Routt County Habitat for Humanity contracts hit snags; duplex stands empty |

Routt County Habitat for Humanity contracts hit snags; duplex stands empty

Kat Kelly spends time with her sons, Thomas, front, and Sean, inside the hotel room at the Nordic Lodge that the family calls home. Kat and Sean have been living in the room since February along with the family's two large dogs while waiting to hear what will happen with the Habitat for Humanity home in Riverside the family had expected to move into. Thomas also was living in the room but moved out temporarily to live with his baseball coach.
John F. Russell

— Editor’s note: This story has been changed to reflect that the final price of the Kelly family’s half of the Habitat duplex is $185,000, not $199,000.

The new Routt County Habitat for Humanity duplex in Riverside has been ready for occupancy since mid-February but continues to stand empty to the frustration of the two families who have dreamed of moving into a home of their own there for the past two years.

In that time, they have followed through on their partnership agreement requiring them to contribute 350 hours of sweat equity to the construction of their home.

But as winter turns to spring, communication between the Habitat board and the two families is through their attorneys.

The intended occupants of the two duplex units, Kat Kelly and Renee Gaerlan, told the Steamboat Today this month that they feel misled about the cost of acquiring their new Habitat homes while Habitat officials said they consistently have told their partners what to expect, with the exception of a couple of surprises along the way, including an extra $30,000 to get utilities to the duplex units. But it's apparent there have been misunderstandings.

Recommended Stories For You

Kelly, a single mother of two teenagers, said she originally had expected to pay for her share of a duplex unit with a total cost $120,000 with terms requiring her to pay just $500 down on a 30-year, interest-free mortgage. But that is not the case.

Habitat board President Kathi Meyer told the Steamboat Today this week that Habitat was able to offer those terms on prior projects but that the $500 down, 30-year, interest-free mortgage that Kelly referenced has not been available to Habitat through a program from the Colorado Housing Finance Authority for four years.

"We were OK with the (original) $120,000 price and understood when it went from $120,000 to $150,000," Kelly said, "but when they told us it would be $199,000 per side, and I would have to borrow $68,000, that blew me away. I'm having a vision of getting a second full-time job and never seeing my kids in order to afford my Habitat home. If I was out shopping for a home, I wouldn't look at anything over $125,000 to $150,000 per side."

Ultimately, the Habitat board reduced the final price for Kelly’s half of the duplex to $185,000.

Meyer said this week that Habitat partners never know the final purchase price until the home is completed.

"They are told specifically, ‘You can't be told the purchase price until it's built,’" Meyer said. "It's not like a custom home where you contract for it. It's written in the policies that Habitat doesn't quote the price" in advance.

Kelly and Gaerlan are employees of the city of Steamboat Springs. Kelly is an administrative assistant in the Steamboat Springs Planning Department, and Gaerlan is a fire technician in the fire marshal's office.

Kelly said the greatest source of her frustration is that from the day she was approached by former Habitat Director Jody Patten to inquire if she would be interested in becoming a Habitat partner, and at numerous steps in the process, she has informed officials in the organization that she has an outstanding judgment against her credit relating to a loan she did not pay off in Texas. She also said she told them she previously had been turned down for a U.S. Department of Agriculture loan.

"In my application to the family selection committee, I put a letter in there explaining the judgment to make sure we wouldn't go through this entire process, sit down to close and then they tell me we can't close," Kelly said. "I didn't want to go through this, build up my family's hopes, and we end up where we are right now. This was in my application."

She said Habitat officials repeatedly told her the outstanding judgment would not be a problem.

Meyer said there is no dispute that Habitat was made aware of the judgment against Kelly's credit. However, she said Kelly was prequalified for a USDA loan only to have it withdrawn in October because of changes in federal lending practices.

