Lake County Build a Generation Lake County – non-LIHTC Funding Sources April 3, 2019 8:30-10:30 1
Lake County Build a Generation Agenda 1. EPS Recommendations 2. Fund Selection Guiding Principles Goal today is NOT to dissect every possible funding source, or come away understanding 3. Housing Funding Tools housing funding and finance in it’s entirety. a) Overview The goal is to understand the general b) Fees framework for affordable housing funding, c) Taxes and after using that framework to select a few d) Other potential sources, to do a deeper dive into how to move those sources from theory to reality. 4. Fund Prioritization (Voting) 5. Discussion (break-out groups) 6. Report Back - Next Steps 2
Lake County Build a Generation EPS Data Rental Market - Low Vacancy Rate - Virtually zero inventory for households earning less than $37k (<80%AMI) For-Sale Market - 19% of recent sales were affordable to Lake County’s median-income households ($47,000/y) - Virtually zero inventory for people making <$47k/y (<100%AMI) - Homes that are more affordable are often in need of rehabilitation. 3
Lake County Build a Generation EPS Recommendations “ Our recommendation is for the County and City to adopt a use tax dedicated to housing, and further study the potential for inclusionary zoning (which would produce fees-in-lieu that can fund housing activities) and impact fees .” - EPS Housing Needs Assessment 2018 4
Lake County Build a Generation Fund Selection Guiding Principles Guiding principles – Local Funding Sources 1. Consistency 2. Responsiveness to Local Needs 3. Demonstrate Local Support 4. Ability to Make Projects Feasible by Generating Enough Revenue to Close the Funding Gap Uses 1. Development Projects - Buildings 2. Housing Programs 3. Staff 5
Lake County Build a Generation 3. Housing Funding Tools 6
Lake County Build a Generation Tool Overview 9% Tax Credit Apartment 4% Tax Credit Apartment Philanthropic, State, and Local Funds & Incentives Philanthropic, State, and Local Focus here today Funds & Incentives 9% Low Income Housing Tax Credits 4% Low Income Housing Tax Credits Private Debt Private Debt Target Income Range < < 30 30% A AMI 31 1 - 60% 0% A AMI 61 1 - 80% 0% A AMI 81 1 - 120% 0% A AMI 7
Lake County Build a Generation Tool Overview Housing ng T Toolbo box Incentives Partnerships/Public Initiatives Development Regulations Funding Density bonuses Providing County or Town land Inclusionary Housing Grants: Federal, State, Foundation Fee waivers Residential linkage Proceeds from regulations Town or County builds housing Commercial linkage Low Income Housing Tax Credit Reduced parking Public provide financing Annexation policy General fund revenues Fast track processing Property tax exemption Reduce min lot/house size Favorable loans Habitat for Humanity/Self Help Tax: Property, Sales/Use, Excise tax on Allow affordable housing all/most zones STR, Marijuana, GO Bond 8
Lake County Build a Generation Tool Overview World of Housing Funding Opportunity FEDERAL HUD FEDERAL PROGRAMS STATE Zones LIHTC (HOME, CDBG, Housing Choice LIHTC Vouchers, Etc.) CHFA Historic and STATE Energy Credits Managed by DOH : Housing Dev. Loan Fund, Housing Dev. Grant Fund, Housing Investment Fund LOCAL ADMIN OF FED. PROGRAMS For-Sale Preservation (eligibility-dependent) Housing and Community Dev. Supportive Rental Programs, Housing Authorities Rental Foundations Housing Housing Assistance Counseling LOCAL HOUSING FUNDS, INCENTIVES, OTHER and POLICIES PRIVATE Programs, Organizations, INVESTORS etc., who’s mission intersects with housing (Banks, etc.)
