Housing Advisory Committee Retreat Monday, January 9, 2017 1 - PowerPoint PPT Presentation

Housing Advisory Committee Retreat Monday, January 9, 2017 1

Agenda I. Introductions (1:00 – 1:45pm) II. Welcome from Mayor Michael Hancock (1:45 – 1:55pm) III. Background on affordable housing in Denver (1:55 – 2:40pm) IV. Overview of Committee’s role in shaping housing programs (3:00 – 3:45pm) V. Formal structure of the Committee (3:45 – 4:30pm) VI. Next steps (4:30- 4:50pm) 2

Background on OED OED facilitates the development of inclusive communities through investments in key programs: Fostering a a thriv ivin ing bu busin iness envir ironment through business recruitment and expansion, • minority and women owned business certification programs, and technical assistance to entrepreneurs De Developing a a skilled w 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 Expa panding affordable h hous using o opt ptions 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 Cr Creating sus ustainable ne neighborhoods by expanding access to healthy foods and other • amenities that increase a household’s economic mobility 3

NEED FOR AFFORDABLE HOUSING IN DENVER 4

Denver’s rising housing costs Growth in Housing Costs vs. Income (Denver County 2012-2016, Indexed to December 2011) median h home p e price ( (condo) 2.00 1.90 1.80 median h home p price ( (SFR) 1.70 1.60 1.50 med edian r ren ent 1.40 1.30 1.20 median i n inc ncome 1.10 1.00 5 Source: American Community Survey 1-Year estimates; Apartment Association of Metro Denver vacancy Survey

Need for affordable housing 2016 Area Median Income (AMI) = $56,100 (one person) A single parent working 45 hours/week at minimum wage x 30% $16,850 $19,250 $21,650 $24,300 x 50% $32,050 $36,050 $40,050 $28,050 x 60% $38,460 $43,260 $33,660 $48,060 x 80% $44,900 $51,300 $57,700 $64,100 Two parents each working full time at minimum wage 6

Need for affordable housing Afford rdable le 1 1BR Med edian Den Denver Rental H l Home 1BR R Renta tal 60% 60% Bus Driver Pharmacy median Technician income $901 $90 $1,229 ($33,600) ($ Veterinary Cabinetmaker Technician Afford rdable le 1 1BR Med edian Den Denver For-Sale H Fo Home Fo For-Sale C Condo Chiropractor Kindergarten Teacher 80% 80% median $1 $169, 69,084 $299,083 $299, 83 income ($44,750) ($ Reporter Locksmith 7 Source: Bureau of Labor Statistics Occupation and Employment Statistics; Apartment Association of Metro Denver Quarterly Rent and Vacancy Survey; Denver Metro Association of Realtors Market Trends Report

Need for affordable housing 60,000 50,000 40,000 30,000 20,000 33,000 29,000 19,000 10,000 13,000 Not Cost Burdened 6,000 Cost Burdened 0 (Spending more than <$20,000 $20,000- $35,000- $50,000- >$75,000 30% of income on housing) $34,999 $49,999 $74,999 30% 0% A AMI 100% 0%+ A + AMI 60% 0% A AMI 80% 0% A AMI 8

Need for affordable housing 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 experience repeated episodes of homelessness. 9

PUBLIC AND PRIVATE HOUSING PARTNERS 10

Financing affordable housing To build a new housing unit, the developer raises money from investors and lenders to finance construction If the new home is a marke ket-rate h hom ome, the money paid by the renter or new homeowner is enough to pay back the investors or lenders. 11

Financing affordable housing To build a new housing unit, the developer raises money from investors and lenders to finance construction If the new home is a marke ket-rate h hom ome, If the new unit is an affo ford rdable h home, it costs the the money paid by the renter or new developer the same amount to build. But the renter homeowner is enough to pay back the or owner pays only what they can afford. That’s investors or lenders. usually not enough to pay back the investors or lenders. In n most cases, t the pub public sector ne needs t to h help o p out ut to 12 make it f feasible le t to build ld a affordable le housing.