It also is the case, Meyer said, that Habitat officials did not fully understand the implications of financial judgment for the organization's ability to close on the sale of the duplex unit to Kelly. The problem, Habitat learned when a title company employee joined the board, is that the old judgment could be turned into a lien against the new duplex, meaning the transaction cannot be closed until the judgment is cleared. And that's Kelly's responsibility.

The cost of a Habitat home

Habitat partners do not pay retail value for their new homes, Meyer said this week.

"We can't charge any more than 30 percent of gross household income. The monthly payment was within 30 percent or less under the formula," she said. "We are both seller and lender in this case. We're going to take over $100,000 (in debt) in a second trust deed."

The Steamboat Today reported in March 2012 that Habitat had obtained a $90,000 grant from Thrivent Financial from Lutherans of Minneapolis and a $15,000 commitment from Steamboat's Concordia Lutheran Church. Patten said at the time that Habitat still needed to raise about $120,000 to cover the rest of the cost of the two-unit duplex.

Meyer said she could not reveal all of the details of Habitat's contract with Kelly because of confidentiality laws.

"We entered into a standard Colorado real estate contract in January, and it's been extended twice," Meyer said.

Habitat’s board made some adjustments and arrived at the final price of $185,000 for one 1,200-square-foot, three-bedroom half of the duplex on Honeysuckle Lane last fall, Meyer said. That number included a little wiggle room for contingency costs going into the final phase of construction. Meyer added that the cost to buyers of Habitat's duplex in West End Village about seven years ago was $130,000 per side.

But Kelly was uncomfortable with the final cost of the home.

"Kat was insistent we get an appraisal because she felt the house wasn't worth it, so we obtained a third-party appraisal, and it was $215,000 even with the deed restrictions," Meyer said.

Kelly said she doesn't think her friends in the community, including an electrician who volunteered to wire the house, would have donated their labor if they had understood Habitat was going to bill her at retail rates for a portion of their work.

Meyer said it was Habitat, not Kelly, who recruited the volunteers. She added that it's within Habitat’s organizational guidelines to assign a portion of the value of skilled volunteer labor to the cost of the house to generate a sum that can be rolled into the next project.

Meyer said Gaerlan declined to sign her purchase contract for her half of the duplex in December, but Habitat remains hopeful that Kelly still can close on her half of the home.

Meyer said the board actively is working with four to six financial institutions, including banks with national affiliations, to find loans for low-income borrowers.

"I think we're very hopeful everything can workout with the Kelly family," she said. "Understanding that (mortgage) underwriting is really tough today, we want to make sure we pursue every opportunity to obtain financing for her."

In the meantime, Kelly, one of her two teenage sons and two large dogs have been living for about six months in a motel room at the Nordic Lodge, for which they are grateful.

Gaerlan has been living with her two children in a townhome that is more extensive than what they can afford, according to her mother, who has been helping her daughter keep the household together while her husband is stationed elsewhere in the military.

Gaerlan sought out the Steamboat Today for an interview at the newspaper office this week but canceled it.

"We feel fortunate to have worked alongside the numerous volunteers that help families realize homeownership and take that solidarity with us as we move forward,” she wrote in an email.

In a previous phone interview, she briefly indicated she did not think Habitat had dealt fairly with her.

Meyer said that if necessary, Habitat can draw from a pool of potential new partners who could move into the Riverside duplex. The new owners would sign a contract to contribute in-kind labor to future Habitat projects including a number of remodels planned this year through Habitat’s Brush with Kindness program and possibly a new house that could break ground in 2014. She said Kelly and Gaerlan would be reimbursed the value of upgrades for which they already have paid, like microwaves and blinds, if they don’t end up being the buyers.

"We're undaunted," Meyer said. "We'll focus this summer on (home remodels) through our Brush with Kindness program and look for land for a new project in 2014."

Kelly said she wants three things: to move into her house, to make volunteers aware that Routt County Habitat bills its partners for volunteer labor and to prevent other people from winding up in her situation.

To reach Tom Ross, call 970-871-4205 or email

Go back to article