Lake County Build a Generation Tool Overview Local Funds, Incentives, and Policies for Affordable Housing Annexation Policy Inclusionary Housing Tax Linkage/Impact Fee Authority to extend urban Public vote Local Government Zoning code Nexus between fee charged and service and municipal impact to community Authority boundaries % of residential units required % of residential units % of revenue Varies – usually policy makers set a Structure to be affordable rate based on est. of new jobs/sq ft Contractual: land use Assessment: Collected Regulatory: zoning code Assessment: Collected with other Administration negotiations, Council action on with other taxes standard implemented land use approval fees such as plant annexation agreement through County through land use process investment, permit Assessor On-site housing Outcome On-site, off site, land, or Funds for housing Funds for housing (occasionally funds for housing onsite or other compliance) Wide range of potential (10- 10-20% of new homes Examples Property, Sales, and Varies – can range from $1/sq ft 80%) of new homes in affordable Use Tax, STR Excise Tax (Grand Lake) to $35/sq ft (Boulder) annexed area are affordable EPS recommends Use EPS recommends analysis EPS recommends analysis Lake County TBD Tax Specifics 10
Lake County Build a Generation FEES Linkage Fees – The Nexus 11
Lake County Build a Generation FEES Linkage Fees – Potential Impact ( hypothetical example using numbers from Salida, CO ) 2018 2019 2016 2017 (Annualized) (average of 3yrs) Square feet constructed (approx.) 14,590 55,328 3,636 24,518 Assume 80% Eligible sq ft 11,672 44,262 2,909 19,614 Revenue $105,048 $398,362 $26,179 $176,530 (Assume $9/sq ft fee) New Workforce Homes (Assume 2.1 8.0 0.5 3.5 $50,000/unit) New Workforce Homes (Assume 1.1 4.0 0.3 1.8 $100,000/unit) 12
Lake County Build a Generation TAXES Sample of Successful and Unsuccessful Housing Voter Initiatives to Create Housing Funds Map of Cities/Counties that have voted to create fund for Housing • Property Tax Levies Steamboat • Short-Term Rental Boulder Excise Tax • Local General Eagle Summit Obligation Bonds • Non-Real Estate or Housing-Related Taxes o General Fund Gunnison o Industry Taxes (such as Marijuana) o Sales Tax NOTE : counties/towns that have aff. Housing funds typically subsidize • Public/Private Fund rental and for-sale homes at the rate of $20,000 - $100,000/unit 13
Lake County Build a Generation TAXES Property Taxes How Property Taxes Work • County calculates the value of a property it will assess for taxes (“Assessed Value”). Estimated value of property Lake County will assess for taxes in 2019 is $196M • County determines the rate it will tax the property at using a system called a “Mill”. 1 Mill = .0001 or, 1/10 th of 1 cent. So, 10 mills translates to about a 1% tax rate. • NOTE: law called “TABOR” limits how much taxes can increase w/out voter approval. Remaining Questions Current Estimated Annual Property Tax Revenue • Total Used 38.2 Mills (approx. 3.8% tax rate), 1. Is passing a bill to raise county property taxes feasible in Lake County? Raising $7.5M • Balance of Unused Mills 3.807, equal to $747k 2. Is there already a long-term plan for the use of the Mill balance? In other words, are Possible Property Tax Revenue For New Mill there competing priorities for the Mill Levy balance? • .5 Mill = $98k • 1 Mill = $196k • 2 Mill = $392k 14
Lake County Build a Generation TAXES Sales Tax Sales Tax in Lake County Pitkin County: 3.1% • Annual Value of Sales: $45M Chaffee County: 2.75% • Sales Tax Rate: 4% • Sales Tax Revenue: $1.8M/Year Summit County: 2% • Potential Available Revenue through Sales Tax Increase Clear Creek County: 0.25% increase = $112,000 1.65% 0.5% increase = $225,000 Gunnison County: 1% 1% increase = $450,000 Park County: 1% Remaining Questions Eagle County: 1% • Would Lake County residents and elected officials support increasing the sales tax rate? 15
Lake County Build a Generation TAXES Short-Term Rental Excise Tax How it Works : • Extracted from property owners who rent to tenants for less than 30 days (think Airbnb) Potential Revenue : • 5% tax in Crested Butte raises about $300k/year. • 5% in Leadville on 90 homes rented 90 days at $100/night = $40,000. Pros • Revenue comes from visitors – synergy with local jobs • Creates more level playing field with lodgers/commercial property tax Cons • New in Colorado 16
Lake County Build a Generation TAXES General Obligation Bonds How it Works: 1. County issues a Bond. 2. Investors buy the bond – creating revenue for the County 3. County pays back investors over time with revenue it gains from taxes Why do it? • Brings funds that would normally be stretched out over many tax years up front in a large lump sum. Pros: • Can provide large funds for immediate investment • Not affected by TABOR (not a new tax) * may still require a vote Cons: • Not a consistent revenue stream. Once you spend your bond revenue, that’s it. 17
Lake County Build a Generation TAXES Marijuana Tax Capacity : Lake County has a couple dispensaries located in Leadville. Revenue Potential : Using a very rough calculation based on average sales per square foot for retail dispensaries across the country, a new marijuana tax of 3.5% could generate $210,987/y NOTE : Leadville levies a 5% marijuana excise tax on wholesale transactions, that raised $37k in 2017 Pros : Many local governments have been successful in passing this tax, though not all use it for affordable housing Cons : there may be competing priorities for use of revenue 18
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