Housing Advisory Committee Retreat. Monday, January 9, 2017

Transcription

1 Housing Advisory Committee Retreat Monday, January 9,

2 Agenda I. Introductions (1:00 1:45pm) II. Welcome from Mayor Michael Hancock (1:45 1:55pm) III. Background on affordable housing in Denver (1:55 2:40pm) IV. Overview of Committee s role in shaping housing programs (3:00 3:45pm) V. Formal structure of the Committee (3:45 4:30pm) VI. Next steps (4:30-4:50pm) 2

3 Background on OED OED facilitates the development of inclusive communities through investments in key programs: Fostering a thriving business environment through business recruitment and expansion, minority and women owned business certification programs, and technical assistance to entrepreneurs Developing a skilled workforce through job training, apprenticeships, and educational programs in Denver s growing advanced manufacturing, information technology, and health care sectors as well as other skilled trades Expanding affordable housing options for low and moderate income families in Denver through investments into new construction and preservation of affordable housing, land acquisition for future housing development, and programs to help families access or maintain housing Creating sustainable neighborhoods by expanding access to healthy foods and other amenities that increase a household s economic mobility 3

4 NEED FOR AFFORDABLE HOUSING IN DENVER 4

5 Denver s rising housing costs Growth in Housing Costs vs. Income (Denver County , Indexed to December 2011) 2.00 median home price (condo) median home price (SFR) median rent median income Source: American Community Survey 1-Year estimates; Apartment Association of Metro Denver vacancy Survey 5

6 Need for affordable housing 2016 Area Median Income (AMI) =$56,100 (one person) A single parent working 45 hours/week at minimum wage x 30% x 50% x 60% x 80% $16,850 $19,250 $21,650 $24,300 $28,050 $32,050 $36,050 $40,050 $33,660 $38,460 $43,260 $48,060 $44,900 $51,300 $57,700 $64,100 Two parents each working full time at minimum wage 6

7 Need for affordable housing 60% median income Bus Driver Pharmacy Technician Affordable 1BR Rental Home $901 Median Denver 1BR Rental $1,229 ($33,600) Veterinary Technician Cabinetmaker 80% median income Chiropractor Kindergarten Teacher Affordable 1BR For-Sale Home $169,084 Median Denver For-Sale Condo $299,083 ($44,750) Locksmith Reporter Source: Bureau of Labor Statistics Occupation and Employment Statistics; Apartment Association of Metro Denver Quarterly Rent and Vacancy Survey; Denver Metro Association of Realtors Market Trends Report 7

8 Need for affordable housing 60,000 50,000 40,000 30,000 20,000 33,000 29,000 10,000 0 <$20,000 $20,000- $34,999 19,000 $35,000- $49,999 13,000 $50,000- $74,999 6,000 >$75,000 Not Cost Burdened Cost Burdened (Spending more than 30% of income on housing) 30% AMI 60% AMI 80% AMI 100%+ AMI 8

9 Need for affordable housing The January 2016 Point-in- Time (PIT) Homeless count identified 3,600 homeless individuals in the City of Denver, about 65% of all homeless persons in the region. Approximately 550 were chronically homeless, meaning they experience repeated episodes of homelessness. 9

10 PUBLIC AND PRIVATE HOUSING PARTNERS 10

11 Financing affordable housing To build a new housing unit, the developer raises money from investors and lenders to finance construction If the new home is a market-rate home, the money paid by the renter or new homeowner is enough to pay back the investors or lenders. 11

12 Financing affordable housing To build a new housing unit, the developer raises money from investors and lenders to finance construction If the new home is a market-rate home, the money paid by the renter or new homeowner is enough to pay back the investors or lenders. If the new unit is an affordable home, it costs the developer the same amount to build. But the renter or owner pays only what they can afford. That s usually not enough to pay back the investors or lenders. In most cases, the public sector needs to help out to make it feasible to build affordable housing. 12

13 Partners in addressing housing needs Many partners come together to make affordable housing possible including multiple city agencies, state and federal partners, housing and real estate stakeholders, finance experts, and the general public. Key partners in providing affordable housing include: Public and Quasi-Public Partners - Community Planning and Development (CPD) - Mayor s Office of HOPE - Budget and Management Office (BMO) - Denver s Road Home (DRH) - Denver Housing Authority (DHA) - Denver Urban Renewal Authority (DURA) - Colorado Housing and Finance Authority (CHFA) - Colorado Division of Housing (CDOH) - U.S. Department of Housing and Urban Development (HUD) Private Partners - Non-profit affordable housing developers - For-profit affordable housing developers - Private sector real estate professionals - Financial institutions - Philanthropic institutions 13

