The money will go toward second mortgages for buyers to make up the gap between what they can afford and the cost of entry-level houses in the area. The money is expected to help 20 or more families get into homes.
BP, a global energy company, is the area's leading natural-gas producer.
"We're a good neighbor. This is one of the things you do when you operate in a community," said Curtis Thomas, director of government and public affairs in the Rockies for BP.
The mortgage program will be targeted at families that make between 80 percent and 125 percent of the area's median household income, or $49,900 to $78,000 for a family of four.
The second mortgages, which require no monthly payments, will cover as much as $50,000 of the price of the home. When the home is sold, part of the appreciated value goes to the seller and part goes back into the fund to offer assistance to other families.
The program will be administered by the RHA, a governmental entity created by the county, the city of Durango and the town of Ignacio to work on affordable housing - an issue that has moved to the forefront of public concern in recent years as home prices have skyrocketed, outpacing local wages.
Julie Levy, RHA programs manager, said entry-level homes in the area go for about $170,000 for a studio or one-bedroom, $210,000 for a two-bedroom and $260,000 for a three-bedroom.
Though prices remain high, the market has softened in the last year, expanding the pool of entry-level homes, Levy said.
"It's impeccable timing," she said.
Though few disagree that affordable housing is a pressing issue, various elected officials have expressed frustration in recent months with a lack of tangible progress on it. But this week, advancement was clear as BP announced its contribution and Durango Mountain Resort divulged that its program to help employees buy homes was nearly final.
The more than $420,000 available to DMR employees, who also will be provided with second mortgages, comes from a fee that developers are charged at the time a building permit is issued. It's just one way the resort said it is addressing work-force housing.
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Prospective buyers under both programs must go through the RHA's nine-hour homebuyer-assistance program, which helps prepare families for homeownership by providing information about budgeting, improving credit and qualifying for a conventional mortgage.
Levy said BP's contribution represents a big step toward the RHA's goal of raising $10 million by 2011 to help families buy homes.
"I think BP is really interested in the future of our community," she said.
Levy added that Peter Werwath, vice president of nonprofit Enterprise Community Partners based in Maryland, had provided crucial technical assistance in establishing the mortgage programs.
La Plata County Commissioner and RHA Board Member Joelle Riddle said discussions with BP had originally focused on a land donation for affordable housing but later switched to a monetary contribution.
"We had some really willing partners at BP," she said. "Really, it's one of the first big funding opportunities we've had through the RHA."
She said she hopes other contributors will follow.
