January 22, 2024
The Honorable Jared Polis
Dear Governor Polis:
We appreciate your leadership in establishing public funds and policies to deliver homes to Coloradans struggling to afford them. Our organizations have been proud to partner with you and your administration on these critical initiatives, bringing to life high-quality, publicly funded homes and helping to ensure residents can stably remain in their homes and communities.
To this end, we want to elevate the critical importance of utilizing state resources to preserve the existing affordability of multi-family properties. This includes properties required to be affordable to low-to-moderate income residents by virtue of public funding and investments; properties that don’t have such restrictions but are running below market rates—often buildings with fewer than 50 units; and un- or underutilized properties that can be converted to realize affordable homes. Preserving the long-term affordability of existing properties through recapitalization, acquisition, rehabilitation, and conversion will increase Colorado’s affordable housing supply –both immediately and in the long-term—more quickly and cost-effectively than new development. And preservation is essential to advancing Coloradans’ housing stability through mitigating displacement.
We, therefore, urge you to direct implementing agencies of Proposition 123’s capital and equity products, namely the Colorado Office of Economic Development and International Trade (OEDIT) and the Colorado Housing Finance Authority (CHFA), to consider proposals to utilizing these funds on equal footing with those for new development, ensuring a balanced strategy to preserve existing affordability with increasing our affordable housing supply through new construction.
The structure of Proposition 123 capital and equity products makes them the best public resource available in the state for preserving Colorado’s current stock of affordable units. Both were structured with preservation and production in mind. Other resources, such as the 4% low-income housing tax credit and private activity bond programs, are stretched thin and largely driving new construction, not preservation, making Proposition
123 funds an even more essential preservation tool.
Indeed, our state needs more financial tools to successfully preserve existing affordability, as recognized by both the State Affordable Transformational Task Force and the State Strategic Housing Working Group. And an informal “preservation network” of affordable housing financers (including CHFA) and developers working to preserve existing affordability has noted such need in applying to DOLA for resources to create new flexible and innovative preservation financing products. Still these funds are not adequate to meet demand: A $5 million preservation-specific pilot fund housed at CHFA was tapped out upon launch.
CHFA has estimated that statewide, there are at least 77,000 publicly funded units with affordability requirements. And according to CHFA’s most recent esmate, in the next 10 years, affordability requirements on approximately 13,000 of those units will expire, meaning they may well be turned into homes affordable only to people with much higher incomes. The cost to refinance and maintain the long-term affordability of these units is far less than to build new restricted units to replace them. Preserving affordability also helps residents stably remain in their homes and communities, and from being forced into the growing number of housing insecure and homeless Coloradans.
Moreover, according to an Enterprise analysis of 2022 American Community Survey data, Colorado has an estimated 373,800 rental units in properties with fewer than 50 units, representing 47% of all rentals. These units have no formal affordability restrictions yet comprise 54% of homes affordable to lower-income Colorado renters. Preserving the affordability of these buildings through acquisition and long-term affordability requirements is cheaper than building new units and is again an essential anti-displacement strategy.
Losing currently affordable housing to market-rate interests exacerbates inequities in our housing system, where people living on lower incomes in every part of the state suffer the greatest dearth of affordable options. While Colorado does need more homes, we simply cannot build our way out of our state’s housing crisis, and it is counterproductive to dedicate public resources only to building new units without equal consideration of keeping those we have. Rather, we must simultaneously and appropriately invest in ensuring currently affordable homes don’t become out of reach for lower-income Coloradans and current residents.
Therefore, we urge your staff, OEDIT, and CHFA to ensure new financing products created through Proposition 123 are utilized for housing preservation and to explore the creation of more flexible and innovative preservation financing tools. Our organization look forward to continuing to partner with you and your administration in producing and preserving affordable homes and housing stability for low-to-moderate income Coloradans statewide.
Sincerely,
ACLU of Colorado
Archway Communities
Colorado Coalition for the Homeless
Colorado Poverty Law Project
Community Builders
Community Economic Defense Project
Denver Metro Fair Housing Center
East Colfax Community Collective
Elevation Community Land Trust
Enterprise Community Partners
Grand Junction Housing Authority
Home Trust of Ouray County
Housing Colorado
Housing Resources of Western Colorado
Impact Development Fund
League of Women Voters of Colorado
Mercy Community Capital
Neighborhood Development Collaborative
SLV Housing Coalition
The Denver Foundation
United for a New Economy
Urban Land Conservancy
Weave Social Finance & Colorado Housing Accelerator Initiative Funds