Lake County non-LIHTC Funding Sources April 3, 2019 8:30-10:30 1 - - PowerPoint PPT Presentation

Lake County – non-LIHTC Funding Sources

April 3, 2019 8:30-10:30

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Lake County Build a Generation

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Lake County Build a Generation

• 1. EPS Recommendations
• 2. Fund Selection Guiding Principles
• 3. Housing Funding Tools

a) Overview b) Fees c) Taxes d) Other

• 4. Fund Prioritization (Voting)
• 5. Discussion (break-out groups)
• 6. Report Back - Next Steps

Agenda

Goal today is NOT to dissect every possible funding source, or come away understanding housing funding and finance in it’s entirety. The goal is to understand the general framework for affordable housing funding, and after using that framework to select a few potential sources, to do a deeper dive into how to move those sources from theory to reality.

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Lake County Build a Generation 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.

EPS Data

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Lake County Build a Generation

“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

EPS Recommendations

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Lake County Build a Generation

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 Fund Selection Guiding Principles Uses

• 1. Development Projects - Buildings
• 2. Housing Programs
• 3. Staff

• 3. Housing Funding Tools

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Lake County Build a Generation

9% Low Income Housing Tax Credits 4% Low Income Housing Tax Credits

31 1 - 60% 0% A AMI 61 1 - 80% 0% A AMI 81 1 - 120% 0% A AMI < < 30 30% A AMI

9% Tax Credit Apartment Private Debt

Philanthropic, State, and Local Funds & Incentives Philanthropic, State, and Local Funds & Incentives

7 Private Debt Target Income Range 4% Tax Credit Apartment

Lake County Build a Generation

Focus here today

Tool Overview

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Lake County Build a Generation

Housing ng T Toolbo box

Incentives

Density bonuses Fee waivers Reduced parking Fast track processing Reduce min lot/house size Allow affordable housing all/most zones

Tool Overview

Development Regulations

Inclusionary Housing Residential linkage Commercial linkage Annexation policy

Funding

Grants: Federal, State, Foundation Proceeds from regulations Low Income Housing Tax Credit General fund revenues Favorable loans Tax: Property, Sales/Use, Excise tax on STR, Marijuana, GO Bond

Partnerships/Public Initiatives

Providing County or Town land Town or County builds housing Public provide financing Property tax exemption Habitat for Humanity/Self Help

World of Housing Funding

LOCAL ADMIN OF FED. PROGRAMS (eligibility-dependent)

Housing and Community Dev. Programs, Housing Authorities

FEDERAL LIHTC STATE LIHTC

For-Sale Rental Supportive Rental Housing Counseling Preservation

CHFA PRIVATE INVESTORS

(Banks, etc.)

Foundations

Housing Assistance

LOCAL HOUSING FUNDS, INCENTIVES, and POLICIES OTHER

Programs, Organizations, etc., who’s mission intersects with housing

STATE

Managed by DOH: Housing

• Dev. Loan Fund, Housing
• Dev. Grant Fund, Housing

Investment Fund

Lake County Build a Generation

Tool Overview

HUD FEDERAL PROGRAMS

(HOME, CDBG, Housing Choice Vouchers, Etc.)

Opportunity Zones Historic and Energy Credits

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Lake County Build a Generation

Local Government Authority Structure Administration Outcome Examples Lake County Specifics

Tool Overview

Local Funds, Incentives, and Policies for Affordable Housing

Inclusionary Housing

Zoning code % of residential units Regulatory: zoning code standard implemented through land use process On-site, off site, land, or funds for housing 10-20% of new homes affordable EPS recommends analysis

Linkage/Impact Fee

Nexus between fee charged and impact to community Varies – usually policy makers set a rate based on est. of new jobs/sq ft Assessment: Collected with other land use approval fees such as plant investment, permit Funds for housing (occasionally

• nsite or other compliance)

Varies – can range from $1/sq ft (Grand Lake) to $35/sq ft (Boulder) EPS recommends analysis

Annexation Policy

Authority to extend urban service and municipal boundaries % of residential units required to be affordable Contractual: land use negotiations, Council action on annexation agreement On-site housing Wide range of potential (10- 80%) of new homes in annexed area are affordable TBD

Tax

Public vote % of revenue Assessment: Collected with other taxes through County Assessor Funds for housing Property, Sales, and Use Tax, STR Excise Tax EPS recommends Use Tax

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Lake County Build a Generation

Linkage Fees – The Nexus

FEES

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Lake County Build a Generation

