\/figcaption><\/figure>\n<\/p>

The city of Durango is on track to meet its three-year Proposition 123 affordable housing requirements as early as July, said Mike French, city prosperity officer.<\/p>\n

But the city needs to identify other funding sources for its Housing Division as it risks running into a budget deficit in 2028, he said, and affordability remains a chief concern for the city and its residents<\/a>.<\/p>\n

Proposition 123 is a voter-approved initiative that created the Affordable Housing Support Fund, which provides grants and loans for affordable housing development, according to the Colorado Department of Local Affairs. Local governments must opt in to the program and commit to expanding their housing supply by 3% within three years.<\/p>\n

French delivered a housing report to City Council last week where he discussed the progress and challenges of expanding the city\u2019s housing supply.<\/p>\n

He said affordability is Durango\u2019s largest challenge, and among major expenses such as housing, child care and cost of living, housing is the No. 1 pain point.<\/p>\n

Businesses are struggling to hire and retain staff, even for high-paying jobs. The city has struggled to hire directors, he said.<\/p>\n

\u201cIf we\u2019re having that challenge, you can only imagine what\u2019s happening out in the commercial sector,\u201d he said.<\/p>\n

\"The
The city of Durango\u2019s initial Proposition 123 commitment was to build 184 housing units \u2013 a 3% growth of the city\u2019s total housing stock \u2013 within a three-year period ending this year. The city expects to reach its goal in July if not sooner. (Durango Herald file)<\/span>du1-i-syn<\/span><\/figcaption><\/figure>\n<\/p>

He said the number of families with children in La Plata County is on the decline and older demographics are becoming more prominent despite a steady population growth of about 1% annually.<\/p>\n

La Plata County\u2019s senior population of people aged 65 and up is projected to grow between 20% and 26% by 2050, a faster rate than any other age group, he said. The population of children under the age of 18 declined by nearly 3% in the past five years.<\/p>\n

While employment has increased 12%, available housing has increased only 9%, he said.<\/p>\n

\u201cIt\u2019s very difficult for us to say our community\u2019s thriving when we don\u2019t have a place for people to live,\u201d he said.<\/p>\n

Prop 123 progress and housing forecast<\/div>\n

The city\u2019s initial Proposition 123 commitment was to build 184 housing units \u2013 a growth of the total housing stock of 3% \u2013 within a three-year period ending this year.<\/p>\n

The Residences at Durango, a 120-unit apartment complex converted from a former Best Western motel, opened in summer 2025. The project, which utilized low-income tax credit funding, was a massive leap forward for the city of Durango\u2019s state affordable housing commitment.<\/p>\n

French said the city will fulfill its commitment in July if not sooner, depending on whether a rural resort project targeting income earners making 120% area median income goes through.<\/p>\n

The city currently has about 1,750 housing units in the planning stage, representing a projected 18% increase of the city\u2019s overall supply over the next five years, he said.<\/p>\n

But not all of those units are being built for Durango\u2019s workforce \u2013 police, nurses and schoolteachers, for example.<\/p>\n

\n

Short-term rentals, by the numbers<\/h4>\n

The city of Durango has an estimated 9,464 total households, of which about 8,300 \u2013 or 88% \u2013 are occupied, said Mike French, Durango prosperity officer. That indicates 12% of Durango households are vacant. French attributed vacancies to \u201cseasonality, second homeowners and short-term rentals.\u201dDespite the apparently large percentage of vacant homes, Durango is outperforming other resort communities when it comes to occupancy rates, he said. Durango has about 135 managed, licensed and regulated short-term rentals, and there are just under 1,700 short-term rentals across La Plata County. Short-term rentals sprung up at a rate of 63% from 1,100 units in 2019 to 1,750 units in 2024, he said. The guest capacity likewise grew from 7,500 to 11,500, he said, an indication more short-term rentals are being converted, and those conversions feature larger units \u2013 hence the increase in guests and visitors. Daily rates for short-term rentals have grown as well. Average daily rates in 2019 were in the mid-$300s range, he said. Rates peaked along with the number of short-term rentals in 2024 when average rates rose $600 to $700. The data indicates a strong financial incentive to convert units into short-term rentals, he said. That incentive is magnified outside city limits where the county lodgers tax is just 2% versus the city\u2019s 5.25%.<\/p>\n<\/div>\n

\"Daniel
Daniel Lucero and his dog Carmelo settled into their new apartment at the Residences at Durango in July. In order to maintain a homeownership rate of about 55%, the city must focus programming, housing subsidies and developer incentives on homeownership opportunities for income earners making below 150% area median income, according to Mike French, city prosperity officer. (Jerry McBride\/Durango Herald file)<\/span>cca<\/span><\/figcaption><\/figure>\n<\/p>

\u201cHere\u2019s the challenge: about 27% of these are planned to be affordable. That\u2019s less than 1% per year,\u201d he said. \u201cNot actually a bad number. The state looks to us to do 3% per year to continue to qualify for Prop 123.\u201d<\/p>\n

But 74% of the planned affordable units are designated as rentals, while 26% are designated for homeownership, he said.<\/p>\n

Approximately 55% of Durango residents own their homes \u2013 a lower percentage compared to neighboring communities. French said the city needs to expand its housing supply by 1,550 units, and 1,100 of those units must be owner-occupied to keep homeownership at 55%.<\/p>\n

He said the city needs to focus programming, housing subsidies and developer incentives on homeownership opportunities for income earners making below 150% area median income. He expects the open market will take care of demand for rentals above the 80% area median income threshold, and the city should focus any rental efforts below that threshold.<\/p>\n

More funding needed<\/div>\n

French said despite existing housing projects, progress on expanding the city\u2019s housing supply is slowing down. High construction costs and an unpredictable market are the culprits.<\/p>\n

He said state and federal funding has \u201cdried up,\u201d making construction competitive. Local matching grants for predevelopment funding are harder to attain.<\/p>\n

\u201cThe challenge is (not) that we don\u2019t have projects. The challenge is how do we fund them, how do we incentivize, how do we partner and how do we create more predictability, which is very, very hard given today\u2019s economic climate,\u201d he said.<\/p>\n

The city commits $1 million to $1.5 million yearly to fee offsets and other programming to incentivize developers to get units built, he said. The city started the year with a housing fund balance of $4.3 million. It is projected to enter 2027 with a balance of $1.7 million.<\/p>\n

\u201cWe\u2019d end up with just under $600,000 at the end of 2027. Going into 2028, without any additional funding, we would start to run into a deficit,\u201d he said.<\/p>\n

He said additional funding would allow the city to scale up and continue its current programming.<\/p>\n

cburney@durangoherald.com<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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