Local Housing Policy

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Training 6 - Local Housing Policy

Video Transcript: Local Housing Policy

Slide 1

Hi, and welcome to Fundamentals: Local Policy Options and Advocacy. I'm Jenny Rodgers, Vice President and Market Leader for the Rocky Mountain, Tribal Nation, and Rural team at Enterprise Community Partners.

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The Division of Housing partners with local communities to create housing opportunities for Coloradans who face the greatest challenges to accessing affordable, safe, and secure homes. DOH supports projects ranging from homeless prevention to homeownership. The Local Officials Toolkit, a joint project between the Division of Housing, Enterprise Community Partners, and Community Builders is intended to help local communities identify possible housing opportunities and streamline their processes to achieve housing faster. The toolkit will explain affordable housing in the context of Colorado, separated into three parts. The toolkit includes Affordable Housing 101, 201 Fundamentals modules such as this one that can be found online, and a set of potential tools and solutions focused on policies, programs, partnerships, etc. that communities can use and are already using to address housing needs in Colorado. Enterprise, as a national nonprofit, brings together nationwide know-how, partners, policy leadership, and investment to multiply the impact of local affordable housing development. We deliver the capital, development, and programs and advocacy for the policies needed to create and preserve well designed homes that people can afford in inclusive and connected communities. Community Builders is a leader in community planning, design, and development with core competency in training and capacity building, direct technical assistance, public engagement and facilitation, strategic communications, and applied research. In applying these skills, Community Builders brings a range of expertise in community planning and development, including housing, transportation, economic development, urban design, and downtown revitalization. Local governments have an important role to play as they work to address housing challenges. It can be difficult to determine where to start, and how to develop an effective local strategy. And that's what we're going to work on today.

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So, let's get started. In this training, we're going to look at local policy options to advance housing affordability and sustainability that you can apply in your own community.

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Local officials play many important roles to advance affordable housing opportunities in their communities. This slide shows some of those roles, but it's certainly not inclusive of all of them. These include: (1) forming and articulating a vision around an inclusive, thriving community that meets the housing needs of people all along the income spectrum; (2) exercising legislative and regulatory authority and securing public resources to realize your housing vision; (3) seeking community voices, talking to implementers who have expertise in the field, and looking at data to help you form your strategies; (4) working with community leaders to energize residents into action and ensuring that all residents can be part of the process; and (5) collaborating with fellow elected officials and local housing staff, liaising with other local officials and state officials to learn more about what other communities are doing.

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In this training, we'll present and dive a little bit deeper into some of the public options that local officials have to advance affordable housing and stability in their communities. These include topics that: (1) reduce the costs of development, things like reducing and waiving fees, decreasing the cost of regulation; (2) creating affordable provisions (affordability periods and inclusionary housing); (3) how to change your zoning to encourage more affordable housing; (4) using notice and rights of first refusal; (5) finding ways to fund affordable housing production and preservation; and (6) thinking about code enforcement.

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Notice and right of first refusal laws can be used by local communities to keep units that are currently affordable in your affordable housing inventory. Notice laws require rental property owners to give residents advance notice of any intention to sell. This gives residents the opportunity to either find another buyer who's interested in keeping units affordable, or to possibly purchase a property themselves. This has become a particular interest in Colorado over the last few years, as mobile home parks have become investment strategies for out-of-state investors.

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Right of first refusal laws are usually most effective when they're implemented with companion resources including flexible, quickly accessible funds for acquiring properties, or establishing community land trusts which may be necessary to realize these opportunities. Often, this requires a commitment of public funds. On this slide, you can see some of the relevant Colorado State laws that are on the books and allow for rights of first refusal and notice laws. We also are providing some examples of existing local laws that have been particularly effective, including the Denver Preservation of Affordable Housing ordinance, the Prince George's County, Maryland ordinance, and an ordinance from San Francisco, California.

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Well, right of first refusal laws can be a way for local governments to acquire properties that may have expiring subsidies or expiring use restrictions. Local governments can also ensure the properties are affordable into the long term by extending affordability periods. Local governments can require developers, property owners and managers to legally commit to maintaining the affordability of units for minimum lengths of time. An Extended Land Use Restriction Agreement (LURA) is often tied to public sources of funding including federal CDBG and HOME funds, federal and state housing tax credit resources, and local affordable housing resources. These recognize that the long-term ownership and maintenance of affordable rental housing requires financially strong entities that can sustain themselves over the long term.

