Social housing finance plan
There is no single policy or financing solution that can build housing to scale as quickly as we need it while also ensuring racial justice and social equity, and remaining permanently affordable and democratically controlled.
Therefore, we need a comprehensive and flexible approach to finance social housing. We will use a variety of grants and tax relief opportunities from all levels of government as well as public-private and community partnerships to ensure there are enough subsidy funds available to meet the critical housing shortage we face in Denver.
We will establish affordable housing trust funds to finance production and preservation of affordable housing, and pursue additional gap financing like the Low-Income Housing Tax Credit and private subsidies. Cities that utilize this model include Los Angeles, Seattle, Philadelphia, and Washington, D.C. We will propose a voter bond measure for this purpose.
Specifically, our bond measure will focus on gap funding for straight 4% Federal LIHTC (which are non-competitive awards) deals that target 60% or below AMI. Most new construction and substantial rehab deals for affordable housing targeting 30-60% AMI and below have huge gaps and require a more complex capital stack. We will pursue a 4% Colorado State LIHTC to layer on the Federal 4% to fill the deal financing gaps. This targeted gap funding would open a wave of new projects and new housing units. And in order to mitigate “profittering” under the program, we will require an “up to” 40% deferred developer fee so all parties to the deal have “investment” that support housing production, not just profits.
We will work with our state partners to aggressively pursue Low-Income Housing Tax Credits, the primary source of development funding that is a federal tax credit administered by state agencies. On the municipal level, we will fast-track the permitting approval processes within 90 or 120 days for affordable housing developments to ensure that Denver is eligible to receive Proposition 123 funds recently approved by Colorado voters for affordable housing development and related programs. We will work much more closely with CHFA by investing in affordable housing and community development through federal and state housing tax credits.
Our capital stack will consist of: 1. current bond proceeds (subject to their regulatory conditions); 2. and/or proposed bond proceeds; and 3. City and County CDBG funds; 4. Foundation funds that will target 30% AMI or below towards financing gaps on straight 4% Federal LIHTC deals for 60% AMI or below (requiring up to a 50% deferred developer fee) or 30% AMI or below (requiring up to a 40% deferred developer fee) to fast track the financing of projects and and rapid development of units.
We will continue innovative initiatives like the public-private partnerships such as through the Denver Social Impact Bond Program to fund services. However, we are aware of the critique that the primary benefactors of SIBs are bond lawyers and wall street firms. A more efficient bond utilization is a straight 4% federal LIHTC with tax exempt bonds than SIBs.
The estimates for resources for a small segment who are chronically homeless and cycled into the criminal legal system, detox facilities, and emergency rooms cost an average of $29,000 per individual. We will work with our partners to increase consistent and supportive housing resources for providers and housing developers.
We will also complete an audit to identify surplus city owned land, and then subsequently lease it at a reduced cost to deeply affordable housing and community land trust developers to offset the high cost of land and build more affordable housing. This model has been implemented in Montgomery County, MD, King County, WA, and Washington, D.C., to encourage low-income housing development on public land.
Rather than an arena bond measure for the National Western Stock Show that voters rejected in 2021, we would create a very strong HUD Choice Neighborhoods Initiative (CNI) $50M Grant Application to bring in housing affordable to Globeville-Elyria-Swansea (GES) neighborhoods with regulatory restrictions against resident displacement. This would create millions in grants and foundation funds for neighborhood and community improvement projects.
Our plan fundamentally reimagines the economy and shifting wealth inequities toward community economic development, including for lending and acquiring properties. We will explore progressive financing and acquisition enterprises like public banking and a Social Housing Development Authority(SHDA) involving institutions at all levels of government acquiring properties and then transferring them to the non-profit sectors for deeply affordable and permanent housing.
We would combine the SHDA and the current Denver Housing Authority (DHA) into a single entity by using the power of the Mayor's Office to remake the DHA Board of Commissioners that would support changing the state law (which created DHA) to accomplish both objectives.
Sources: How Affordable Housing Gets Built, 10 Actions to Housing Affordability, Denver Social Impact Bond Program, Remaking the Economy: Social Housing