2016 2017 2018 (Annualized) 2019 (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 (Assume $9/sq ft fee) $105,048 $398,362 $26,179 $176,530 New Workforce Homes (Assume $50,000/unit) 2.1 8.0 0.5 3.5 New Workforce Homes (Assume $100,000/unit) 1.1 4.0 0.3 1.8

FEES

Linkage Fees – Potential Impact (hypothetical example using numbers from Salida, CO)

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Lake County Build a Generation TAXES

• Property Tax Levies
• Short-Term Rental

Excise Tax

• Local General

Obligation Bonds

• Non-Real Estate or

Housing-Related Taxes

• General Fund
• Industry Taxes

(such as Marijuana)

• Sales Tax
• Public/Private Fund

Sample of Successful and Unsuccessful Housing Voter Initiatives to Create Housing Funds

Eagle Steamboat Gunnison Summit Boulder NOTE: counties/towns that have aff. Housing funds typically subsidize rental and for-sale homes at the rate of $20,000 - $100,000/unit Map of Cities/Counties that have voted to create fund for Housing

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Lake County Build a Generation TAXES

Property Taxes Current Estimated Annual Property Tax Revenue

• Total Used 38.2 Mills (approx. 3.8% tax rate),

Raising $7.5M

• Balance of Unused Mills 3.807, equal to $747k

Possible Property Tax Revenue For New Mill Levy

• .5 Mill = $98k
• 1 Mill = $196k
• 2 Mill = $392k

Remaining Questions 1. Is passing a bill to raise county property taxes feasible in Lake County? 2. Is there already a long-term plan for the use

• f the Mill balance? In other words, are

there competing priorities for the Mill balance? 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, 1/10th 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.

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Lake County Build a Generation TAXES Sales Tax Sales Tax in Lake County

• Annual Value of Sales: $45M
• Sales Tax Rate: 4%
• Sales Tax Revenue: $1.8M/Year
• Potential Available Revenue through Sales Tax Increase
• 0.25% increase = $112,000
• 0.5% increase = $225,000
• 1% increase = $450,000

Clear Creek County: 1.65% Chaffee County: 2.75% Gunnison County: 1% Park County: 1% Summit County: 2% Eagle County: 1% Pitkin County: 3.1% Remaining Questions

• Would Lake County residents and elected
• fficials support increasing the sales tax rate?

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Lake County Build a Generation TAXES 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

Short-Term Rental Excise Tax

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Lake County Build a Generation TAXES 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. General Obligation Bonds

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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

• f 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

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Lake County Build a Generation Public/Private Funds

Revolving Loan Funds

• How They Work
• Local gov. decides to create a fund and invests a certain amount

into it. Then (usually) invites investors (banks, foundations, etc.) to invest.

• Local gov. makes loans from the fund to developers. Payments
• n the on the principle and interest are revolved back into the

fund to increase it over time and fund future projects

• Pros
• Can bring funds to bear without impacting taxes
• Fund may grow over time

Cons

• Expectation of loans rather then grants is less helpful in filling

gap, doesn’t work for staffing and some programs

• Fund can be depleted and take time to replenish

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Lake County Build a Generation

Potential Fund Source Rough Summary

Fund Summary

Consistency Responsiveness to Local Need Potential Local Support Potential to Make Projects Feasible Estimated Revenue Property Tax High Moderate-High Low Moderate - High $100k (.5 mill) $400k (3 mills) Sales Tax Fluctuates Moderate-High Unknown Moderate-High $112k (0.25%) $400k (1%) Short-Term Rental Excise Tax Moderate High High Moderate <$100k Marijuana Tax Fluctuates Moderate Moderate-High Moderate $50k-$200k General Fund Fluctuates Moderate Moderate Moderate – High $5.2M balance Private/Public Fund Varies High Moderate-High Varies (depends on size) Unknown Linkage Fee Highly Variable High Moderate Moderate-High TBD Inclusionary Zoning Highly Variable High Moderate Moderate-High TBD

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Lake County Build a Generation

Discussion/Questions

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Lake County Build a Generation

Dot Vote

Step 1 – Vote using dots on the provided board to decide which 2-3 funding sources you feel have the most promise. Step 2 – Breakout Groups to Discuss the Following Questions: 1.What action steps do we need to bring the preferred fund(s) forward 2.How much do you think we should raise? 3.Who should lead? 4.What hurdles do you envision? Break-Out Groups

Willa Williford Crested Butte, CO 303-818-0096 Willa@willifordhousing.com www.willifordhousing.com

Lake County Build a Generation

Questions and discussion

Jonathan Cappelli Denver, CO 970-948-4614 Jonathan@cappelliconsulting.com www.cappelliconsulting.com