Colorado housing crisis: Leaders to promote density over sprawl and single-family development

Colorado’s housing crisis is now such that even people making above-average salaries are struggling to rent or buy at rates they can afford. State lawmakers appear mostly united on at least one way the state should address this problem: embracing density over sprawl and single-family development.

In the coming legislative session, which begins Jan. 12, lawmakers plan to create incentives for developers and local governments around the state to prioritize dense, multi-family housing as a means of promoting relative affordability in a state where home prices have risen at least 457% in three decades.

It’s not about density for density’s sake, they say.

“For a number of reasons, everything from just the pure cost of land to tap fees to the inefficiency one house at a time gets you, building taller and denser makes more sense in terms of the math of trying to finance these projects and actually make them happen,” said state Sen. Julie Gonzales, a Denver Democrat and vice chair of a legislative task force on affordable housing that is wrapping up its study now.

State government won’t command change at the local level; even if it were so motivated, the legislature could not abolish single-family zoning without inviting lawsuits centered around local-control laws.

But it does plan to encourage some change. Colorado leaders have set aside 10% of the historic $4 billion it’s received in federal stimulus money — a total that represents about ten times the amount of discretionary spending lawmakers generally get to make in a given legislative session. And much of that money set aside for housing is primed to go toward grants and low-interest loans meant to encourage developers and cities to build or preserve affordable units.

The definition of affordable is somewhat flexible in this case. Colorado’s got an estimated shortage of more than 100,000 units for people at the lowest end of the income scale, but lawmakers appear just as — if not more — focused now on people who earn average or slightly above-average salaries, and who cannot afford to live where they work.

“Nurses, firefighters, teachers,” said Brian Rossbert, executive director of the nonprofit Housing Colorado, and the chair of a panel that’s been advising the legislative task force on affordable housing. “Across the housing spectrum and across income levels there is a need for more housing, for more units to be built and a need for units to be preserved as affordable.”

How might Colorado incentivize housing density?

How precisely the legislature will spend on this priority isn’t clear yet. Early proposals suggest as much as $208 million on loan funds meant to achieve goals including helping developers build new affordable units and assisting in the purchasing of units that can be preserved as affordable. The task force has also explored spending up to $164 million on nonprofit and local government grants. These and other possible spending plans for 2022 have the potential to either create or preserve more than 250,000 housing units in the state over the next 15 years, the task force estimates. That’s about a tenth of the total existing housing stock in Colorado as of 2019, according to the U.S. Census Bureau.

That density is a critical tool in this push is not a controversial idea, said Republican state Sen. Dennis Hisey of Fountain, who serves on the legislative task force.

“I found it to be less partisan than I expected,” he said of the task force’s work. “Everybody knew of a problem somewhere. Nobody is insulated from this. It doesn’t matter your district.”

Hisey said there’s also been broad support for the plan to nudge municipal leaders — the people who approve zoning changes and development proposals — to embrace density as a means to greater affordability.

“Yes, the local folks are going to have to do their part,” he said. “Are we going to try to push on that? Well, the easiest way to do it in the short term, given home rule and local authority that we believe in, would be to tie the money to some sort of non-exclusionary policies.”

That is, Hisey said, policies other than single-family development.

As a former county commissioner, however, Hisey knows well that this is often a touchy topic at the local level. People who live in single-family zones often resist affordable housing. Kurt Firnhaber, housing director for the city of Boulder — where even small proposed affordable developments can generate massive backlash from homeowners — sees this regularly.

“We may know what the right approach is from an affordability standpoint and from a climate standpoint, but if the politicians can’t get the community to go along with that, it’s just not going to happen,” he said.

Firnhaber added that the state setting a standard would help local officials like him advance their affordable housing goals.

Where will the new affordable housing go?

Colorado has already been experimenting with incentives for affordable housing development, including through the passage of two new laws in 2021. There’s more appetite for planning and incentive grants than the state can keep up with, Andy Hill, community development officer for the state’s Department of Local Affairs, told the task force last month.

“It’s exciting. We’re at the point where right now we have accepted letters of intent for frankly more money than we have in the fund. But that’s a good problem,” Hill said.

Firnhaber said developers will be interested, too.

“The finance metric of the project just works better when you can add the density,” he said.

Paul Weissman, an affordable housing developer with the firm Lument and a member of the panel advising lawmakers, said it would be unsurprising if these incentive programs end up creating more units in places where political will exists to welcome in people of diverse income levels.

“I think it’s probably reasonably accurate that, say, Greenwood Village or Cherry Hills Village are not the likely places where you’ll see a lot of affordable housing development,” he said. “What I do feel confident about is that these dollars will be spent and will create more affordable housing. There may be communities where you don’t see as much development as you’d like to see.”

Weissman grew up in Boulder and said he’s seen firsthand what a tough sell affordable housing can be, even when there’s money available to create or preserve it.

“Where is affordable housing most acutely in need? San Francisco, Los Angeles, New York, Denver, Seattle. There’s sort of this irony that very liberal communities seem to have the most difficulty providing housing for poorer people despite saying that they want to do that,” Weissman said.

One notable Boulder resident, Democratic Gov. Jared Polis, hasn’t been shy in the past about calling for policies that promote affordability. Early in the pandemic he criticized his own city, among others, for strict occupancy rules that limit how many unrelated people can live together. He supports removing zoning and regulatory barriers than keep low- and middle-income people out.

In the upcoming session, Polis spokesman Conor Cahill said, “The governor looks forward to working with anyone on solutions that ensure we are increasing housing supply and cutting red tape to adjust to the growth our state has seen.”

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