Council signals support for sale of Fruitdale/Bridal Lofts to Foothills Regional Housing using NOAH funds

Wheat Ridge city staff and councilors on Feb. 24 reviewed a proposed purchase of the Bridal Lofts (the former Fruitdale School) and signaled consensus to support a staff recommendation that would use the city’s federal NOAH (Naturally Occurring Affordable Housing) grant funding to preserve the property as long-term affordable housing.

City staff summarized the property's history: the Fruitdale School, designed by Denver architect Temple Buell in 1927, closed as a school in 2007. The Wheat Ridge Housing Authority purchased the property in 2011 and later approved redevelopment converting the building into 16 residential units (Bridal Lofts), which opened in October 2017. The project included energy-efficiency features, solar power and other sustainability elements. The city and the housing authority provided loans and support to get the project built.

Jim Goff (city staff) described current financial distress at the property: developer Hartman Eli Investments (HEI) repaid $1.5 million of the city's earlier loan but the project did not reach the developer's target return and remains under financial strain. HEI sought to sell the property. Foothills Regional Housing offered to purchase the property, assume the remaining Freddie Mac loan and contribute cash and fees; Foothills also proposed to add project-based vouchers over time to increase affordability.

Dana Ashley Ohm, chief real estate and development officer at Foothills Regional Housing, told council the agency could manage the property within a larger portfolio and keep current tenants in place. "Because we're a housing authority and we have access to pretty good insurance models," she said, Foothills can reduce operating risk and provide portfolio-level property management for 16 units. Foothills would invest additional funds and is positioned to preserve the units as affordable housing.

Staff presented three options: (1) take no action (property remains with current owner or could be sold privately, with likely rent increases and uncertain loan repayment to the city); (2) recommend that the Wheat Ridge Housing Authority forgive its $570,000 loan and the city contribute $1.5 million of the NOAH funds; (3) recommend the city contribute the full $2.0 million of NOAH funding, the housing authority forgive $570,000, and Foothills assume the remaining debt and buy the property. City staff recommended option 3 and explained that using the full NOAH allocation would simplify federal compliance and free up other funding for additional affordable-housing projects Foothills is pursuing in the city.

Councilors asked clarifying questions about the grants and the risk that federal reimbursement could be delayed or rescinded. Staff reported active communications with HUD and said their housing planner has been coordinating with HUD to position the NOAH grant narrative for a timely reimbursement process. Councilors also noted the potential community benefits from keeping affordability and preserving a landmark building.

Council reached consensus to pursue option 3: the Wheat Ridge Housing Authority would forgive its $570,000 loan; the city would contribute $2,000,000 from its NOAH federal grant to the transaction; and Foothills Regional Housing would complete the purchase and transition the property into its portfolio with a plan to increase project-based vouchers and maintain affordability.

Staff said the city would receive repayment of approximately $1,850,000 of the outstanding city loan balance as part of the purchase-closing mechanics described to the council. The council asked staff to coordinate next steps with the housing authority and Foothills and to bring back formal agreements and contingency language ensuring compliance with HUD rules.

Notes: This topic was discussed in a special study session following the regular meeting; the council's direction was recorded as consensus rather than a formal vote.