By Faith Miller – Colorado Springs Independent
As the person on city staff most directly responsible for affordable housing in Colorado Springs, Community Development Division Manager Steve Posey has a lot on his shoulders.
But he’s largely optimistic about the city’s affordable housing prospects, despite a predicted shortage of almost 14,000 units for households making up to 80 percent of area median income — now calculated at about $62,000 for a family of four — by 2019. That housing shortfall warning came out of a 2014 housing needs assessment funded by Colorado Springs and El Paso County, though Posey seems skeptical of its predictions. He says the city’s Attainable Housing Plan, which it hopes to finish drafting this year, will include re-assessing housing stock.
Posey oversees city funding from the U.S. Department of Housing and Urban Development, and helps developers apply for federal tax credit financing to build new affordable rental housing projects or acquire and renovate existing housing. Such tax credits are awarded through a competitive application process to affordable housing developers, who sell them to investors to raise capital.
This year, Posey says, a city task force will also look at adding incentives for developers — which are essentially nonexistent in Colorado Springs. But even without large incentives, Posey says developers are eager to build here. The Business Journal caught up with him to discuss the city’s game plan for affordable housing.
What affordable housing projects are underway in the Springs?
We actually have a higher interest in the development of affordable housing in this community right now than we have had in many years, and it’s very encouraging. We’ve got a lot of activity going on here in Colorado Springs. One of our local housing providers, Greccio Housing, is working on a first-ever-of-its-kind project over on Bijou [Street]. They took an old vacant commercial building and they’re turning that into 18 units of affordable housing — one- and two-bedroom apartments — and we’re hoping that is the first of a trend, that we’ll start to see some more of those projects happening particularly downtown.
And then on the multifamily side … we just had the groundbreaking for [Freedom Springs in Cimarron Hills] yesterday. That’s 50 units of permanent supportive housing. They’re working hard to house homeless vets. And then we’ve also got another 60-unit project down south called The Ridge [in the Broadmoor Bluffs area], and that one has started up as well. That’s going to be a workforce housing project. We have one-, two- and three-bedroom apartments.
We’ve got approximately 700 units in the pipeline, and these are all different types of projects, everything from senior housing to more workforce housing.
By “in the pipeline,” do you mean — ?
They’ve come in and they have brought in development plans to the planning department, or they have contacted me about financing, or they have been in touch with the state about financing. And it’s hard to say which ones are going to get there first, but the encouraging thing is that we’ve got such a big volume of units that would be built and then coming online within the next two years. Colorado Springs is a very attractive place to develop affordable housing right now. … Compared to other parts of the state, this is an affordable place to build affordable housing. The cost to the developer is relatively low. There’s only one other part of the state where it’s … less expensive to build, and that’s Pueblo County.
Is the risk greater for this type of project than for traditional developments?
At the end of the day, it’s no different from any other multifamily apartment project. It’s just the money is different and more complicated.
Are there ways for developers to make money building affordable housing?
The developers who are putting together these affordable housing projects — they do make money at it. Just like any other developer they’ve got upfront costs, you know — buying land, putting together the development plans, getting through the approval process for permits and so forth, and that all costs money, and they need to be able to recover the funds that they’ve put into it. And then the affordable housing projects do have a developer fee that the developer is allowed to charge. …
With affordable housing projects, because they get tax credits, that puts a whole bunch of cash into the deal so the developer doesn’t have to borrow as much to build the project. And that’s how they’re able to keep the rents low.
Mayor Suthers has said the goal was to get to 1,000 units of affordable housing a year. Do you think that’s achievable?
Absolutely. We’re going to get there. You know, we may not have a thousand units every year. It could be that some years we’ve got 700, and some years we’re a little bit higher. But the mayor’s intent was to have an average of a thousand units a year, and that’s not just new construction. That’s also, for instance, the El Paso Housing Authority runs a really terrific down payment assistance program that last year helped over 300 families buy a house. And that’s something that we’re hoping would be part of that number as well.
How does our philosophy on incentives for affordable housing developers compare with other cities’?
Well, one of the things that is really very encouraging right now is that we have direction from the chief of staff to put together a task force that is going to look at development fees, tap fees, impact fees, building permit fees, and work toward getting some kind of incentives in place that will help develop more affordable housing in this community.
And when do you expect that to be in motion?
We’re having the first meeting of that task force in [March] and then hopefully we are going to have some incentives, some meaningful incentives around housing by the end of the year.
What are some examples of what that could look like?
The goal is to reduce development costs. That’s really what we’re trying to do. And whether or not that’s in trying to find some way to provide a break on tap fees or permit fees … we’ll be taking a close look at the way the city and the utility company in particular put together their fees for new development and then taking a look at some models from other cities to see how they have managed to create good incentives for affordable housing. And then pick the ones that are right for Colorado Springs. Not every tool is going to be right for this community.
Do you think the Springs is generally more opposed to incentives than a community like Denver?
I don’t really know. I think that one of the things that’s very encouraging to me is that there is a terrific unity of purpose in this community right now. Everybody, from the local housing providers, people like Greccio or Homeward Pikes Peak, builders, developers, the philanthropic community, and both the city and the county governments, we are all getting behind the notion that affordable housing is critical to this community’s and this region’s growth over the next five to 10 years, and we need to have a good plan in place for how to manage that.
Do you think infill development will be more important for this than continuing to expand east or north?
I think it’s going to be a combination of those. With the annexation of Banning Lewis Ranch, there’s a lot of land coming online that will be available for single-family construction. Within the city’s core, where some of the older neighborhoods are, those are places where we’re looking very closely at — what are the opportunities there to help address the housing need?
And how do you balance that with NIMBYism?
It’s unfortunate people still have a negative image of affordable housing. I think a lot of people are still hanging onto some very, very old images of public housing in really big cities like Chicago or New York where you’ve got block after block of these tenement buildings. … And that’s really not what’s getting built these days. I mean, if you drive down the street past some of the projects that have just come online, you would never have any indication that it’s any different from a multifamily apartment building. They’re much more closely regulated than they ever have been, because the people who put the money into these things have to have some very strong guarantees that the property is going to serve the people that it’s supposed to and be maintained in a condition that it’s supposed to in order for them to get their tax credits. It’s a very different model from the way housing used to get built.
And … according to some of the investment reports that are out there geared toward tax credit investors, in communities where you have strong growth happening, as Colorado Springs does right now, there is absolutely no evidence that affordable rental housing has any impact on property values.