Operational Plan for Housing Investments

Transcription

1 DRAFT Denver Office of Economic Development Operational Plan for Housing Investments January 9, 2017 Created for: OED, Housing Advisory Committee, Development Partners, Residents Assisted by: BBC Research & Consulting

2 This document serves as a guide to federal and local investments in affordable housing development, preservation, and housing-related programs administered by the Office of Economic Development s Housing Division. Office of Economic Development s Role in Housing The Denver Office of Economic Development (OED) is dedicated to advancing economic prosperity for the City and County of Denver, its businesses, neighborhoods, and residents. Working with a wide variety of community partners, OED operates to create a local environment that stimulates balanced growth through job creation, business assistance, housing options, neighborhood redevelopment, and the development of a skilled workforce. 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 sustainability. Who should read this operational plan? This plan s primary audiences are: 1) Denver s Housing Advisory Committee (HAC),* the governance body that has been formed to assist in Housing Fund implementation, and 2) the City s partners in housing development, preservation, and delivery of housing programs. This plan is also intended to inform stakeholders in the affordable housing, residential, and commercial development industries; businesses and employers; and current and future residents of the City and County of Denver. *More information about the HAC is located in Appendix A. 1

3 OED s housing programs have historically been funded through federal housing and community development block grant funds. As federal investments in housing have declined, these resources have become more limited even as population and housing needs have grown. Figure 1. Changes in Federal Block Grant Funds v. Average Rent What is an operational plan? Why is it helpful to guide this effort? An operational plan is a version of a business plan. Developing a business plan is typically the first step in forming a private business or nonprofit organization. In this case, that formation has already been done, with creation of Denver s first Affordable Housing Fund and the Housing Advisory Committee. This Operational Plan s main goal is to provide transparency for internal and external partners and to set a foundation for the Office of Economic Development and the HAC s work to address affordable housing. To that end, it provides: Note: *Represents the City of Denver s total CDBG allocation, some of which is not available for affordable housing investment. Source: OED Addressing the challenges of housing affordability and strengthening neighborhoods is a top priority of Mayor Hancock s administration. This Operational Plan will serve to outline OED s toolkit in addressing affordable housing needs through federal and local investments. Some possible opportunities to expand existing tools are listed in this document but do not represent the range of possible strategies to address Denver s housing needs. OED will continue to take feedback from a range of partners and the general public on opportunities to expand its existing housing toolkit. An overview of Denver s affordable housing needs; An overview of OED investments into land acquisition, unit development, unit preservation and programs that provide housing assistance; An identification of some current gaps in investments or policies; and A framework for the HAC s role in ongoing governance of the dedicated housing fund. 2

4 The Affordable Housing Challenge Except for a handful of communities, housing costs in the Denver region have been moderate and even relatively affordable for the Western U.S. until recently. Figure 2. Denver Region s Homeownership Affordability Ranking, U.S. and Western States, 1991 to 2016 (lower ranking = higher affordability) The Denver region used to be one of the most affordable nationally for homeownership. Yet, now: The inventory of homes to buy is at a record low according to the Denver Metro Association of Realtors: 6,700 homes were listed for sale in October 2016 compared to a monthly average of 16,615 between 1985 and2015. The National Association of Homebuilders (NAHB) housing opportunity index (HOI) shows that the Denver region s homeownership affordability has diminished significantly in recent years. The region currently ranks 195 out of 225 for affordability nationally (where a lower score = greater affordability). Its regional ranking has dropped from the most affordable market in the West (1994) to moderatelylow affordability (39out of 72) today. Note: The index measures the share of homes sold that are affordable to a median-income household, based on standard mortgage underwriting criteria, with lower numbers indicating higher levels of affordability. Source: National Association of Homebuilders. 3

5 Similar trends have occurred for rental costs. However, because renters incomes have increased more slowly than owners incomes and owners have benefitted from historically low mortgage interest rates rising costs have been harder for renters to manage. Rental vacancies are hovering around 5%, a slight increase from recent lows. Yet rental prices continue to climb and have reached a historic high of $1,350/month. Rent increases since 2013 have been the steepest on record. A renter earning the median income in 2015 ($42,200 for renters) could afford 40% of housing units available for rent in Denver. This same renter, earning $28,000 in 2000, could afford 60% of units available for rent in Denver. Figure 3. Change in Median Rent and Income, City and County of Denver, Who needs affordable housing in Denver? OED measures housing need by cost burdened households, paying more than 30% of gross income for housing, including utilities. Renters in 2016: 64,000 face cost burden 31,000 are severely cost burdened Owners in 2016: 35,000 face cost burden 14,000 are severely cost burdened Cost Burden, 2000 vs. 2016: Renters 40% vs. 46% Owners 9% vs. 10% Of the 100,000 new households in Denver, 4 of every 10 are cost burdened Persons experiencing homelessness: 3,600 Source: 2015 ACS. 4

