The Denver City Council voted 9 to 4 on October 19 to create a citywide affordable housing trust fund, marking the first creation of a housing production fund with a dedicated revenue source in city history. The new trust fund is expected to invest as much as $150 million over 10 years to build an estimated 6,000 new homes.
Prior to last month’s action by the city council, Denver Mayor Michael Hancock created a stakeholder group to study the city’s housing crisis and propose a policy solution to the city council. The Colorado Coalition for the Homeless, an NLIHC state partner, was part of the stakeholder group that met for 18 months before legislation creating the trust fund was introduced. Other members of the stakeholder group included housing and homelessness advocates and service providers, neighborhood associations, community development corporations, and real estate developers, as well as staff from the offices of the mayor and several city council members. Denver City Council Members Robin Kniech and Albus Brooks introduced the legislation creating the trust fund and led the advocacy for its passage.
The new affordable housing trust fund will receive funding from a modest property tax increase and a new development impact fee. The property tax increase is equal to a “half mil” or $0.50 per $1,000 in residential property value. The half mil property tax increase will be taken from a full mil property tax increase that voters previously approved but that the city had not yet implemented. The development impact fee will range from $0.40 to $1.70 per square foot, depending on the type of project. Denver will begin to collect these new assessments on January 1, 2017, and they are expected to generate as much as $150 million over 10 years to build an estimated 6,000 new housing units. Officials estimate that in the fund’s inaugural year $10 million will come from a combination of the property tax increase and the development impact fee. An additional $5 million will come from Denver’s general reserve fund, $1.5 million of which will be taken from untapped recreational marijuana sales tax revenue.
In the weeks leading up to the city council’s September 19 vote, City Council Member Chris Herndon introduced an alternative proposal that employed the same language as the original proposal to create the trust fund but delayed implementation of the program by one year, during which the city would be required to seek alternative sources of funding. Advocates for the original proposal pointed out that there had already been 18 months of study before their bill reached the city council. Mr. Herndon’s proposal was defeated
After compromise between supporters and opponents of the trust fund, three significant amendments were included in the final legislation approved by the City Council. One requires the mayor and the city council to create a citywide comprehensive housing plan each year. Another amendment exempts accessory dwelling units from the development impact fee created by the legislation. A final amendment opposed by trust fund advocates sunsets the fund after 10 years. Advocates attempted to block this amendment by highlighting that the proposed legislation already enabled the city council to enhance, continue, or end the trust fund at any time.
An advisory board created by a committee in the Mayor’s office will now convene to determine how to allocate trust fund money, what populations will be served by the program, the mix of rental housing versus homeownership activities to be funded, and how the funding will be provided. The 23-seat advisory board is open to public participation, and advocates anticipate applications for seats on the board to be released this month.
Cathy Alderman of the Colorado Coalition for the Homeless celebrates the creation of the affordable housing trust fund, but notes that the fund will need much more revenue to fully address the housing and homelessness crisis in Denver. She notes with optimism that the creation of the fund allows the Council to continue to explore new sources of funding and to increase its funding in the future.
For more information, contact Cathy Alderman at calderman@coloradocoalition.org.