Title
Affordable Housing Update 2022
Presenter:
Steve Posey, Community Development Division Manager
Peter Wysocki, Director, Planning & Community Development
Body
Summary:
Throughout 2021 and the 1st quarter of 2022, the City has considered a number of initiatives in response to swiftly increasing housing costs. The presentation today will provide a high-level overview of for sale and rental housing costs compared to household income, current development costs for multi-family housing, and a summary of various City initiatives related to maintaining or encouraging development of affordable housing in accordance with Mayor Suthers’ goal of building or preserving 1000 units of affordable housing each year.
The initiatives include development fee rebates, sales tax refund on construction materials used in affordable housing projects, Rapid Response designation for affordable multi-family projects, creation of a Housing Coordinator position in Community Development, provisions included in ReToolCOS related to affordable housing, and ongoing use of private activity bonds and Dept. of Housing & Urban Development (HUD) funds to finance new construction of affordable rental units.
The presentation includes a brief overview of the scoring metric that is used to evaluate projects for ongoing affordability and alignment with City planning documents, as well as information about a new senior rental assistance program and use to date of Emergency Rental Assistance funds made available by the US Treasury through the CARES Act in 2020.
The presentation concludes with an advance look at ‘House America,’ a nationwide challenge issued by HUD to reduce homelessness by making the best use of Community Development funding made available by the American Rescue Plan in 2021.
Previous Council Action:
N/A
Background:
Housing costs in COS continue to increase as household incomes remain flat. The average rent for a 2BR/1BA apartment has exceeded $1400 per month, an increase of 14% since 2020. Nearly half of all renter households in the region spend up to 50% of their income on housing. Rapidly increasing housing costs are particularly difficult for senior households on fixed incomes, as well as for working individuals and families.
Affordable housing development is highly sensitive to development cost increases. Colorado Springs’ developers are seeing an 18% increase in development costs over the last year. Unlike market rate projects where rents can be raised to account for higher development costs, affordable rental housing must hit rent targets to be eligible for the most common types of financing available. In a high cost environment, maintaining lower rents results in greater subsidies needed to advance a project or fewer units being developed.
Some development costs are largely immune to local intervention. The price of materials is set in global markets. The availability and cost of land is largely a free market issue. Securing timely and reliable subcontract labor is increasingly set in the context of high development activity up and down the Front Range. Focusing on development charges at the local level is one of the few tools that local governments have available to reduce costs and encourage development of new affordable units.
Financial Implications:
Year over year funding for affordable housing development and related City initiatives largely comes from federal sources. The Community Development Division administers the City’s annual allocation of grant funds from the Dept. of Housing & Urban Development, along with the City’s annual allocation of private activity bonds from the State of Colorado Dept. of Local Affairs. In 2022, staff anticipate funding the fee rebate program through a combination of issuer fees from private activity bonds and a catalytic housing grant from the State of Colorado which received approximately $550M to further development of affordable housing from the American Rescue Plan. Community Development re-purposed an existing position to create the Affordable Housing Coordinator.
Additional presentations of the Development Fee Rebate Program and the Sales Tax Refund program will be provided at a future CC Work Session and Regular Meeting.
Board/Commission Recommendation:
N/A
Stakeholder Process:
Affordable housing continues to be a topic of interest and concern across the community. As the City has responded to the challenge of rising housing costs, multiple stakeholders have had the opportunity to provide input into City initiatives. The stakeholders include the Housing & Building Association, the Affordable Housing Collaborative, staff from the Economic Development Offices at Colorado Springs Utilities and the City of Colorado Springs, the Citizen’s Advisory Committee for the Planning and Community Development Department, the City Planning Commission, and for-profit and non-profit developers.
Alternatives:
N/A
commended Action
Proposed Motion:
N/A
Summary of Ordinance Language
N/A