6 OED uses the federal definition of affordability in determining housing needs: Eligibility for affordable housing programs is based on the incomes of all households in a region. Annually, HUD estimates the Area Median Income, or AMI, for the Denver region. Household eligibility for housing assistance is based on the AMI, adjusted for household size. In general, households earning 80% of the AMI and less are eligible for assistance if programs exist. As shown on the next page, a two-person household earning $32,050 in the Denver region would earn 50% of the AMI. 5

7 Many people needing housing assistance are employed yet their wages fail to keep up with housing costs. A single parent working more than full time 45 hours per week at minimum wage would earn 30% of AMI. These needs are in addition to persons experiencing homelessness. Each year, the Metro Denver Homeless Initiative partners with Metro Denver jurisdictions to conduct a survey of individuals experiencing or at risk of homelessness. 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 experienced repeated episodes of homelessness. Due to some limitations in the ability to capture information from the full range of individuals experiencing homelessness or at risk of homelessness, PIT data is considered to be an undercount of homelessness in Denver and throughout the region. 6

8 OED partners with Denver s Department of Human Services and the Mayor s Office of Housing and Opportunities for People Everywhere (H&OPE) to provide supportive services, transitional and permanent housing solutions for individuals experiencing homelessness. Figure 4. Age Distribution of Denver Residents Experiencing Homelessness The number of persons experiencing homelessness regionwide was down slightly from 2015, yet the second highest number in the past 6 years. The cumulative number of K-12 students experiencing homelessness approached 15,000 regionwide during Persons experiencing homelessness in Denver are mostly families with children and adults over the age of 45. In addition to meeting the basic needs of low income residents and workforce, affordable housing offers social and economic benefits. Recent research has shown positive economic returns on providing adequate, affordable housing: Affordable housing is a critical component of economic mobility for families. Low income children raised in neighborhoods with high economic opportunity, as measured through low poverty rates and high-quality schools, have higher lifetime earnings as adults. The effects are greater the earlier the children move. Building affordable housing has positive direct economic impacts. The one year combined state and local economic impact of building 800 rent-subsidized rental homes in Colorado is estimated at more than $113 million in local income, $20 million in taxes and local revenues, and more than 1,500 full time jobs. 7

9 Affordable Housing Resources and Programs Federal, state and local investments into affordable housing take two broad forms: 1) programs that provide assistance to renters and homeowners directly, and 2) programs that create and preserve income-restricted rental and for-sale housing. Historically, affordable housing has been supported primarily at the federal level, through the Housing Choice/Section 8 rental subsidy program administered by the Denver Housing Authority, construction and operation of public housing, creation of affordable rental housing through the Low Income Housing Tax Credit (LIHTC) program administered by the Colorado Housing and Finance Authority (CHFA), downpayment assistance for homebuyers, subsidized mortgage insurance, and subsidized mortgage loans. OED utilizes both federal and local resources to create and preserve affordable rental and for-sale housing, in many cases leveraging the LIHTC program; facilitates the acquisition of land for future affordable housing development; and invests in a variety of programs that provide families with downpayment assistance, rental assistance, utility assistance, counseling and emergency home repairs. Additional programs are administered at a local level through other city agencies including a property tax rebate for seniors and individuals with a disability, and supportive services for individuals experiencing homelessness. Leveraging funding sources from a federal, state and local level a layered approach is critical for affordable housing creation, especially in a climate of lower federal commitments to affordable housing. OED Rental Programs OED Homeownership Programs Provide direct assistance to renters: Tenant based rental assistance Tenant-landlord counseling Emergency home repair and rental access modifications Create/preserve affordable rental housing: Private activity bonds (tax exempt) Federal revenue streams Local revenue streams Land acquisition for future development Provide direct subsidies to owners: Home mortgage interest tax deduction Downpayment/low interest rate purchase assistance Emergency home repair and access modifications Homebuyer Counseling Create/preserve affordable for-sale housing: (Historical) Inclusionary Housing Ordinance Federal revenue streams Local revenue streams Land acquisition for future development 8