Partners in addressing housing needs Many partners come together to make affordable housing possible including multiple city agencies, state and federal partners, housing and real estate stakeholders, finance experts, and the general public. Key partners in providing affordable housing include: Public and Quasi-Public Partners Private Partners - Community Planning and Development (CPD) - Non-profit affordable housing developers - Mayor’s Office of HOPE - For-profit affordable housing developers - Budget and Management Office (BMO) - Private sector real estate professionals - Denver’s Road Home (DRH) - Financial institutions - Denver Housing Authority (DHA) - Philanthropic institutions - Denver Urban Renewal Authority (DURA) - Colorado Housing and Finance Authority (CHFA) - Colorado Division of Housing (CDOH) - U.S. Department of Housing and Urban Development (HUD) 13

Financing affordable housing Total project cost In a typical affordable rental housing development, Federal, State and Local Funds the majority of capital comes from deb debt and feder ederal Low-Incom ome H Housing T Tax Credits ( s (LIHTC). Denver Revolving Affordable Housing Loan Fund (RAHLF) • Non-profit and for-profit developers can raise debt State Low-Income Housing Tax from banks or other financial institutions Credits • LIHTC are allocated by CHFA FA for all projects in Colorado 9% Low Income Housing Tax 9% L LIHTC provide equity for about 70% of project 4% Low Income Housing Tax Credits cost osts, and are allocated once per year in a Credits competitive process. 4% L LIHTC provide equity for only about 30%-40% o of f proj oject c cost osts, but they have a rolling application and are non-competitive. Private Debt Affordable p projec ects th that t rec eceive ei eith ther ty type of LIHTC Private Debt still n st need ad additional “ “gap ap financing” t to o have enough capital al t to build a affordab able u units. s. Both 9% and 4% LIHTCs serve households up to 60% AMI 14

RESOURCES FOR HOUSING INVESTMENT 15

OED resources for affordable housing OED spends federal and local resources on affordable housing development, preservation and programs. Key funding sources in providing affordable housing include: Federal housing resources Local housing resources - Community Development Block - (Historical) One-time general fund Grants (CDBG) transfers helped seed Denver’s - HOME funds Revolving Affordable Housing Loan - Housing Opportunities for Persons Fund with AIDS/HIV (HOPWA) funds - $150 million dedicated local funds - Emergency Solution Grant (ESG) 16

OED resources for affordable housing Typical annua nnual resour urces for h hous using d development, p preservation a and nd p programs Funding ng s sour urce Typical u uses Amount nt CDBG funds available for housing Land acquisition, preservation, programs $2.00 million HOME funds Development, preservation, programs $2.00 million HOPWA funds Programs $1.50 million ESG (Administered by DHS) Programs $0.55 million Dedicated local housing funds (average) Land acquisition, development, ~$15.00 million preservation, programs TOTAL $21.05 .05 milli llion Additional one-time federal or local funds may be used for housing investments as available. 17

OE OED res resources es f for af r affordable ho housing Average Denver Rent Federal Resources $12,000,000 1400 CDB DBG* average 1300 $10,000,000 Denver Den er rent 1200 $8,000,000 1100 $6,000,000 HOME HOME 1000 $4,000,000 900 $2,000,000 800 $- 700 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *Represents the City of Denver’s CDBG allocation, some of which is not available for affordable housing 18 investment. CDBG funds can also not be used for new construction.

Background on Denver’s dedicated fund • Pr Property T Tax ax * – 0.5 mill for year one – $6.5 million in year one * Adjustable mill in year two and beyond (as with other mills). Tax revenue is expected to grow gradually over time. • Developme pment F Fee – Residential Single-Family/Duplex $0.60/sq ft – Residential Multi-Family $1.50/sq ft – Commercial Hotel/Office/Retail/Other $1.70/sq ft – Commercial Industrial/Agricultural $0.40/sq ft 19

Development Fee Developme pment f fees • Charged per square foot on new construction/additions with more than 400 square feet • Used to help meet demand for new affordable housing needed due to new permanent jobs in new commercial & induced by residential • Payable at issuance of Building Permit • Replaces the existing Inclusionary Housing Ordinance – costing condo developers 1/4 to 1/10 less than the current ordinance 20