Housing Authority Can No Longer Operate Facility at a Loss
OLATHE – Despite a possible short-term funding reprieve from the City of Montrose, officials at Haven House, a transitional housing program for homeless families located near Olathe, must find a way to cope with higher rent payments imposed by the Montrose County Housing Authority, purchase the building itself or close the facility outright.
The Montrose County Housing Authority, which owns a the 13,521-square-foot facility, notified Haven House in early August that rent for the dormitory would be increased from $18,000 per year to $30,000 per year. On Tuesday, the Montrose City Council considered funding $12,000 to Haven House, which would give the facility another year to solve its new funding deficit. Ultimately, however, council approval of the funding was tabled until Haven House works further with the Montrose County Housing Authority, the Montrose Community Foundation and the Montrose Board of County Commissioners, which indicated at a meeting on Monday that it would consider funding the nonprofit as well.
According to Haven House’s Founding Board Member Larry Fredericksen, without financial help, the 67 percent increase in rent could shut the facility’s doors.
“We don’t really have any information on why the increase happened,” Fredericksen said on Tuesday. “We are totally surprised.”
Opened in 2011, Haven House is a faith-based nonprofit organization that provides safety and security for homeless families, and offers them opportunities to get into permanent housing. According to Fredericksen, in its more than three years in operation, Haven House has provided over 38,000 shelter nights to over 300 people, including 140 children.
Haven House and its programs are solely funded by the people living there, as well as by donations and grants. Fredericksen said the raise in rent will cause a negative cash flow, and make sustaining the organization financially unsustainable.
“Our focus is homeless families and the most common client is the single mom with one or more kids,” he said. “Outside of Haven House, homeless families in the region would have to go to Grand Junction or Durango for shelter and mostly what is available is emergency overnight shelters. If we close, that would seem to be their only option.”
But, as Montrose County Housing Authority Executive Director Tim Heavers explained, for the past three years, the housing authority has operated at a loss; a rent increase of $2,500 a month, he said, is not only fair but necessary. In the years 2011, 2012 and 2013, the housing authority sustained operating losses of $3,200, $26,400 and $16,700, respectively. Over that same period of time, the U.S. Housing and Urban Development cut the housing authority’s Section 8 voucher program by 31 percent due to the effects of sequestration.
“We have had three annual losses in a row and they are strictly related to the dorm,” Heavers said. “The real reason for the increase in rent is that our expenses exceed the revenue they are paying at the facility. We can’t continue to run the dormitory at a loss.”
Furthermore, Heavers said, when the facility was leased to Haven House, it included $100,000 worth of equipment, including washers, dryers, ice machines, 72 beds, 36 microwaves, 36 refrigerators, and complete yard maintenance equipment.
“Haven House has been a very good renter,” Heavers said. “They always paid their rent on time. But the costs are high out there and the [housing authority] board felt that it was time to raise the rent and that it was a reasonable rate for the facility.”
The ultimate goal of the housing authority is to sell the facility; they have offered it to Haven House, complete with equipment and furnishings, for $450,000 (about $33.28 per square foot). According to Heavers, the building was appraised with a market value of $794,790 in 2006.
“It’s always been the board’s desire to sell the property,” Heavers said. “The property remains for sale and the lease we have had for Haven House has always stipulated that the board reserves the right to advertise it for sale and that it will give Haven House the first right of refusal.”
Haven House has submitted three offers to purchase the property, but because of provisions and contingencies stipulating that the housing authority carry a portion of the mortgage on the selling price, the offers have been rejected by the housing authority board.
“The board would prefer to sell the building outright,” Heavers said.
Fredericksen said he believes Haven House can raise the $400,000 to purchase the property, but it will take time to organize various sources of financing – time Haven House may not have without financial help. He also said the Colorado Department of Housing is supportive of Haven House’s effort to purchase the facility, and may be willing to fund a substantial portion of the $400,000 proposal
At Tuesday’s Montrose City Council meeting, council directed the city manager’s office and the city attorney’s office to allocate emergency funds for Haven House in case there was a dire need for cash in the near future.