10 OED Funding Sources to Address Housing Needs OED invests federal and local funds to support affordable housing development, preservation and programming: Federal funds are allocated to the City and County of Denver through the U.S. Department of Housing and Urban Development (HUD): Community Development Block Grant (CDBG) CDBG funds support small businesses, neighborhood revitalization, homeowner and rental repair, counseling and social service operations. OED typically receives between $6 and $8 million annually through the CDBG program, but these resources are invested across a variety of housing, neighborhood and business development programs. OED typically invests approximately $2 million annually on housing through the CDBG program. HOME Investment Partnerships Program (HOME) HOME funds support a variety of affordable housing activities including new construction and preservation of rental and for-sale housing, and tenant based rental assistance. OED typically receives approximately $2 million annually through the HOME program. Housing Opportunities for Persons with Aids (HOPWA) HOPWA funds are available to assist in the provision of affordable housing for persons with HIV/AIDS. The City and County of Denver typically receives approximately $1.5 million annually for the HOPWA program. Emergency Solutions Grant (ESG) ESG funds are available to assist persons experiencing homelessness or who are at risk of homelessness. ESG resources are administered by Denver s Department of Human Services for temporary emergency assistance for renters. The City and County of Denver typically receives approximately $550,000 annually through the ESG program. 9

11 Local funds are appropriated to OED through the City and County of Denver s annual budget process: Between , Denver approved $14 million in general fund transfers for affordable housing development and preservation. OED used $6 million in general fund resources to seed a Revolving Affordable Housing Loan Fund (RAHLF), leveraging resources from the Colorado Housing and Finance Authority (CHFA) to enhance the feasibility of affordable rental housing development. To date, most of the funds available in the RAHLF have been committed to existing projects. In September 2016, Mayor Hancock and City Council partnered to create Denver s first dedicated local fund for affordable housing. The dedicated fund will generate an estimated $150 million over 10 years to build or preserve at least 6,000 affordable units for low and moderate income families. Revenue for the dedicated fund will come from a portion of a property tax already approved by Denver voters in 2012 and a new, one-time housing linkage fee on commercial and residential development. The property tax component of the fund is stable and predictable, generating an estimated $6.5 million in This revenue will grow slowly and steadily over time. Revenue from the housing linkage fee will vary based on economic trends, bringing in more revenue during an economic upcycle and less revenue during an economic downturn. On average, the linkage fee is expected to generate $7-8 million annually. Find out more about Denver s Dedicated Housing Fund in Appendix B. Additional one-time federal or local funds may be used for housing investments as available. 10

12 Guiding Priorities for OED Investments into Affordable Housing OED utilizes federal, state and local data to inform affordable housing investment priorities, along with input from stakeholders and members of the public. When evaluating housing investments, OED assesses potential projects according to a number of different criteria, namely location specific-criteria and project-specific criteria. OED prioritizes affordable housing in the following locations: 1) 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. 2) 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. 3) 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, health care, child care and grocery stores that can affect a household s economic mobility. OED prioritizes affordable housing projects with the following characteristics: 1) Mixed-income development including affordable housing alongside market rate housing to deconcentrate poverty and provide a mix of affordability levels within a fully income-restricted building. 2) Housing for very low income households earning less than 30% of the AMI ($24,300 for a family of four), since more than 75% of households in this income bracket are cost-burdened. 3) Housing for special populations such as seniors, veterans, households experiencing homelessness, individuals with a disability or large families. In some scenarios, adequately providing safe, stable and affordable housing for these populations includes special amenities or wrap around supportive services. 4) High quality, sustainable housing development that includes features that promote the health and safety of residents, integrate with the character of the surrounding neighborhood, and utilize durable materials. 11

