Denver is the best place in the entire nation to live, according to U.S. News & World Report’s inaugural “Best Places to Live” rankings. This, of course, is not news to those of us who live in Colorado, and we have seen the effects every day that reflect our rapidly growing population. In fact, in 2015 Colorado gained over 100,000 new residents, and this trend is expected to continue for the foreseeable future. While many of these new residents are locating on the Front Range, the impacts of this growth are seen throughout the state as more and more people seek Colorado as a place to live, work and play.
For some, this growth has signaled economic prosperity – employers are finding a large influx of college-educated workers, and homeowners have seen property values rise year after year by 10-12%. For others, particularly those served by Housing Colorado members, this housing boom has deepened a long-standing crisis in Colorado: escalating housing costs and a need for affordable housing that dramatically outstrips supply. In fact, one out of every two renters in Colorado spend more than 30% of their income on housing costs. One out of every four renters pays more than 50% of their income on housing costs.
Of course, booming housing markets and resulting increased demand for affordable housing options is not a unique occurrence – many other states and major metro areas have experienced the same growth as Denver and Colorado in the past. However, Colorado is at a fundamental disadvantage when compared to our peers throughout the country. We lack a permanent and dedicated source of public funding for affordable housing development. Across the country, other states have recognized the consequences of economic growth – while many benefit from appreciation of property values and increases in consumer spending, many households are left behind and forced to contend with stagnant wages and rapidly escalating housing costs.
To achieve a greater balance in the housing market and an ability to respond to these economic changes, other states have implemented strategies that include public finance tools such as real estate transfer taxes, documentary filing fees, lodging and property taxes. These sources of revenue are then dedicated to a fund specifically set aside for their purpose – funding the development and preservation of affordable housing. Unfortunately in Colorado, many of these solutions are not possible. Due to public finance policies that are unique to Colorado, many of the funding tools employed in other states are constitutionally prohibited in our state.
There are, of course, some funds available for affordable housing in Colorado – but they are always under threat to changing economic and political conditions. Federal funding to the state for affordable housing has decreased dramatically in recent years. Since 2000, funding for the HOME and Community Development Block Grant (CDBG) programs – two of two of the most important federal funding sources for affordable housing – has dropped by 59 and 49 percent, respectively. While we have seen some increases in the state Affordable Housing Grants program over the past 3 years, it has only partially backfilled the cuts to federal programs.
Colorado has had some progress in funding sources over the past two years with the reauthorization of the state’s Low Income Housing Tax Credit program which provided $5 million in both 2015 and 2016. However, this program is scheduled to sunset at the end of 2016, and there is currently efforts in the state legislature to extend this program for an additional three fiscal years. The investment in this program has been tremendously successful, and in 2015, nearly 2,000 affordable housing units were supported by the state and federal tax credit program. Even with this programs’ success, population and housing costs will continue to rise, placing more demand on limited inventory. In fact, at current production rates, it will take 100 years to close this gap.
For this reason, Housing Colorado’s top policy priority is to secure a dedicated and permanent source of revenue for affordable housing development. The consequences of inaction will affect all our communities. In fact, a recent study by the Piton Foundation estimated that there is currently a $2 billion loss in consumer spending in Colorado because households are forced to commit so much of their income to housing. This affects local business and local governments who rely on tax revenues to provide critical community services. While Colorado is an attractive place to live, businesses and industries will begin to have second thoughts when considering a relocation to Colorado – if there is not sufficient housing inventory priced at a level their employees can afford, they will choose to locate elsewhere. Colorado is at risk of no longer being a competitive state and our entire economy will suffer.
We can do more, though, and during this current legislative session we are expecting several proposals aimed at supporting a range of housing options. In addition to the extension of the state tax credit program, other strategies are also being considered. The Unclaimed Property Fund strategy involves allocating a percentage of the remaining annual Fund balance to several affordable housing programs, while the Documentary Fee proposal involves increasing the real estate documentary fee and directing the additional monies collected to a state affordable housing trust fund. In addition, a bill that would create tax deferred savings accounts for first time homebuyers is also in development. These proposals have not yet been introduced, but we are expecting to see them in the coming weeks.
As housing issues continue to dominate public discussion, Housing Colorado has created a number of resources intended to inform the conversation and guide potential solutions. Last year we launched Live Affordably Colorado, a campaign full of data and resources to mobilize our communities to take action on the current housing crisis. We encourage you to visit the campaign website, www.liveaffordablycolorado.org, and share this information with leaders in your community. Together, we can advocate for public policy that supports affordable housing in our state, and ensure that Colorado remains a great place to live and work for generations to come.
About Sara Reynolds, Executive Director of Housing Colorado:
Sara Reynolds has over twelve years in nonprofit management experience and deep connections to local officials throughout the state of Colorado. Prior to coming to Housing Colorado, Sara worked as the outreach and membership director for the Colorado Municipal League, a nonprofit representing the interests of municipal government throughout the state. Sara has held volunteer positions with various organizations including Family Tree, Inc, Mile High Montessori and Family Star Montessori and Early Head Start Center. She was recently appointed to the School of Public Affairs Advisory Board, and holds a Master in Public Administration (MPA) from the University of Colorado and is a Certified Association Executive (CAE) with the American Society of Association Executives (ASAE).