Colorado Proposition 123 would create affordable housing fund, decrease tax refunds
It's no secret that Fort Collins, like most of Colorado and the country, is struggling with the cost of housing.
Fort Collins' median home sales price for the first nine months of 2022 surpassed $622,000, up 16.5% from the same time last year. As the price of housing increases, so does rent. With Fort Collins median rent near $1,700 per month, renters and potential homebuyers are venturing farther from the area's employment centers in search of more affordable homes.
One proposition on the Nov. 8 ballot attempts to address the state's affordability issues.
Citizen-led Proposition 123 would create a State Affordable Housing Fund (SAHF) and dedicate 0.1% of annual state income tax revenue to affordable housing programs administered by the state Office of Economic Development and International Trade and the Colorado Department of Local Affairs.
"We know in Fort Collins it will be extremely difficult to reach our affordable housing goals with our existing resources," said Sue Beck-Ferkiss, social policy and housing programs manager for the city of Fort Collins.
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The city's goal for affordable housing continues to be 10% of total housing inventory.
"Under current regulations we have limited capacity to reach that goal, but changes recommended in the city's land use code would allow for much more housing capacity, increased density, etc.," Beck-Ferkiss said. "Additional resources would be very helpful and we are exploring ways to increase resources at the local level as well."
How Colorado Proposition 123 would work if passed
Proposition 123 does not create a new tax but would divert a small portion of the 4.45% businesses and individuals pay in Colorado income taxes to the housing fund. Because the Taxpayer's Bill of Rights, or TABOR, requires the state to refund money collected above a certain limit unless voters decide otherwise, the proposition's passage could decrease taxpayer refunds.
Based on forecasts from June, the proposition could decrease the overall amount returned to taxpayers by $145 million next year and $290 million in 2024, meaning TABOR refunds — like the $750 or $1,500 most Coloradans received this year — could be reduced by $43 next year and $86 in 2024.
In years when the state budget doesn't have a surplus under TABOR, allocating money for SAHF would decrease the amount of general fund money available to pay for education and other state priorities.
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The Colorado Legislative Council estimated $135 million would be allocated to SAHF for fiscal 2022-23 and $270 million the year after for programs including down-payment assistance, land banks, rental assistance and housing vouchers for people experiencing homelessness, and for cities to bolster their planning departments to more quickly process affordable housing development applications.
"Because of rising construction costs, labor shortages and supply chain issues, the environment for building homes and doing homeownership is increasingly challenging," said Kristin Candella, executive director of the Fort Collins Habitat for Humanity.
"Particularly as a nonprofit that is providing affordable mortgages to homebuyers, we need all the tools in the toolbox that we can get," she said. "While 123 is not a panacea, 86% of Coloradans say housing costs are an extremely serious concern."
Habitat typically pieces together a variety of grants, donations and public funding for its projects. The percentage of government funding it gets "is actually quite small compared to the cost of what we are doing," she said. "We would be eligible for these funds and would apply for them."
Candella said the movement to provide a statewide funding base for affordable housing put federal, state, local and county governments in alignment. "Citizens are asking for this problem to be solved," she said. It's a unique moment in history where there's an opportunity to create a designated source of funding "to address the issue in a variety of ways from people experiencing homelessness through homeownership."
The Fort Collins Area Chamber of Commerce also supports the measure. "Housing affordability poses a significant threat to economic vitality within Northern Colorado and across the state," the chamber said in a position statement. "Proposed structure and use of the fund provides an efficient and effective mechanism to address both needs and root causes of housing instability."
What's considered affordable housing in Fort Collins?
Affordable housing is defined as housing for renters earning up to 60% of the area median income, or homeowners earning up to 100% of AMI. For a housing unit or project to qualify as affordable housing, housing costs must not exceed 30% of the household's income.
Fort Collins' area median income, as established by the U.S. Department of Housing and Urban Development, is $75,200 for an individual and $107,300 for a family of four. One person earning 60% AMI would make about $45,120; a family of four would have an annual income of about $64,380.