14 Financing affordable housing Total project cost 9% Low Income Housing Tax Credits Federal, State and Local Funds Denver Revolving Affordable Housing Loan Fund (RAHLF) State Low-Income Housing Tax Credits 4% Low Income Housing Tax Credits In a typical affordable rental housing development, the majority of capital comes from debt and federal Low-Income Housing Tax Credits (LIHTC). Non-profit and for-profit developers can raise debt from banks or other financial institutions LIHTC are allocated by CHFA for all projects in Colorado 9% LIHTC provide equity for about 70% of project costs, and are allocated once per year in a competitive process. Private Debt Private Debt 4% LIHTC provide equity for only about 30%-40% of project costs, but they have a rolling application and are non-competitive. Affordable projects that receive either type of LIHTC still need additional gap financing to have enough capital to build affordable units. Both 9% and 4% LIHTCs serve households up to 60% AMI 14

15 RESOURCES FOR HOUSING INVESTMENT 15

16 OED resources for affordable housing OED spends federal and local resources on affordable housing development, preservation and programs. Key funding sources in providing affordable housing include: Federal housing resources - Community Development Block Grants (CDBG) - HOME funds - Housing Opportunities for Persons with AIDS/HIV (HOPWA) funds - Emergency Solution Grant (ESG) Local housing resources - (Historical) One-time general fund transfers helped seed Denver s Revolving Affordable Housing Loan Fund - $150 million dedicated local funds 16

17 OED resources for affordable housing Typical annual resources for housing development, preservation and programs Funding source Typical uses Amount CDBG funds available for housing Land acquisition, preservation, programs $2.00 million HOME funds Development, preservation, programs $2.00 million HOPWA funds Programs $1.50 million ESG (Administered by DHS) Programs $0.55 million Dedicated local housing funds (average) Land acquisition, development, preservation, programs TOTAL ~$15.00 million $21.05 million Additional one-time federal or local funds may be used for housing investments as available. 17

18 OED resources for affordable housing $12,000,000 Federal Resources Average Denver Rent 1400 $10,000,000 $8,000,000 CDBG* average Denver rent $6,000,000 HOME 1000 $4,000, $2,000, $ *Represents the City of Denver s CDBG allocation, some of which is not available for affordable housing investment. CDBG funds can also not be used for new construction. 18

19 Background on Denver s dedicated fund Property Tax * 0.5 mill for year one $6.5 million in year one * Adjustable mill in year two and beyond (as with other mills). Tax revenue is expected to grow gradually over time. Development Fee Residential Single-Family/Duplex $0.60/sq ft Residential Multi-Family $1.50/sq ft Commercial Hotel/Office/Retail/Other $1.70/sq ft Commercial Industrial/Agricultural $0.40/sq ft 19

20 Development Fee Development fees Charged per square foot on new construction/additions with more than 400 square feet Used to help meet demand for new affordable housing needed due to new permanent jobs in new commercial & induced by residential Payable at issuance of Building Permit Replaces the existing Inclusionary Housing Ordinance costing condo developers 1/4 to 1/10 less than the current ordinance 20

21 Example of dedicated fund collection Revenue $25,000,000 $20,000,000 Even though annual revenue is projected to average about $15M per year, revenue in any given year will likely be higher or lower than that amount. $15,000,000 $10,000,000 $5,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Property Tax (0.5 Mill) Multi-Family Hotel/Office/Retail/Other Industrial/Agriculture Single-Family Note: Hypothetical based on historic new construction (assuming 20% of Single-Family and Multi-Family development is exempt and 10% of Hotel/Office/Retail/ Other and Industrial/Agriculture development is exempt). Property tax is assumed to be $6.5M in year 1 growing at 2% in non-reassessment years and 6% in reassessment years.

