Fruita council approves term sheet with Headwaters Housing Partners for Oaks affordable housing project

Fruita — The City Council voted 6–0 to approve a nonbinding term sheet with Headwaters Housing Partners (the Oaks project) that sets negotiation targets for converting the Family Health West property at 805 Otley Avenue into 62 multifamily housing units. Dalton (speaker 16) and staff described the term sheet as a negotiation framework rather than a binding appropriation.

Key elements in the term sheet include a sliding‑scale contribution model that would allow the city and partners to reach affordability targets (discussed examples included targeting a mix where half the units would be restricted at 80% area median income (AMI) and half at 100% AMI, depending on contributions). Staff noted the $1,250,000 figure as a target amount to achieve that mix but emphasized the council was not authorizing payments tonight; any city contributions would require later appropriation.

Staff said the Fruita Housing Authority has agreed to participate as a limited partner in the ownership structure, enabling tax exemptions intended to lower project costs and support affordability. Dalton and staff also described flexibility in the agreement: if contributions fall short, pre‑agreed units could be released from AMI restrictions to market rate to maintain project feasibility. The term sheet authorizes staff to continue negotiations and to present a redevelopment agreement and land‑use restriction agreement for formal council consideration.

Councilors asked for timing and process clarifications; staff said they aim to return a redevelopment agreement or a structure in the spirit of the term sheet by mid‑first quarter 2025 and that the city would negotiate crediting for any third‑party contributions. The council approved Resolution 2024‑48, authorizing the interim city manager to sign the term sheet and continue negotiations.

What happens next: staff and the developer will refine financial terms, finalize a redevelopment agreement and land‑use restriction agreement, and bring specific appropriation requests and final entitlements back to council for approval.