13 OED s Affordable Housing ToolKit 1) Acquisition of land for future affordable housing development OED invests federal and local resources into land acquisition directly and through partners to drive a long term pipeline of affordable housing development. Investment into land acquisition in areas of the city with planned transit and in areas of the city vulnerable to gentrification can preserve affordability in neighborhoods where housing prices may rise over time. Investment into land acquisition in neighborhoods of the city with high access to opportunity factors can help create affordability in areas that are predominantly higher income, creating mixed-income neighborhoods and deconcentrating poverty. Land acquisition partners: Denver s Transit Oriented Development (TOD) fund, established in 2009 with significant public and private investment including a financial commitment from OED, is managed by Enterprise Community Partners for the purpose of acquiring real estate along high frequency transit corridors for future housing development. The TOD fund was expanded in 2015 to acquire real estate throughout the Denver Metro Area and to date has helped facilitate development of more than 1,100 affordable homes and 100,000 square feet of community space at 13 transit-accessible properties across the region. Possible opportunities to expand tool: Denver is prioritizing development of affordable housing when disposing of City-owned parcels of land where a residential use is appropriate. Other public and private partners may have vacant or underutilized land appropriate for affordable housing development, including the Regional Transit Authority (RTD) or Denver Public Schools (DPS). Spotlight OED Project: In 2014, OED partnered with the Urban Land Conservancy to purchase a sixacre site in the Elyria Swansea neighborhood of north Denver, blocks away from the Regional Transit District s (RTD) planned National Western Stock Show Station along the new north metro line. The City s $1.5 million investment leveraged an additional $4.5 million in private capital to acquire the site for future housing development. While the project is still in development stages, it is expected that there will be more than 400 affordable homes and 60,000 square feet of commercial space on the site serving the neighborhood. 12

14 2) Development of new affordable housing units OED invests in projects built by for-profit and non-profit organizations including fully affordable developments and mixed-income developments with only a portion of units that are affordable. Projects include new rental housing that leverage Low Income Housing Tax Credits as allocated through the Colorado Housing and Finance Authority (CHFA). LIHTCs come in two forms: 9% LIHTCs provide equity for about 70% of a project s costs, and are allocated once per year in a competitive process. 4% LIHTCs provide equity for only about 30-40% of a project s costs, but they have a rolling application and are non-competitive. OED also invests into for-sale developments including single family, townhome and condominium developments. Possible opportunities to expand tool: Rental Since 4% LIHTCs provide less equity for a project, these developments have a larger financial gap and need more assistance from the public sector. Since 4% LIHTC are non-competitive, Denver is using tools such as the Revolving Affordable Housing Loan Fund (RAHLF) and other direct investments to increase the feasibility of these projects to increase production of affordable rental housing. For-Sale Condominium development has slowed in recent years due to limitations at a state level related to construction defects. OED is working with local and regional partners to spur development of affordable condominiums near transit. Spotlight OED Project: Originally funded in 2013, OED partnered with Integral Development and the Denver Housing Authority to create a mixedincome building in the heart of Downtown Denver s Union Station Neighborhood. OED s $3.45 million investment is helping to create 75 affordable units in one of the most expensive neighborhoods in Denver. 13

15 Subsidies are needed for new affordable housing development because while some design features may be simpler, the cost of building an affordable residential unit is not dramatically different than the cost of building a market rate residential unit. Yet because the amount that can be charged for an affordable unit is capped based on a rent or sales price, there is often a financing gap to build affordable housing units. OED provides gap financing for the development of new affordable rental and for-sale housing units through local and federal resources. 14

16 3) Preservation of existing affordable housing units When local, state and federal dollars are invested into affordable housing, an income restriction is placed on the home or the land to ensure it is available at a certain price for a set amount of time, usually between fifteen and thirty years. The income restriction means than only households earning below a certain income limit (for example, 80% of AMI) are allowed to purchase or to rent the home. More than 20,000 rental units in Denver are affordable through income restrictions. OED invests into preservation of Denver s existing affordable housing stock through acquisition and rehabilitation of affordable homes with income restrictions to ensure homes are available for low and moderate income families long-term. An estimated 2,700 rental units about 10% of all affordable rentals have income restrictions that are set to expire in the next five years. Spotlight OED Project: 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, Colorado s Division of Housing and the Colorado Housing and Finance Authority s investment in rehabilitation of the property will preserve affordability through