22 OED HOUSING INVESTMENT PRIORITIES 22

23 Investment Priorities OED s overarching priorities for investment into affordable housing development, preservation and programs: Location specific priorities: Neighborhoods with access to transportation Neighborhoods vulnerable to gentrification Neighborhoods with high access to opportunity factors Project specific priorities: Mixed-income developments Housing for very low income households Affordable housing for special populations High quality design 23

24 Location Priorities - Transit OED prioritizes investment into areas of the city with access to transportation including fixed-rail transit and high frequency bus since transportation is typically the second highest use of household income after housing for low and moderate income families. 24

25 Location Priorities - Gentrification OED prioritizes investment into neighborhoods vulnerable to gentrification since shifting neighborhood demographics in areas of the city experiencing significant public and private investment can have the effect of raising property values, property taxes and rents and placing low and moderate income families at risk of displacement. 25

26 Location Priorities Access to Opportunity OED prioritizes investment into neighborhoods with high access to opportunity factors such as high quality education, proximity to good paying jobs, and other amenities such as parks, libraries, recreation centers and grocery stores that can impact a household s economic mobility. - Approach required by HUD regulations to affirmatively further fair housing - OED is in the process of developing quantitative mapping tool to analyze access to opportunity factors with the expectation that this tool will be available in early In the meantime, OED has revised our housing application to require applicants to provide qualitative responses to the elements that address areas of opportunity 26

27 OED S HOUSING PROGRAMS 27

28 OED s Affordable housing toolkit Land Acquisition Spotlight Project: 48 th and Race OED invests federal and local resources into land acquisition directly and through partners to drive a long term pipeline of affordable housing development. In 2014, OED partnered with the Urban Land Conservancy to purchase 6 acres of land to develop at least 400 affordable homes and 60,000 square feet of community commercial space in the Elyria Swansea neighborhood blocks away from a planned transit stop. 28

29 OED s Affordable housing toolkit New Construction Spotlight Project: Ashley Union Station OED invests federal and local resources into land acquisition directly and through partners to drive a long term pipeline of affordable housing development. Units created since issuing the x5 challenge: 2,188 Originally funded in 2013, OED partnered with Integral Development and the Denver Housing Authority to create a mixed-income building in the heart of Downtown Denver s Union Station Neighborhood. OED s investment is helping to create 75 affordable units in one of the most expensive neighborhoods in Denver. 29

30 OED s Affordable housing toolkit Preservation Spotlight Project: Kentucky Circle Village OED invests into preservation of Denver s existing affordable housing stock through acquisition and rehabilitation to ensure homes are available for low and moderate income families long-term. Units preserved since issuing the x5 challenge: 1,178 In 2016, OED partnered with Senior Homes of Colorado to preserve 147 affordable rental units for low and moderate income seniors at Kentucky Circle Village in the Washington Virginia Vale neighborhood of Denver. The development s previous affordability covenant was set to expire in 2019, but OED investment in rehabilitation of the property will preserve affordability through

31 OED s Affordable housing toolkit Housing Programs - Rental Housing Programs - Homeownership OED invests federal and local resources into programs that provide short to medium term financial assistance for renters and individuals experiencing homelessness. OED also invests into tenant-landlord counseling and an emergency assistance hotline. OED invests federal and local resources into programs that provide downpayment assistance for prospective homebuyers, homeownership counseling courses and emergency home rehabilitation for existing low and moderate income homeowners. 31

32 Inclusionary Housing Ordinance Denver s Inclusionary Housing Ordinance produced 82 affordable for-sale units since 2002 under ordinance requirements and 1155 units under development agreements. Currently, there are 107 units under construction and another that are possible under existing agreements. The IHO has been replaced with a residential housing linkage fee where developers will have an option to build affordable units instead of paying a fee to the city Affordable IHO Units Produced by Year

33 OED s Process to Select and Fund Development or Preservation Projects 33

34 HISTORIC ACCOMPLISHMENTS 34

35 OED s Historic accomplishments $3M Capitalization of IHO Fund Advisory Committee Formed BBC Housing Gap Analysis Mayor s Housing Advisory Committee Convened Mayor Announces 3X5 Initiative Phase I IHO Revisions Revolving Affordable Housing Loan Fund Established Mile High TOD Fund Established Preservation Ordinance Revisions Linkage fee Nexus Study Completed 2 nd Annual Housing Summit NSPIII Competitive Grant Award Mayor s Housing Task Force Convened Task Force Recommendations Adopted Housing Finance Task Force Convened Metro Mortgage Assistance Plan Established Housing Plan Outreach Phase II IHO Revisions Housing Plan Published IHO Rules & Regs. Adopted Dedicated Housing Fund Announced Preservation Mapping Tool Developed $150M Dedicated Fund Adopted 35

