Verde Plaza II gets green light

The Cottonwood City Council approved a density increase and letters of support of the Low-Income Housing Tax Credit program application for the Verde Plaza II affordable housing project at a regular meeting on March 3.

Verde Plaza was awarded LIHTC program credits in 2022 to renovate the existing 52 units and add 18 additional units, alongside a $250,000 loan from the city and other funding sources. The developer reported in February that the complex is at 100% occupancy with over 100 families currently on the waitlist.

The city then supported the same developer, Terra Realty and Management of Colorado, for 2024 and 2025 LIHTC applications but were unsuccessful in securing funding due to the competitive program.

The Verde Plaza II is a proposed multi-family residential development project to be constructed on city-owned property. This project is being submitted for LIHTC funding, which prioritizes projects that demonstrate local govern­ment support and long-term affordability commitments.

The parcel is currently zoned R3 which allows a maximum density of 58 units, but the developer is proposing 67 units. Sixty-six units will be restricted to households earning at or below 60% of the area median income with one unit to be the manager’s apartment.

According to the Verde Valley Housing Needs Assessment of 2021, nearly 25% of Cottonwood households earn at or below 60% of the area median income, yet only two low-income housing complexes provide this affordability: Verde Plaza and Mingus Point.

The council discussed approval of a devel­opment agreement to allow for this density increase.

Ryan Bigelow, director of strategic initia­tives, said increasing the project’s density allows them to score more points through the qualified allocation plan scoring criteria used for the program which uses total unit count as a tiebreaker. Projects with more affordable units receive priority, so increasing density will improve their posi­tion for securing funding.

The city seeks to use its Design Incentive Guidelines for Affordable Housing of its affordable housing ordinance to adjust required development standards in return of affordable housing through a develop­ment agreement to increase density for the project.

Additionally, the council discussed approval of a separate resolution supporting the developer’s LIHTC application. This item commits the city’s support for the project’s application with a letter of support from the mayor and a letter of support in the form of a loan commitment of $200,000 and a fee waiver of $50,000.

The application is due Wednesday, April 1, and awards will be announced on Monday, June 1. If the project is awarded funding, there will be an additional discussion to discuss the terms of the loan, execute the land lease and other additional next steps.

Both resolutions were approved unanimously.