17 Denver s Preservation Ordinance helps maintain affordability of existing income restricted housing by requiring notification to the City of an expiring income restriction or planned sale of a restricted property. In the event of a planned sale of an income restricted property, the City or its designee has a right of first refusal on the property. But, thousands of families across Denver also live in unrestricted or market affordable housing that might be relatively inexpensive because it is an older building, is located outside of central Denver, or is in need of repairs. If an owner of a market affordable property rehabilitates or redevelops the property to charge higher rents, low and moderate income residents could be at risk of displacement. Housing preservation partners: OED is a member of the Colorado Housing Preservation Network, coordinated by the Colorado Housing and Finance Authority to bring public and private partners together with the goal of preserving Denver s and Colorado s affordable housing stock. Among other efforts, the Housing Preservation Network performs early outreach to owners of existing income restricted building with expiring restrictions to offer funding or other opportunities to preserve their properties. Possible opportunities to expand tool: Some of Denver s peer cities across the country have created preservationspecific funds that deploy capital quickly to preserve income restricted and market affordable properties. These funding sources do not compete with the same resources agencies like OED use for other housing development and programs. OED is also working to develop a more robust strategy to preserve income-restricted for-sale housing that is not captured under the City s Preservation Ordinance. 4) Programs that help low and moderate income families access or maintain affordable housing While creating and preserving affordable housing units is an important long term investment for Denver, OED also provides funding for programs that help low and moderate income families access or maintain their existing housing. These programs help provide necessary services to prevent homelessness, preserve existing housing, enable residents to age in place, attain homeownership or promote de-institutionalization for persons with disabilities. Programs for Renters: Tenant Based Rental Assistance (TBRA): funded through Denver s HOME allocation, tenant based rental assistance is provided through OED s community partners for low income families for a period of 6-24 months. 16

18 Tenant-landlord counseling: funded through Denver s CDBG allocation, tenant-landlord counseling is provided through OED s community partners for renters at risk of eviction, seeking legal advice on other complaints, and other legal services such as housing discrimination. Programs for Homeowners: Mortgage Credit Certificate Program: Denver s program allows qualifying borrowers to receive an annual federal income tax credit equal to 30% of the annual interest they pay on their home mortgage loan. The tax credit enables a taxpayer to subtract the amount of credit from his or her annual total federal income taxes. Downpayment assistance programs: Denver s Metro Mortgage Assistance Plus Program (MMAPP) provides grants to low and moderate income families seeking to purchase a home in the Denver Metro Area. In addition to the MMAPP program, OED utilizes its HOME allocation to provide downpayment assistance through partners for low and moderate income families seeking homeownership opportunities in Denver. Emergency home repair and access modifications: funded through OED s HOME and CDBG allocations, home repair programs help low and moderate income families make plumbing, heating, and electrical updates to their homes, where access modification programs help improve accessibility improvements for people with disabilities. Homeownership counseling programs: funded through OED s CDBG allocation, homeownership counseling programs are designed to educate individuals on various aspects of homeownership, including how to select a property, how to find and choose a financial lender, mortgage products and qualifications and what to expect after closing on a home. Possible opportunities to expand tool: OED invests into unit development and preservation for Denver s most vulnerable residents individuals and families who are experiencing or are at risk of homelessness. To stay successfully housed, some residents also need robust supportive services such as mental or behavioral health care, and OED is working with partners to fund services aimed at assisting families in permanent supportive housing developments. OED is also working with local partners to expand emergency assistance for individuals at risk of being displaced from Denver due to gentrification pressures. This includes temporary emergency assistance for current renters and homeowners, and research into peer cities policies and programs that are used to help mitigate displacement. 17

19 OED s Process to Select and Fund Development or Preservation Projects When evaluating housing investments, OED assesses potential projects according to a number of different housing priorities, namely location specific criteria and project specific criteria. Location specific criteria include whether the proposed project is within proximity to a current or planned transit stop, in a neighborhood vulnerable to gentrification or in a neighborhood 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. Project specific criteria include mixed-income development, housing for very low income households earning below 30% of the Area Median Income and housing for special populations such as seniors, veterans, households experiencing homelessness, individuals with a disability or large families. Standard financial products for OED housing investments: OED has developed consistent terms for housing investments based on historic financial investments across development types, peer city research and financial modeling. These financial products, finalized with feedback from public and private stakeholders, provide transparent and predictable guidelines for OED s borrowers, streamline decision-making for housing investments and create more efficient processes for contract development and execution. OED s financial products will be used to deploy all housing funds, both federal and local. The decision of which funds to allocate to which project will be made by OED staff. Exceptions to the standard financial products will be evaluated on an individual basis and must be approved by OED s Loan Review Committee. Standard financial products will be evaluated annually with input from housing stakeholders to reflect any market changes or other product updates as appropriate. Application process for OED housing investments: OED maintains a current housing funding application on the agency s website with instructions for submission. Projects applying for competitive Low Income Housing Tax Credits through the Colorado Housing and Finance Authority should submit a completed application for OED housing resources at the same time they submit a tax credit application through CHFA s shared portal. 18