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Extended affordability periods are already being used with many state and local programs to ensure long term affordability of housing across Colorado. Relevant Colorado State laws include that which governs the state Affordable Housing Tax Credit allocation; and SB 22-159, the Affordable Housing Revolving Loan Fund; and HB 22-1304, which governs the Affordable Housing and Stability grant program. Local jurisdictions such as Denver require higher minimum affordability periods that may be required through statute or the federal program requirements for many resources such as CDBG and HOME. For example, in Denver, their inclusionary housing ordinance requires a minimum 99 years for affordable units and a minimum 60 years for projects that receive City resources.

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Strategic, balanced code enforcement programs that are mindful of equity implications can help maintain the quality and the safety of existing housing units, thereby supporting efforts to preserve particularly unrestricted affordable units. While code enforcement alone typically won't prevent the loss of units, it does work best with other rehabilitation tools and funding streams, such as those provided by the USDA, the Colorado Division of Housing's Single Family Homeownership Rehabilitation program, resources offered by Energy Outreach Colorado and other locally supported acquisition-rehabilitation programs.

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When considering local code enforcement laws, you should review relevant Colorado State statutes including the new (as of 2019) Warranty of Habitability law for rental units throughout the state and look at examples of existing local laws including Denver's Healthy Residential Rentals for All program, which is a rental licensing program for multifamily units, and San Francisco's program that focuses on rehabilitation of unsubsidized affordable housing.

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Local jurisdictions can encourage development of new affordable housing by reducing or waiving various fees for qualified projects. Some fees may be waived by city staff while, generally, waivers of larger fees must be approved by city council or county commission. Waivers can be codified for an entire jurisdiction or only in specific areas, but should always be established clearly and state their eligibility criteria clearly. Eligibility for fee reductions and waivers can be limited to nonprofit developers, or available to all projects that meet specific and specified affordable criteria regardless of the developer.

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The impact of reduced or waived fees can be dramatic on an affordable housing development budget, which are often very tight. In Colorado, the total cost of permit and review fees varies between local communities but may run over $30,000 per single-family house. The effect of permitting and review fees on the total development costs can be significant and have a direct impact on the affordability of units being built in your community. An example of an existing local fee waiver program is the Glenwood Springs Fee Waiver Program. The city of Longmont also has an affordable housing incentive program that reduces fees for affordable housing.

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Another way that local officials can support affordable housing development through policy action is by creating local financing resources for the production and preservation of affordable units. These funds don't need to just be created in large communities. Small communities throughout Colorado have been coming to the table and creating financing streams that help support the development of affordable housing and their communities. Local funding sources for affordable housing can be established or increased through taxes such as taxing short-term rentals and investing revenue into affordable housing or directing lodging taxes to affordable housing. New and one-time state-administered funds now make grants and loans available to local governments and their partners to advance housing affordability and stability on an unprecedented basis.

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In creating new local affordable housing financing resources, local governments should be sure to create resources that are truly helpful to the developers of new affordable housing or those trying to preserve units in their community. Across the board, funding should be flexible and meet local needs, such as ensuring that funding can cover the gap between what it costs to develop a property and what the developer of that property can raise through debt tax credits, other equity. etc. Funding resources can be used to address the backlog of accumulated capital needs in existing properties and ensure that units are healthy and safe for their residents. Funds should be used, or can be used, for pre-development to facilitate investigation of preservation and development opportunities by local developers or nonprofit organizations. Funds can be used to help a nonprofit or mission-driven for-profit to act quickly to purchase an available property, either land or property that needs to be preserved. And flexibility is key to ensuring that these developers have the resources they need quickly to act on these opportunities. Local governments can provide permanent financing for properties that are being built or preserved in their communities. And finally, local governments could consider making loans to property owners, which would enable them to refinance properties for rehabilitation so that rents aren't being risen beyond what's currently affordable.

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Local governments across Colorado are creating a variety of financing resources to support and fund affordable housing development and preservation, as well as programs in their communities. Some relevant Colorado State laws include HB 22-1117, looking at the use of local lodging tax revenue and allowing affordable housing development to be one of the uses for that revenue. SB 22-159, the Affordable Housing Revolving Loan Fund, as well as HB 22-1304 and HB 22-1282. Many local governments who have created local financing resources are able to leverage those resources with many new state resources funded through the Division of Housing. Some examples of existing local funding measures include the Yampa Valley Housing Authority's mill levy to provide affordable housing resources for the construction of homes in the Yampa Valley, as well as multiple cities and counties across Colorado--small and large--who have created new expanded funds for affordable housing in 2022.