36 Income-restricted rental units in Denver 30 units 300 units 36

37 Affordable housing opportunities in Denver Access to Affordable Housing in Denver - Units/Vouchers Available in 2016 Housing Type Number of Units/Vouchers Covenant Restricted Rental Units 22,098 Inclusionary Housing Ordinance (IHO) For-Sale Units 1,237 Non-IHO Rezone Agreement For-Sale Units (predating the IHO in 2002) 154 Non-IHO For-Sale Units (Denver Office of Economic Development, funded since 2009) 68 Denver Office of Economic Development - Tenant Based Rental Assistance Vouchers (funded through 2015 HOME program) 58 Denver Housing Authority - Tenant Based Housing Choice/Section 8 Vouchers 5,862 Denver Housing Authority - Project Based Vouchers 870 Colorado Division of Housing - Tenant Based Rental Assistance Vouchers (Denver specific data, funded through 2015 HOME program) 20 Colorado Division of Housing - Tenant Based Housing Choice/Section 8 Vouchers (Denver specific data) 1,236 Colorado Division of Housing - Project Based Vouchers (Denver specific data) 120 TOTAL NUMBER OF HOUSEHOLDS IN AFFORDABLE HOMES 31,765 Note that OED is working to integrate for-sale units built or rehabilitated under the Neighborhood Stabilization Program and update with 2017 data. 37

38 Denver s 3 x 5 Challenge In 2013, Mayor Hancock announced the 3x5 Goal for the City to build or preserve 3000 units in 5 years. By the end of 2017 we will deliver on that goal ahead of schedule. 38

39 Affordable housing opportunities in Denver 39

40 ROLE OF ADVISORY COMMITTEE 40

41 Next Steps Overview of Housing Fund Next Steps: Implementation: Action items to effectively and efficiently invest funds into projects and programs Comprehensive Planning: long-term strategic planning and production goals for local, state and federal resources across homeless to housing spectrum 3-5 year Comprehensive Housing Plan Supplemental annual action plan and reports Office of HOPE (Housing and Opportunities for People Everywhere) 41

42 Revamped Affordable Housing Advisory Committee Housing Advisory Committee will: Recommend goals, objectives and policies to inform 3- to 5-year comprehensive housing plans and annual action plans for housing investments, including goals for mix of: AMI ranges Rental and homeownership Supportive services Land banking Review annual performance and outlook reports Inform affordable housing budget priorities Review and/or propose new programs or tools 42

43 Implementation Next Steps OED is taking a number of steps in 2017 to update processes for housing investments that focus on increasing transparency and efficiency. While Advisory Committee will have role in informing budget priorities moving forward, OED has developed a 2017 housing budget to provide predictability for Council and stakeholders. Focus on unit production and preservation Land acquisition to drive long term pipeline Temporary emergency assistance 43

44 Implementation Next Steps Housing Fund Implementation Steps Task Timeline Finalize Housing Fund Rules and Regulations January 2017 Begin quarterly Housing Division newsletters Q Update OED s Housing Division website Q Begin quarterly Housing Division newsletters Q Finalize compliance and monitoring requirements for local funds Q Release RFP for Temporary Emergency Assistance Q Release RFP for Innovative Housing Solutions Q

45 Implementation Next Steps Housing Fund Implementation Steps cont. Task Implement 2017 standard financial products for housing investments Implement 2017 revised application for housing investments Timeline Ongoing Ongoing 45

46 Comprehensive Housing Plan Comprehensive Housing Plan elements: - List of City housing expenditures - Measurable goals for each type or category city housing expenditure (including range of incomes) - Financial and production goals for a mix of affordable rental and forsale housing - Strategies to reduce effects of gentrification and displacement - Parameters for use of funds for supportive services - Parameters for use of funds for land banking - Parameters for the use of funds for mixed-income development 46

47 Comprehensive Housing Plan How Comprehensive Housing Plan interacts with HUD Consolidated Plan and Affirmatively Furthering Fair Housing 47

48 Advisory Committee Implementation Comprehensive Planning Advisory Committee Production Goals Program/Policy Development Budget Priorities 48

49 Comprehensive Planning Next Steps Comprehensive Planning Steps Task Timeline Convene Advisory Committee, kick off Comprehensive Planning process January 2017 Select Comprehensive Plan consultant(s) through competitive process January 2017 Finalize components of Comprehensive Plan and overall community/stakeholder outreach plan with input from Advisory Committee Begin data collection and outreach for Comprehensive Planning process February 2017 February 2017 Comprehensive Housing Plan must be submitted to Council for adopting by September 1,

50 FORMAL STRUCTURE 50