DENVER — All across the Denver skyline, construction cranes dot the landscape. Work is well underway on new offices, new apartments and new housing projects.
About 40 minutes away in Castle Pines, new neighborhoods are popping up along I-25 as the state and local communities work to accommodate all of Colorado’s population growth.
Despite all the construction, though, the state is still facing a serious housing crunch. During the last legislative session, lawmakers dedicated hundreds of millions of dollars to try to address the problem. Now, voters will have a chance to weigh in as well.
Affordable housing crunch
While the COVID pandemic highlighted Colorado’s affordable housing program and even exacerbated it, policy experts say it did not create the problem.
Mollie Fitzpatrick, the co-founder and managing director of Root Policy Research, says the housing crunch began during the Great Recession.
“In the economic recession, 2007 to 2010, we really stopped building. We built almost nothing in those years,” Fitzpatrick said.
Root Policy Research is a local economic and policy firm that works with local governments to understand their housing market, what’s working, what’s not working and how to strategize policy interventions.
Between 1995 and 2005, Fitzpatrick says the state built around 40,000 housing units per year. Currently, though, the state is only building 27,000 units per year. However, the state’s population is growing much more rapidly than during previous decades.
“We are not building enough housing to keep up with both our population growth or our job growth,” Fitzpatrick said. “In Colorado, we are certainly at a peak point of need.”
Affordability has also become a major issue, with housing prices significantly outpacing income and wages.
All across the state, more housing projects are being built. However, the construction projects that are going up are not necessarily affordable for families.
Because of that, housing affordability is not only affecting lower-income families, but also people with moderate income levels.
“What we are building is at the higher end of the market. So, we're not meeting the needs of folks that are either trying to get entry-level kind of ownership housing, that kind of first-time buyer option, nor are we getting residential rental construction that really meets the needs of the incomes that people have,” Fitzpatrick said.
She believes housing solutions need to be local since each community is facing its own set of unique challenges but insists state strategies can play an important role as well.
For a true solution, Fitzpatrick says there needs to be regulatory reforms and an increase in housing supply.
What Proposition 123 does
Proposition 123 would dedicate 0.1% of the state’s income taxes each year for affordable housing projects. It would not raise income taxes in the state, however it would likely result in fewer TABOR refunds for taxpayers.
The money would be used in six ways:
- To provide grants to local governments and nonprofits
- To offer assistance for developing affordable, multi-family rental housing
- To create equity investments in affordable housing projects
- To offer home ownership and down payment assistance programs
- To address homelessness through rental assistance and eviction defense
- For local government planning and zoning support
The Office of Economic Development and International Trade, as well as the Colorado Department of Local Affairs, would oversee the programs and funding.
The ballot initiative is expected to raise $145 million in budget year 2022-2023 and $290 million in budget year 2023-2024.
In exchange for the funding assistance, local governments would have to guarantee a 3% bump in affordable housing each year and a 90-day fast-track permit approval process for these projects.
For a housing unit to be considered affordable, housing costs must not exceed 30% of a family’s income.
Right solution, right time
For supporters of Proposition 123, this is a unique opportunity for the state to be a national leader in affordable housing funding.
“We believe that safe, stable and healthy communities are built on the foundation of housing,” said Brian Rossbert, the executive director of Housing Colorado.
It is one of dozens of organizations supporting the ballot initiative and the potential it could create for the state.
Rossbert believes the funding would pick up where the legislature and federal government’s one-time funding left off this year and would move some of their innovative concepts forward.
“We're trying to come up with a solution that will build 10,000 homes a year, that over the course of 20 years could really get a huge dent into our housing deficit,” he said.
The Colorado Realtors Association is one of the groups supporting this ballot initiative. Elizabeth Peetz, the vice president of government affairs, says realtors have seen firsthand how difficult it is for families to break into the housing market.
“We are one of the worst states in the country in terms of affordability,” Peetz said. “If we're going to turn the tide and help build the inventory that is gone, we need to spend on the entire housing continuum.”
Along with trying to save up for a proper down payment, Peetz says first-time homebuyers are also competing with wealthier buyers. In fact, the National Association of Realtors estimates that 14% of the housing market is made up of out-of-state investors.
The housing affordability crunch also has a disproportionate impact on some communities.
“We know there is a huge disparity and racial gap in homeownership and wealth generation. Most people's biggest asset of their lives is their home, and we're leaving a significant portion of the Colorado population behind,” she said.