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Local zoning can either be a barrier to building affordable housing or an incentive to build affordable housing. Some of the issues to consider when you're thinking about local zoning are: Reducing parking requirements for affordable housing units recognizing that, in many affordable housing developments, there is less use of cars and more use of public transit by residents. And parking can be expensive to build. Providing allowances and or bonuses for greater density for affordable housing. Enabling accessory dwelling units by right and considering allocating public resources to support lower-income households' ability to construct and benefit from ADUs on their properties. Reducing or removing minimum house sizes, lot sizes, or yard size requirements. Eliminating excessive subdivision standards and advancing allowances for affordable housing development by right in lieu of case-by-case considerations.

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In Colorado, many communities have used zoning to reduce the barriers to preserving or building affordable housing units. For instance, in Denver, Denver decreased the minimum parking requirements for developing affordable housing at or below 60% AMI. In Pagosa Springs, Longmont, and Colorado Springs, among others, these communities have adopted a density bonus policy to promote development of homes affordable to people with lower middle incomes. And in Fort Collins, they've updated their residential land development code to enable more dense and affordable housing units.

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Thanks to recently passed legislation, Colorado communities can now pass inclusionary housing ordinances. Colorado municipalities can specifically require that new developments include a certain number of units that will have more affordable rents or prices, as long as one other option is provided to the developer besides providing units in their development. So, what should a local government consider when creating an inclusionary housing ordinance? First, what will be that other option? In many communities, this involves allowing the developer to pay a fee instead of providing units and, in many communities that prefer units over a fee, those fees are set as a disincentive to paying out instead of providing units. Your jurisdiction should also define what is affordable. What are your target AMI levels? And what types of units do you want developers to build?

Slide 20

When a community decides to explore creating an inclusionary housing ordinance, you should definitely review Colorado House Bill 21-1117, which allows local governments the authority to promote affordable housing units through inclusionary zoning. Some examples of communities who have passed inclusionary zoning ordinances are Denver and their Expanding Housing Affordability program, as well as Longmont who's passed an inclusionary housing ordinance.

Slide 21

Regulation can be a costly line item in affordable housing development budgets. Local governments have the ability to decrease the cost of regulation, which can encourage more affordable housing development in your community. Actions that local governments can take to decrease the cost to affordable housing developers include streamlining permitting review processes between agencies and jurisdictions for affordable housing projects, and ensuring that timing is not an issue, which can be costly to developers. Local governments can build flexibility into local codes and for design standards. Properties can be designed to be sturdy, affordable, and long lasting, but still use products that are not as costly as maybe regulated and local codes.

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The newly passed Proposition 123 in Colorado provides an incentive to local governments to decrease the cost of regulation. This resource, which will be available through the Colorado Division of Housing, encourages and requires local governments to take action to increase affordable housing development and reduce local barriers to developing that housing. As we talked about, Denver has an inclusionary housing policy. And this policy includes an incentive for permit review through a dedicated affordable housing team, reducing time and ensuring that staff have the tools required to review affordable housing developments.

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Two other best practices that local government officials can use to incent more affordable housing development are to incorporate your affordable housing goals into existing or future local government documents such as a HUD-mandated Consolidated Plan in communities that require them, your comp plan, zoning plans, and local land use plans. You can work with your local Council of Government and other partners to ensure that there's consistency from jurisdiction to jurisdiction within a county or within a region so that it's easy for developers to understand how to build housing in your area. Coordinating with other entities is also key. If you are providing local funding, look for opportunities for consistency with other key funders such as the Colorado Housing Finance Authority or the Colorado Division of Housing. Think about establishing an affordable housing committee or consortium of public housing authorities, nonprofit housing developers, private developers, government agencies, and other members of the community to support housing efforts prior to projects coming online.

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And lastly, consider working with other local government officials from across the state on advocacy for affordable housing. There are many groups that have been advocating for affordable housing resources across the state, including Colorado Counties, Inc., Colorado Counties Acting Together, CML, Housing Colorado, the Colorado Coalition for the Homeless Advocacy Network, and nationally, the National Low Income Housing Coalition. If you'd like to learn more, there are more resources on the webpage with these trainings. In addition, consider looking at the Colorado Division of Housing's Affordable Housing Toolkit for Local Officials and stay up to date with training materials and next steps for technical assistance by connecting with Colorado Division of Housing staff or signing up for their email blast. Thank you.