Colorado officials tasked with helping create affordable housing options for the state’s fast-growing population know they’re facing a chasm of need as deep as Grand Lake.
About 280,000 Colorado households put at least 50 percent of their income toward their housing, according to Colorado Department of Local Affairs, an arm of state government that includes the Division of Housing. By federal standards, those people are considered severely cost-burdened, meaning that the amount they pay to keep a roof over their heads damages their ability to buy food, pay for medical care and provide other necessities for themselves and their families.
The U.S. Census Bureau put the average Colorado household size at 2.55 people, meaning roughly 714,000 Coloradans live under such conditions. That’s more than one out of every 10 people. The doesn’t even account for the thousands of additional people dedicating at least 30 percent of income to housing, the federal threshold for being cost-burdened.
“I think definitely, this is a stability factor for many families around the state,” Division of Housing director Alison George said last month.
In 2019, the Colorado General Assembly made it clear it recognizes the problem and its members voted to allocated millions in fighting back, not just in 2020 or 2021, but every year going forward.
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Three bills passed in the 2019 session that will pump significant funds into the state’s affordable-housing war chest, which at its peak will amount to $82 million annually for a few years. “]
House Bill 1245 promises to have the most profound effect of the three. By reworking the state sales tax rules in a way that caps how much revenue retailers get to keep as a collectors’ fee, the bill is expected to push up to $50 million per year into the state’s housing development grant fund. The bill is designed in a way that allows smaller business to keep more revenue than before, while larger companies, those doing $15 million per year or more in sales, pay toward housing.
“What 1245 was all about for me is I wanted to bring serious funding to affordable housing and housing construction,” said Rep. Mike Weissman, the bill’s architect and co-sponsor. “It is designed to be that permanent source of funding. It needs to be commensurate with the size of the problem.”
The Democrat lives in East Aurora, an area he said for a long time was a working-class place where young families could buy a home for under $200,000. Zillow still features a number of listings in the east metro city around that number but the median listing price in the city has jumped more than $120,000 in the past four years to hit $361,000.
“I’ve seen my community become less affordable. I’ve seen the difficulty that imposes on residents to remain a part of the community and to keep up with the rising cost of housing and balance that with all the demands of life,” Weissman said. “I know that problem is going on all around Colorado as well. ”
He noted that many other states — as close by as Nebraska and as far off as North Carolina — have trust funds dedicated to affordable housing. It was time, he said, for Colorado to follow suit and create an ongoing revenue stream. A study released last year put Colorado’s housing stock at 32,000 homes and apartments short of demand, a deficit expected to inflated prices for years to come until it is corrected, according to researchers.
“We didn’t get here in one year, and we won’t get out of here in one year,” Weissman said.
While some of HB 1245 funding will be diverted in the first two years, another bill, House Bill 1322, is expected to bridge the gap and then some. The bipartisan piece of legislation will tap an existing state trust fund — the unclaimed property fund — to transfer $30 million each year for three years into DOLA’s housing development grant fund starting in fiscal year 2020-2021.
The bill’s sponsors included Rep. Perry Will and Sen. Don Coram. Between them, the two Republicans represent a wide swath of the Western Slope, demonstrating that affordable housing is not just a problem in Colorado’s big cities and resort towns.
Combined, HB 1245 and HB 1322 are expected to pump $77 million in new funding into the division of housing by fiscal year 2021. Now, the division takes in $24.5 million per year in state funding for its housing development grants and $13.5 million annually in federal funds for affordable housing. That total supports the creation of around 2,800 units of affordable housing per year, according to division officials. With an additional $77 million at its disposal, the division is expected o spur development of another 3,500 to 6,500 units each year.
“We can use this money for everything from emergency shelter and homelessness prevention to down payment assistance,” said George, the division’s director.
George and colleagues from the DOLA set out earlier this summer on listening tour, stopping in places across the state to hear directly from residents, school districts and other groups about the chief housing needs in their communities. The tour came to Denver last week after stops in Grand Junction, Durango, Pueblo and Bent County in the southeast part of the state. Future stops include a Sept. 23 meeting at the Summit County Community and Senior Center in Frisco.
“I think what has been overwhelming to me is the diversity of support for affordable housing options,” George said earlier this summer. “When we went to Grand Junction, we had people from all different community interests, from Realtors to multifamily owners to homeless service providers to county commissioners to housing authorities, to domestic violence shelter providers.”
The division earlier this month signed off on a contract to open a 100-bed homeless shelter in Pueblo, according to Natriece Bryant, deputy executive director of DOLA.
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The Division of Housing is not the only agency in the state that received a boost from the legislature last session. House Bill 1228 doubles the state’s allocation to its affordable housing tax credit program to $10 million starting in 2020 and stretching through 2024.
Those tax credits are awarded by the Colorado Housing Finance Authority. The way the credits work is developers apply for them and, if awarded credits from the limited pot, sell them to investors, infusing capital into their projects needed to get them built.
The state’s credits are typically paired with federal 4 percent low-income housing tax credits. When combined the two funding mechanisms can support up to 45 percent of the cost to build an affordable rental project, according to CHFA statistics. Any project that uses federal tax credits for financing has to have an average rental cap that makes them affordable to people making 60 percent of the area median income.
The tax credits program has always had more need than supply, said Jamie Gomez, CHFA’s chief operating officer. Since the state launched its program in 2015, it has supported the creation of more than 6,000 affordable rental units in the state. With the boost of HB 1228, that number should rise substantially.
“We feel like based on the increase, we’ll be able to support an additional 1,000, maybe 1,100 units per year, Gomez said.
The Denver Housing Authority has frequently been awarded state and federal credits through CHFA. Workforce housing developments in Denver’s Sun Valley and Curtis Park neighborhoods have used the credits. DHA is nearly done with an overhaul of its 68-unit Platte Valley Homes project at 3058 Champa St., which used $585,000 worth of state credits in its financing.
“As housing leaders, the community is rightfully looking to us and asking if we are doing all we can to create and preserve affordable, accessible housing for seniors, families, and individuals struggling to make ends meet,” DHA executive director Ismael Guerrero said in an emailed statement earlier this summer. “Expansion of the state’s affordable housing tax credit is a great example of how we are meeting the challenge.”
For Rep. Shannon Bird, the Westminster Democrat who co-sponsored HB 1228, the legislation and other bills aimed at boosting affordable housing have multiple benefits for Coloradans and the state at large. It stabilizes communities, allowing people like a divorced teacher she recently met in her district to stay in place rather than having to move in search of affordable housing. Furthermore, it supports economic development by ensuring employers can find workers they need to do business here.
“In a good, strong economy, employers tend not to want to locate in places where their employees cannot live close by,” she said. “It’s a good driver for economic development and keeping a statable workforce.”
