HB21-1271: Incentivizing Affordable Housing Development

Bill Sponsors

• Rep. McCluskie

• Rep. Jodeh

• Sen. Gonzales

Overview

The housing crisis is impacting all of corners of Colorado. In 2018, Shift Research Labs identified that the primary challenge to affordability is housing supply. This is a problem for employers seeking to locate in Colorado and retain top talent, our civil servants, our aging seniors, and our young professionals who are the lifeblood of Colorado’s future economy as they grow their families.

In order to meet the demand, Colorado needs over 200,000 additional affordable rental units. In July 2020, 12% of the active for-sale listings were under $250,000; whereas 52% of the active listings were over $500,000. In Colorado, home prices grew faster then median household incomes resulting in one of the top five worst gaps in the country. The median home value of a single-family home in Colorado is $418,363. To purchase a home, a household would need to earn a minimum of $100,000. In every community around the state, teachers, firefighters, nurses, restaurant managers, city workers – the people who help make our communities safe, healthy, and thriving – cannot afford a decent place to live.

We need to acknowledge the barriers that are impeding affordable housing development and support local governments to overcome some of those barriers. Construction costs, regulations, permitting fees and delays in the approval process all decrease the speed of producing new housing and increase the costs of producing affordable housing that Coloradans desperately need.

Why this legislation is important

HB21-1271, by Reps. McCluskie and Jodeh and Sen. Gonzales, supports and incentivizes local governments to remove barriers and adopt best practices for affordable housing development. It creates 3 different programs in the Department of Local Affairs (DOLA) to promote innovative solutions to the development of affordable housing across the state. Together, the programs provide for $13 million in state stimulus funds to jump start development in the next three years.

• The Affordable Housing Guided Toolkit and Local Officials Guide helps local governments develop an overall affordable housing strategy.

• The Planning Grant Program awards local governments funding for assistance to adopt qualifying land use strategies including a needs assessment, reviewing model land use codes, or making investments in its community that would enable the local government to be competitive in applying for a housing development incentives grant.

• The Housing Development Incentives Grant supports local governments to adopt effective tools to spur housing creation. The menu of strategy options is broad enough that any community can be successful in finding the right mix of strategies that fit its community, or the local government may introduce its own innovative or unique approach.

Under the housing development incentives grant, DOLA will develop a menu of policy and regulatory tools that local governments may adopt to spur affordable housing development within their boundaries or across their region. At a minimum, this menu of options includes the list below. DOLA may also add to the list and allow for a local government to propose an idea not included on the list. Local governments must include at least three options in their grant application, and DOLA has the discretion to include the work the local government has already underway and their ongoing commitment when evaluating their grant application.

Menu of Policies and Tools

LAND

• The use of vacant real public property within the local government for development of affordable housing.

• The creation of a land donation or land banking program.

PERMITS

• The creation of a program to subsidize or otherwise reduce local development review or permitting fees for affordable housing development.

• The creation of an expedited development review process for affordable housing aimed at households with an annual income at or below 120% of the AMI in the county in which the housing is located.

• The creation of an expedited development review process for acquiring or repurposing underutilized commercial property that can be rezoned into affordable housing units, including the preservation of existing affordable housing units.

• The establishment of a density bonus program that ensures that at least 30% of the units constructed are affordable for persons in households with an annual income at or below 50% AMI in the county in which the housing is located.

• The establishment of a density bonus program that ensures that at least 30% of the units constructed are affordable for persons in households with an annual income at or below 120% AMI in the county in which the housing is located.

UTILITIES/INFRASTRUCTURE

• With respect to water utility charges, the creation of processes to promote the use of sub-metering of utility changes for affordable housing projects and the creation of expertise in water utility matters dedicated to affordable housing projects.

• With respect to infrastructure, the creation of a dedicated funding source to subsidize infrastructure costs and associated fees.

ZONING

• Granting duplexes, triplexes, or other appropriate multi-family housing options as a use by right in single-family residential zoning districts.

• The classification of a proposed housing development as a use by right when it meets the building density and design standards of a given housing district.

• Authorizing accessory dwelling units as a use by right on all parcels containing single-family residences.

• Allowing planned unit developments with integrated affordable housing units.

• Allowing the development of small square footage residential unit sizes.

PARKING

• Lessened minimum parking requirements for new affordable housing developments.

DOLA will have the authority to spend the $13 million in funding over the next three years and provide a report back to the legislature on the success of all three programs along with recommendations for future statewide policy efforts.