Colorado counties raise concerns about affordable housing measure

In the run-up to Election Day, a broad group of Colorado public officials and organizations threw their weight behind Proposition 123, billed as a historic attempt to support affordable housing in the state. It promised hundreds of millions of dollars in annual funding for a variety of housing and homeless prevention efforts, available to any local government that agreed to a few key conditions.

Colorado voters passed the measure by 5 percentage points. Now local governments are eying those conditions and wringing their hands.

“I think I’m not alone in feeling that, yes, I endorsed it, yes, I voted for it. But it needs work,” said Robin Kniech, a Denver City Councilwoman.

Kniech is right that she’s not alone: Several local government officials and their representatives told the Denver Post they supported the measure because it addresses a critical issue across the state. But now that it’s passed, they’re raising concerns about requirements governing faster approval processes, consistent affordable housing growth and income requirements in a state with varying economic conditions.

The money — one-tenth of a percent of income tax revenue, projected to be nearly $300 million from 2023 onward — is a “huge step” in Colorado’s fight for housing affordability, said Kinsey Hasstedt of the housing nonprofit Enterprise Community Partners. The money can be used for a variety of efforts, including land banking for future developments; funding for new affordable units; financial help for first-time homeowners; and replacing traditional banks with an organization that gives returns back to tenants.

Much will depend on how the state agencies interpret the measure’s language in still-to-come rule-making, and several officials wondered if lawmakers will need to alter the measure via legislation in the future.

It’s unclear if and when that would happen. Daphne Gervais, a legislative and policy advocate for Colorado Counties Inc., said there was some “noise in the system” about a bill coming. But she, like others, said legislators may be wary of tinkering with something proposed and passed by Colorado voters.

Changing approach to affordable housing

Officials from across the state urged caution in condemning or coronating the measure: It passed only weeks ago, and rule-making will provide some clarity. Some of those need simple clarity. Eva Henry, an Adams County commissioner, said it’s not clear how money will be appropriated if two separate entities — like Adams County and Commerce City, for instance — partner on a project.

But other concerns get at the heart of the measure. To ensure the money is used to support affordable housing, it requires that any participating governments grow their affordable housing stock by 3% every year over a three-year period. It also requires that the approval process for certain housing developments be fast-tracked, to 90 days.

One or both of those are doable, depending on the county, officials said. Whereas a 3% growth in affordable housing may constitute thousands of units in Denver, Kniech said, other parts of the state may need only dozens. Ninety days may be manageable for governments with robust staffing, but others may need more time, and the unique complexity of individual projects makes a one-size-fits-all approach difficult to implement (the measure also provides some money to help governments staff up and meet this goal).

Overall, though, those requirements ask local governments to change how they approach housing, one expert said, and are simultaneously key to the measure’s intent and execution.

“The two things the measure are asking are the two things local governments have been doing the opposite of for decades,” said Peter LiFari, the executive director of Adams County’s Maiker Housing Partners. “My response is: Why haven’t they done that already if this is such an appealing strategic approach to our housing unit shortfall? I think what’s going on now is local governments are really starting to scrutinize (the measure).”

It’s unclear when the state’s Department of Local Affairs and the Office of Economic Development and International Trade, the agencies charged with overseeing the measure, will begin rule-making. Officials for both agencies said they’re still working out those details. The measure becomes effective Jan. 1, and money is expected to first be available July 1.

The move to opt-in, range of median incomes

The success of the measure depends entirely on local governments’ interest. If they don’t voluntarily opt-in, the money will languish. That creates an incentive for early buy-in because more funds will be available to leaders willing to jump in quickly. But it will also mean that unused money will languish, just as state leaders signal an uncertain economic future.

What’s more, the measure also requires affordable housing be pegged to median income requirements. But a universal income benchmark gives pause to resort and rural communities, officials there said, because, though they have significant housing concerns, their average income is higher than it is in Front Range communities. Gervais, of the counties organization, said the “noise” about cleanup legislation was specifically about the income requirements.

“Salaries are higher in rural, resort communities,” said Tamara Pogue, a Summit County commissioner. “Our (area median income) is higher than much of the state. … Historically, when the state has limited AMIs for projects … it actually meant rural, resorts communities can’t access the project. The way this ballot measure is drafted, it perpetuates that inequity.”

She also said that the 90-day expedited timeline may be workable in some cases. But when a proposal needs to be rezoned or the developer needs to make changes, that’s out of local authorities’ hands, Pogue said, and officials shouldn’t rush things unwisely.

She, like other officials interviewed for this story, emphasized that she was “really excited” that Proposition 123 passed. Despite her concerns, she said she supported the fast-track timeline and the measure’s intent overall.

And yet, also like other officials interviewed, she remained unsure if Summit County could make it work.

“If I thought there was a project that helped move the needle, if we can meet that criteria, then certainly. Money is money,” Pogue said. “But at this point, I’m not sure that we actually could. That’s my concern.”

For his part, LiFari, the Adams County housing official, said he was “bullish” that the measure would have buy-in and that it would be successful. He urged local governments to opt in, partially because the voters sent a message of support and partially because there aren’t any “punitive” elements, should officials fail to meet the requirements they’re concerned about.

“Opt in and we’ll work through the volatility,” he said. “Harness the spirit and get it done. That’s been my rallying cry.”

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