Peetz worries that without serious investments in affordable housing, Colorado stands to lose its low- and middle-income workforce.
She is most excited about the opportunities this measure has the potential of providing for families with down-payment assistance.
“As you're renting, you are able to save and get some of the equity of renting to prepare you to get that down payment to get home ownership in the future,” Peetz said.
She doesn’t believe this measure will solve all of Colorado’s affordable housing needs, but she believes it is an important step in the right direction.
A toll on TABOR
While proponents of the ballot measure insist it is not a tax increase because it doesn’t change the state’s 4.55% income tax rate, opponents say it might as well be.
That’s because the measure could result in smaller TABOR refunds for taxpayers. As a reminder, TABOR refunds are excess revenue that the state collects in any given year above state limits and must return to taxpayers in some form.
This year, taxpayers were sent $750 checks starting in August for their tax refund. According to nonpartisan legislative staff, Proposition 123, if passed, would result in taxpayers receiving $43 less in TABOR refunds on 2023 and $86 less each in 2024 based on current state projections.
Former Colorado state lawmaker and current chairman of the TABOR committee Penn Pfiffner says families are already struggling with high costs and this is just another burden for them to bear.
“Families are going to be facing higher taxes, they're facing higher food budgets, their gas prices are going up, they're sitting around their family table worrying about their family budget,” Pfiffner said. “And they (proponents) want to just swipe any or all of a TABOR rebate that the family might count on next year.”
Pfiffner says by passing this initiative, the state is putting housing at the top of the priority list over other priorities like public safety, education and even wildfires.
He also says the state and federal government have dedicated hundreds of millions in resources to affordable housing.
“The proponents have acted as if this is the first dollar that goes to affordable housing. They have just completely ignored the fact that there are lots of programs,” he said.
More than $1 billion in federal stimulus funds have already been allocated in recent years. Pfiffner questions why spending more money on the problem would fix things if the massive state and federal investments have not.
Instead, he would like to see the state better prioritize its current spending.
“The other is to recognize that there are ordinances at the local level, there are laws, which create a lot of expense in developing housing. We know that if you remove a great deal of that unnecessary regulation, that you'll be able to get housing faster, less expensive,” Pfiffner said.
Opponents also say these programs will not address the underlying causes of high housing costs and that pumping money into the market will only distort it further, so the only real beneficiaries will be landlords and housing developers.
For Pfiffner, the bottom line is that this burden shouldn’t result in lower TABOR refunds for taxpayers.
“Families should hang on to that money, not just say, well, let's see if we can toss it in that direction, and have anything good happen,” he said.
An Affordable Housing Story
In a neighborhood across the highway from Elyria-Swansea, Quana Madison and Zach White’s story is like a lot of Colorado couples'.
“I've lived with friends, we were living in rentals that we're being priced out of,” Madison said.
Madison is an artist and White manages a screenprinting shop in Denver. The couple had been working for a while to save up to buy a home but was never able to get enough for a down payment.
“The home valuation has been increasing faster than it's possible to save for us. So, we've basically been falling farther and farther behind in that race,” White said.
With rent continually rising, there were even times the couple says they debated between making a rent payment, buying food or paying for their health care. Like many in the metro area, each time their rent went up, they found themselves packing up and moving to an apartment where they could either pay the same or a little less.
Despite this, they don’t consider their situation unique at all for low- or even middle-income Americans.
It was only through a Habitat for Humanity program the couple applied for that they were finally able to buy a house of their own.
“Honestly, I don't think we ever thought it was even going to be possible to buy a home given the average home price in Colorado is like $500,000,” Madison said.
The couple loves their new neighborhood and the fact that some of their neighbors were also recipients of that same program. However, Madison and White know that not everyone qualifies for that program and the nonprofit can only help so many families buy homes.
They support Proposition 123 because they see it as a long-term solution that will open up funding opportunities for other families like them.
“I think that we're definitely going to lose a lot of amazing families, individuals, community members, if we don't handle the affordable housing crisis in the state,” Madison said.
You decide
The affordable housing crunch wasn’t created in a day or even a decade. It also won’t be solved overnight.
In November, voters will have the chance to determine how much of a priority they want to place on affordable housing solutions in the state and whether they are willing to put their money where their ballots are.
MORE:
Amendment D
Amendment E
Amendment F
Proposition FF
Proposition GG
Proposition 121
Proposition 122
Proposition 123
Proposition 124
Proposition 125
Proposition 126
Full ballot guide
Ballot questions
Candidates
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