El Paso County has broken with tradition to become an active partner in building affordable housing — while assuming none of the risk. The innovative approach could help ease the region’s need for more affordable housing.
“It’s truly a model for the future,” said Dick Sullivan, former executive director of Colorado Springs Housing Authority who spent 33 years with the agency and also served nearly two decades on the County Housing Authority board.
Under the new approach, the county spends no money, but instead issues bonds to the developer. That qualifies the developer for low-income housing tax credits, which provides instant equity and the incentive to build.
“The tax credits generate funds that make construction possible,” said El Paso County Economic Development Division Manager DeAnne McCann.
The project is for new construction — and that’s what makes it groundbreaking for the County Housing Authority.
The process helped create a new development called Copper Range. Intended to be an affordable apartment complex, the project is currently under construction on the northeast corner of Woodmen and Black Forest roads.
Getting into new construction was Sullivan’s idea; he also wanted it to be affordable.
“Dick had a vision, and everybody else on the County Housing Authority board said, ‘Yes, you’re right,’” McCann said.
That was about two years ago, but the wheels of government turn slowly. Last fall, private activity bonds worth $26.5 million were unanimously approved by county commissioners, and sold to Citibank, with the money coming to a trustee, who dispersed it as a loan to Inland Group, McCann said.
Inland Group is the company building the 240-unit complex at Copper Range.
The development is the only project that has been fully approved, but the County Housing Authority has its hand in four other construction projects.
“That’s a legitimate role for the County Housing Authority, to be an active partner with for-profits and nonprofits to put new housing in the ground,” Sullivan said. “We need new inventory.”
El Paso County Commissioner Longinos Gonzalez, who represents the southeast sector, agrees with Sullivan.
“This process is going to help us attack this long-term housing issue as we try to maintain housing costs and renter pricing,” Gonzalez said. “These are going to be helpful — without any cost to the county or us taking any risk, and we get more housing in areas of need.
“Once [private activity bonds] are approved by the county, it puts the developments in a good position in terms of their leveraging other loans. In this case, it also helps them get federal tax credits, and it gives them the immediate advantage of having some equity in the project.”
The county had a hand in another affordable housing project, Traditions, for ages 55 and older, which will be located near Tutt Boulevard and Snowy River Drive east of Powers, McCann said.
It will also be built by Inland Group and is expected to get final approval this summer.
“Traditions is [for ages] 55-plus and, if we have housing for that part of the population, it’s going to open up other residences for other people,” said Gonzalez, the commissioners’ liaison to the County Housing Authority.
“We’re really in a situation where we need to improve and increase our workforce level housing availability, as we’ve seen a tight housing market causing a spike in cost for renters and home purchases.
“Any new development for workforce housing is going to be very important.”
McCann estimated that Copper Range and Traditions apartments would cost renters about $200 a month less than similar housing, and that Copper Range apartments would be about $650 a month for a one-bedrom and $1,100 for a three-bedroom.
Sullivan said El Paso County and the city of Colorado Springs should be proactive in building affordable housing.
“Affordable housing typically was built by the federal government giving a grant to the local housing authority,” Sullivan said. “That was the model, but that housing program ended in 1993.”
El Paso County has issued private activity bonds for 18 projects since 1983, but the County Housing Authority will break more new ground with Traditions, when both federal and state tax credits will be issued.
“That’s the first time we’ve ever gotten state tax credits,” McCann said. “Whenever we issue [private activity bonds] for these types of projects, we’re automatically eligible for 4-percent federal low-income tax credits, so it’s not as competitive.”
The federal tax credit for Traditions is worth more than $1.1 million, while the state tax credit is worth $442,188.
McCann said the state tax credit probably was issued because the County Housing Authority showed the Colorado Housing and Finance Authority it meant business by issuing a $1.3 million loan — at the low rate of 1 percent — to build Traditions.
“That’s the first loan we’ve made like that, to help gap the financing,” McCann said. “It shows CHFA there’s local buy-in. CHFA was fairly Denver-centric for a long time, but we’re really stepping into it now and I hope we get more state credits down here. We’re on CHFA’s radar — and we should be.”
Inland Group is out of Spokane, Wash., but Gonzalez said Copper Range and Traditions should bring plenty of work for local subcontractors. No local construction companies bid on the jobs.
Sullivan said there is no drawback to the county’s approach to help create new affordable housing.
“It’s an opportunity to create partnerships and create a benefit for our community,” he said.
“In the long haul, I think it’ll be good for everyone — for low-income renters and for local elected officials.” n CSBJ