The city approved the largest condo project since 2009 this week, but it likely doesn’t signal change in the housing market.
Condominium construction has stalled across Colorado for years because of the threat of construction defects lawsuits against developers.
A new state law was passed this spring in the Legislature to make it harder for homeowners associations to file lawsuits against developers, but it didn’t play a role in the decision to build the recently approved project.
Architect Rick Feeney incorporated four condominiums into the townhouse project planned for the 1300 block of Florida Road after the city asked him to explore putting more units on the 1-acre parcel, said Assistant Director of Community Development Nicol Killian.
The condos fit better into a steeper section of the site than townhomes would have, because the units needed to be stacked, Feeney said.
Building 10 units on the property became a requirement of the project when it was annexed in 2016.
The Durango Planning Commission unanimously approved his proposal for four condos and six townhouses this week, and it will not go before Durango City Council for review.
Feeney doesn’t know when construction will start because he is working on the financing, he said.
Planning Commissioner Joe Lewandowski said condo projects can help residents start building equity through homeownership. But this project likely doesn’t signal a shift in condo construction in town, which is nearly stagnant.
The city has platted six two-unit condominium projects in recent years, but some of those represent splitting up an existing building, Killian said.
“Building condos en masse is a much bigger question because of the financial issues,” Lewandowski said.
Construction defects lawsuits and the threat of lawsuits have pushed up the cost of insurance for developers, making it unaffordable for them to build condos, said Ted Leighty, vice president of government affairs for the Colorado Association of Realtors.
A report issued by the Colorado Judicial Branch in March estimated that there are about 200 construction defects lawsuits filed each year.
The report reviewed 4,000 cases filed over two periods in 2013 and 2014 and identified 102 construction defects lawsuits.
Even though condo construction is stymied, lawsuits are ongoing because they can be filed eight years after the buildings are completed, Leighty said.
He supported the new state law because it requires a majority of members in a homeowners association to approve a lawsuit, rather than simply the members of a homeowners association board.
It also requires developers be given a chance to address owners and offer to remedy faulty construction before a lawsuit is pursued.
However, Emil Wanatka, president of Timberline Group, does not expect anyone to build large-scale condominium projects in town as a result of the new legislation.
Part of the problem is the standard to which builders are held, he said.
“If there is any deviation from perfection, they can go forward and sue, somehow that has got to change,” he said.
Others argue lawsuits offer an important avenue for homeowners, and framing them as frivolous is unfair.
“It’s insulting to call these cases frivolous ... If they were frivolous, that would get them kicked out of court,” said Suzanne Leff of the Community Associations Institute.