20 Projects not seeking competitive tax credits can submit an application at any time and OED will review these applications on a quarterly basis (for example, applications received throughout the first quarter will be reviewed at the end of the first quarter). Following quarterly application review, applications will either be accepted to move forward for full underwriting analysis or receive feedback and be invited to apply in future quarters. Approval Process for OED housing investments: Once a proposed project has been evaluated according to its alignment with OED s housing priorities and consistency with standard financial products, an underwriting analysis is performed to assess financial feasibility, readiness to proceed and other factors. After underwriting analysis and final negotiations, housing investments are subject to approval from OED s Loan Review Committee. Approval from the Loan Review Committee allows a project to move forward to contract development and final approval from Denver s City Council for investments over $500,000. Compliance and Monitoring for OED housing investments: Once City investment into a development or preservation project has been finalized, OED will work with the owner of the property to ensure compliance with the income restriction and general occupancy standards over the course of the covenant period. Building inspections and income verifications are among some of the elements of OED s ongoing compliance and monitoring process. Competitive Requests for Proposals (RFP) and Notice of Funding Availability (NOFA): From time to time, OED may release special opportunities for investment into housing development, preservation or programs. These Requests for Proposals (RFP) or Notice of Funding Availability (NOFA) will be available on OED s website and will outline what type of program or development partner the City is seeking. Figure 5. OED s Process to Select and Fund Development or Preservation Projects Source: OED. 19

21 Intersection of the Operational Plan and Other Affordable Housing Plans The goals, objectives, policies, and priorities developed by OED with the help of the Housing Advisory Committee will funnel into the required 3-5 Year Comprehensive Housing Plan, and Annual Action Plans. The HAC will also help develop benchmarks to monitor progress of OED s housing investments; this progress will be captured in the Annual Report. Figure 6. Relationship Among Planning Documents for Denver s Housing Resources 20

22 Opportunities to Leverage Other Planning Efforts Every five years, the City is required by HUD to complete a Consolidated Plan that specifies its goals for spending federal housing and community development funds. Annually, the City provides HUD with a spending plan (Action Plan) and evaluates progress from the prior year (Consolidated Annual Performance and Evaluation Report or CAPER). Figure 7. Comprehensive Housing Plan, Consolidated Plan and Affirmatively Furthering Fair Housing Leveraging Opportunities These plans have similar requirements. They must: 1. Describe investment priorities, 2. Set 3-5 year goals for fund allocation, 3. Describe the programs and policies that will achieve such goals, and 4. Detail one-year investments and report back on progress. The City must also complete a plan to affirmatively further fair housing (AFFH) choice every 5 years. All planning efforts Comprehensive Housing Plan, Consolidated Plan, and AFFH require a robust community engagement process, and provide an opportunity to leverage similar activities and requirements, as shown to the right. 21

23 Appendix A: HAC s Role in Guiding Housing Investments Housing Advisory Committee The Housing Advisory Committee, or HAC, was developed to inform program and housing production goals for local and federal housing funds administered by OED. The 23 members of the HAC include: Ex officio members are individuals who represent: The Mayor s Office of Housing and Opportunities for People Everywhere (H&OPE), Office of Economic Development (OED), Department of Community Planning and Development, Department of Finance, Homeless Services, Denver Housing Authority, Colorado Housing and Finance Authority, Colorado Division of Housing. Mayoral appointees include: Housing finance expert, Homeless service provider, Community Housing Development Organization staff, Major employer, Affordable housing resident, Commercial real estate expert, Market rate single family residential expert, Market rate multifamily residential expert, For-profit affordable housing developer, Non-profit affordable housing developer, Atlarge community member. City Council appointees include: City Council member, Affordable housing advocate, At-large community member. Committee members serve 3 year terms and can be reappointed. Initial appointees will serve staggered terms. All Housing Advisory Committee members have equal contribution. Powers and duties of the HAC. Section 27 of the Denver Revised Municipal Code (D.R.M.C.) establishes the powers and duties of the HAC. HAC s main role is to review and inform goals and priorities for OED housing investments, including: Targeted incomes for housing development and preservation, including, for example, a focus on development of units affordable to very low income families earning below 30% of the Area Median Income. Mixes of housing types, including, for example, the ratio of permanent supportive housing units, low income rental units and moderate income for-sale units in a given year. 22

