Colorado cities enroll in Prop. 123 affordable housing program

Denver, Boulder and several other local governments in Colorado have moved to enroll in the state’s new affordable housing program, despite lingering concerns that they can’t meet the requirements of a program that promises to dole out hundreds of millions of dollars in the coming years.

To get access to their share of that money, approved by voters under Proposition 123 in November, local governments must agree to grow their affordable housing stock by a total of 9% over the coming three years. That’s prompted debate over how to calculate cities’ starting points.

“I want to be building as much affordable housing as we possibly can in our community,” said Meaghan Overton, Fort Collins’ housing manager. “But I also don’t want to agree to a baseline that’s so high that we don’t have access to these really important resources in the future.”

The money is significant, projected at nearly $300 million annually, and it began to flow into state accounts on July 1. In the coming years, as much as $55 million of that will go toward homelessness services programs. Millions more will fund efforts like land banking for future developments; financing for new affordable units; programs to replace banks with organizations that give equity and returns to tenants; and financial aid for first-time homebuyers.

After the measure passed, advocates and local officials who support the program worried that cities and towns won’t be able to meet the requirements. Beyond commitments to grow their affordable housing stock, local officials in future years must also commit to expediting their approval processes.

To that end, cities like Denver and Boulder asked the state Department of Local Affairs if they can count only their regulated, deed-restricted affordable housing — units that must remain affordable for certain income levels — as their starting point.  That would exclude naturally occurring affordable housing — meaning cheaper units available on the open market — from their baseline count and make the 9% goal more manageable.

Housing groups, eager to get access to money that will help fight evictions and provide services to the unhoused, worried that if local governments didn’t opt in, nonprofits in their jurisdiction would be shut out, too. Led by the Colorado Coalition for the Homeless, several sent their own interpretation of the ballot measure to state officials and argued they should get the money even if their local government didn’t sign on.

The state agreed, clearing the way for homeless service money to begin flowing.

But the state rejected requests from local governments to count only certain kinds of affordable units, arguing that they must obey language baked into the ballot measure that encompasses both regulated and naturally occurring affordable housing.

Rebuffed, Boulder then filed a commitment to include more units in its baseline number and to build 655 more in the next three years. Denver sent their filing last week and committed to building 6,520 new affordable units by the end of 2026.

Boulder’s commitment has now been approved, along with filings from Colorado Springs, Salida, Sheridan, Hayden and Rangely. Denver is still awaiting the green light, as are six other local governments. The deadline to commit to the program is Nov. 1.

In its application to the state, Denver officials wrote that they were “concerned” that the requirements won’t “produce reasonably achievable goals.” Jay Sugnet, Boulder’s senior housing manager, said his city was similarly “concerned that we very likely will not be able to achieve” the required growth.

So why agree to take the money?

“If we don’t opt in, we’re not eligible for $290 million every year,” Sugnet said. “So it’s a significant resource, and if we don’t go after it, basically we’re not going to be able to achieve our affordable housing goals.”

Plus, he said, the penalty for not meeting the requirement is relatively minimal: Cities out of compliance will only have to miss one year of funding in the next three-year cycle. After that, they can re-apply and, if approved, the tap will begin flowing again.

That’s why housing advocates — and state officials — have urged the local governments to just jump in.

“That’s one of the beautiful parts of the law, if you will,” said Maulid Miskell, the deputy division director of the Division of Housing, which is part of the Department of Local Affairs. “It’s a more carrot than stick approach to getting local governments to opt in and comply with those increased benchmarks.”

Still, even if the penalty is minor, it’s concerning enough to local officials that some, like those in Boulder, are planning to ask legislators to change the law next year. A Denver spokesman said city officials had sought legislative changes earlier this year. Future asks will come from the incoming council and mayor. That man, Mike Johnston, was a chief proponent of Proposition 123 when he was CEO of Gary Community Ventures.

The requirements may change, but overall goal is more housing, state and local officials said.

“That’s one thing we’re all in agreement about as well: Any additional housing is built because of Prop 123 is a win,” Miskell said. “And so local governments understand that as well.”

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