If Proposition 123 passes, cities and towns that qualify for funding must commit to increasing affordable housing by 3% per year and create a fast-track approval process for affordable housing projects. Those that fail to meet their affordable housing goals will be temporarily ineligible for funding.
Who's funding Colorado Proposition 123?
Led by Gary Ventures, which donated $2 million to the effort, the measure is also backed by housing advocates such as Habitat for Humanity, Colorado Low Income Housing Campaign and Fort Collins' Bohemian Cos., which donated $250,000, according to the latest campaign finance reports.
Proponents say the measure tackles housing issues without raising taxes and gives municipalities the flexibility to respond to specific needs. Opponents say the state already spent more than $1 billion in federal stimulus funds on affordability issues, and that the proposition doesn't address the underlying causes of high housing costs and will divert money away from the state's budgeting process.
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The funds made available through the proposition's passage would be available to municipalities and nonprofits through a competitive application process.
Proposition 123 "provides lots of entry points for solutions to the affordable housing crisis the state is experiencing," Fort Collins' Beck-Ferkiss said. "They allow localities to pick which programs would be best for the conditions of that locality. It also provides some innovative strategies such as including a tenant equity vehicle, which would allow renters a mechanism to save for down payments to get into homeownership. It also calls out land banking as a strategy, which is something Fort Collins has been a leader on. We are open to exploring anything that would move the dial."
Programs that would be created by Colorado Proposition 123
Land Banking: Funds would help Colorado government entities buy land for affordable housing development.
Affordable Housing Equity: Invests in new and existing low- and middle-income, multifamily rental units. Provides renters living in the units for at least a year a share of the money made on the development, called a tenant equity vehicle. The money can be used for the future purchase of a home, such as a down payment.
Concessionary Debt: Finances new and existing low- and middle-income multifamily rental units and projects that qualify for federal low-income housing credits, and modular and factory-build housing manufacturers.
Affordable Home Ownership: Down-payment assistance for first-time homebuyers. Makes grants or loans to nonprofits and community land trusts to support homeownership and to mobile home owners associations to help purchase mobile home parks.
Homelessness: Provides rental assistance, housing vouchers and eviction defense to people experiencing or at risk of experiencing homelessness. Makes grants or loans to support new and existing supportive housing for people experiencing homelessness.
Local Government Capacity Building: Provides grants to local governments to support their planning departments in processing land-use permit and zoning applications for housing projects.
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Who's for Colorado Proposition 123?
Yes on Prop 123 is endorsed by more than 175 community leaders and organizations, including Bohemian Cos., Fort Collins Area Chamber of Commerce, Caring for Colorado, Children’s Hospital Colorado, Civitas Resources, Colorado Association of Realtors, Colorado Bankers Association, Colorado Hospital Association, Community Investment Alliance, Colorado Municipal League, Colorado Nurses Association, Community First Foundation, Habitat for Humanity of Colorado, Housing Colorado, Mercy Housing, NAACP-Colorado, Progressive 15, Urban Land Conservancy and Vail Valley Partnerships.
Who's against it?
There are no committees formed to formally oppose the measure. Michael Fields of Advance Colorado Action said, "There is nothing 'affordable' about taking $300 million of our TABOR tax refunds for a flawed housing measure. To fix our state's housing crisis, we need to build more, not tax more. Coloradans are struggling — and they want their full TABOR refund in upcoming years."
Natalie Menten, TABOR Foundation board member, said, "If this passes, the number on that TABOR refund check is going to be smaller. And potentially in some years, there won't be a check coming to you because this will take all of it. ... Many of us don't want to live in downtown. But what this measure is driving us to do is get more high-density housing and that is not what I want to see more of, frankly."
*Source: 2022 Colorado Blue Book and Ballotpedia
This article originally appeared on Fort Collins Coloradoan: Colorado Proposition 123: Get to know the affordable housing measure