24 Level and type of supportive services that accompany investment into permanent supportive housing unit development, including, for example, an amount per unit in supportive service investment, program guidelines and household type served. Land banking and other strategies aimed at creating or preserving affordable housing, including, for example, development of a community land trust or partnerships aimed at providing affordable housing near transportation corridors. Housing preservation strategies, including, for example, programs aimed at preserving existing income restricted housing stock and market affordable housing stock through rehabilitation, tax incentives or other investments. Geographic prioritization for housing investments, including, for example, programs or investments that are targeted to areas of the city vulnerable to gentrification. In evaluating progress toward implementing housing goals and priorities, the HAC will review annual outcomes of OED investments, including determining the metrics used to track success and recalibrating goals to achieve program outcomes as necessary. The HAC will also help identify new or improved approaches to addressing market gaps, including an identification of current gaps, comparison to peer cities, and recommendations on program structure appropriate for Denver. 23

25 Appendix B: Denver s Dedicated Housing Fund Denver s Dedicated Fund was approved by Denver s City Council in September 2016 through an addition to Section 27 of the Denver Revised Municipal Code (D.R.M.C.). The Housing Fund is expected to generate $150 million over ten years to build and preserve at least 6,000 affordable housing units. Revenue for the Housing Fund relies both on the longterm stability of property tax along with the opportunity to capitalize on the benefits during economic growth cycles through a one-time fee on new commercial and residential development. Current modeling estimates housing fund revenue at approximately $150 million over the next 10 years with a balance of the two sources at a 50-50% split (property tax development fee). Affordable Housing Property Tax Revenue Fund. At the approved dedicated property tax of 0.5 mills: The impact on a typical homeowner in Denver will be $12 per year on a home priced at $300,000 The impact on a commercial property owner will be $145 per year for every $1 million of value Affordable Housing Linkage Fee Revenue Fund. This new housing fund is designed to provide flexibility in addressing Denver s housing needs, allowing the City to respond to changing market conditions and develop creative housing solutions. How Linkage Fees Work Housing Linkage Fees fees are paid at the time of building permit issuance for residential or commercial development. Since new commercial and residential development creates the demand for new employees, the housing linkage fee helps offset the cost of construction of affordable housing for low and moderate income employees. Developers of new commercial and residential development can pay the fee or build housing that is affordable for households earning up to < 80% AMI. The linkage fee applies to: New construction of commercial, industrial, manufacturing, civic, agricultural or residential uses Additions to an existing structure of more than 400 square feet Linkage fees range between $0.40 per square foot to $1.70 per square foot depending on development type. Properties that are exempt from linkage fee include: Preexisting contractual commitment to construct affordable housing Publicly-supported housing (federal block grant, Private Activity Bonds, Low Income Housing Tax Credit, Denver Housing Authority properties, deed-restricted properties, properties build with Denver Affordable Housing Fund) Affordable housing built by charitable, religious or non-profits Non-residential projects servicing persons experiencing homelessness Expansions of existing buildings if used for governmental or educational purposes Reconstruction of involuntarily demolished housing Accessory dwelling units The fee is adjusted annually according to the Consumer Price Index (CPI) for Denver-Boulder-Greeley metropolitan area. Other than annual adjustments, fees will not increase before January 1, 2022 without a study to evaluate how fee affects financial feasibility of development on which is it imposed. 24

26 A wide spectrum: The primary use of these funds will be the production and preservation of permanent supportive housing, workforce rental housing and for-sale housing. The spectrum of people benefiting from this fund will range from individuals experiencing homelessness and those struggling to live below 30% Area Median Income ($16,830 for one person) through the income spectrum up to families of four earning 100% AMI ($80,100). Homeownership programs such as down payment assistance can serve households up to 120% AMI ($96,120 for a family of four). Filling gaps: A limited portion of funds will be available for supportive services such as case managers in permanent supportive housing developments after all other sources such as Medicaid are exhausted first. Low administrative costs: A small portion of funds will be available for administrative expenses, capped at 8% of the total revenue from the fund but using less than the legal maximum in the first year. Innovation: Fund deployment will leverage new and existing housing expertise to create competitive programs and streamline investment decision-making. 25