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Builder says wrap insurance, scale and sound mitigation can make condos affordable in Provo
Summary
Edge Homes general counsel told the Provo City Council the company can build smaller, family-friendly condominiums if developers can reach sufficient scale and use "wrap" insurance, soundproofing and deed restrictions; he described a Draper deal reserving 30 workforce units with $60,000 per-unit subsidy.
Paxton G., general counsel for Edge Homes, briefed the Provo City Council on how his firm makes condominium projects work and the hurdles many builders face.
Edge Homes sells three-bedroom, two-bath condominium units of about 1,300 square feet and targets an absorption rate of roughly six units a month at a project level, Paxton said. The firm relies on what he described as a ‘‘wrap’’ insurance policy that covers the builder and subcontractors to manage the risk of construction-defect litigation; those policies, he said, can cost $80,000–$100,000 per month in premiums, so production volume is critical.
"Unless you're able to build and sell 250 condos a year, it will not pencil," Paxton told council members, saying the insurance and other overhead compress margins. He added that Edge uses additional building features—thicker walls, acoustical caulking, sound mats under flooring and other measures—to reduce complaints about sound transfer between units and avoid litigation and sales problems down the line.
Paxton also described a Draper project in which Edge secured 26 units per acre near a TRAX station and negotiated a deal setting aside 30 units for workforce housing. In that deal Edge and the city each contributed $30,000, creating a $60,000 per-unit subsidy that allowed buyers to purchase units at roughly $300,000 with deed restrictions requiring owner occupancy for four or five years.
Council members pressed Paxton on common financing concerns. He said FHA financing for condos is not a ban—projects must be FHA-approved in advance and meet the program’s requirements—and that prior fears about litigation in Utah had been partly reduced by case law and statute, though builders remain cautious. Edge sells many units across multiple communities to reach the scale needed to carry the cost of wrap insurance and interest carry on standing inventory.
The presentation included market and price history: Paxton said Edge sold condos for under $200,000 in 2016, peaked near $370,000 during the housing run-up, and currently sells many units in the $305,000–$325,000 range when paired with interest-rate buy-down programs that reduce early mortgage costs for buyers.
The council thanked Paxton for the briefing and moved on to the evening agenda. Council members expressed interest in learning more about the details of private–public partnerships to expand homeownership options in Provo.
The presentation did not include a formal council action; staff and developers agreed to continue discussions about letting cities partner on subsidy and land arrangements for workforce units.
