Proposition 123 Aims to Tackle Colorado Affordable-Housing Crisis
Colorado is having a major affordable housing crisis, with a shortage of well over 100,000 affordable units. November’s ballot proposal to create a statewide affordable housing fund, known as Proposition 123, aims to eliminate this problem.
Proposal 123 would provide 0.1 out of 1 percent of Colorado income tax specifically for affordable housing. According to the initiative’s supporters, this would raise nearly $300 million a year, and that money would add to funds currently being spent on affordable housing.
“Current housing costs are completely unsustainable. Right now, 86 percent of Colorado residents think this is a big problem,” said Mike Johnston, president and CEO of Gary Community Ventures, the nonprofit that is 123’s top funder. “Everywhere you just see the crisis and I think there is a dramatic need to do something. The exciting part is that this is actually a solvable problem. We know we need a steady supply of resources to build affordable units.”
The money sent to the fund, which would be deducted from annual TABOR reimbursements taxpayers receive when there is excess state tax revenue, would be used in a variety of ways, with the Colorado Office of Economic Development and International Trade overseeing the program.
For example, the fund will provide grants to local governments and loans to nonprofit organizations to acquire and maintain land for affordable housing development.
The housing fund would invest in low- and middle-income apartment buildings so more affordable components could be added; it would also provide debt and gap financing for such developments.
First-time homebuyers could also apply for down payment help from the fund. In addition, the program would provide various homelessness prevention solutions such as: B. Rental Grants, Housing Vouchers, and Eviction and Defense Grants.
Local governments could access grants to increase the capacity of their departments responsible for land use, permit and zoning applications for housing projects. But an important provision of the measure also requires local governments applying for funding to set a goal of creating a 3 percent increase in affordable housing each year. In addition, these governments must adopt an “expedited review process to get affordable housing projects reviewed quickly,” Johnston says.
Michael Fields of Advance Colorado Action, a fiscally conservative advocacy group, suggests the state relax certain regulations to allow municipalities to approve permits faster and build more homes, rather than taking that action.
“Prop 123 would mean less money in people’s bank accounts because it would come straight from our TABOR reimbursement checks. If the state government takes and spends more of our money, that’s a tax increase. It’s not “affordable” to take $300 million of our TABOR tax refund for this flawed housing measure,” Fields said.
According to an analysis by the Colorado General Assembly Legislative Council, the proposal would reduce TABOR reimbursements by an estimated $43 per taxpayer in tax year 2023 and $86 per taxpayer in tax year 2024.
“TABOR never said that you can’t spend money on major national crises. It was said that the voters had to agree to this decision,” replies Johnston.
As in years when money is tight and there would be no TABOR refund, the language of the measure would allow the Colorado Legislature to cut the Affordable Housing Fund to balance a struggling state budget. But that’s unlikely, notes Johnston.
“There are no projections from the Legislative Council that even in a recession, we would not have sufficient resources to fund Prop 123,” he says. The TABOR cap allows lawmakers to temporarily cut funding for this measure to accommodate the to balance the budget.”
Another criticism of Proposition 123 comes from Peter Lifari, executive director of Maiker Housing Partners in Adams County, and Chris Brown, vice president of policy and research at the conservative-leaning Common Sense Institute. Lifari and Brown authored an analysis for CSI addressing the measure and pointed to a loophole that allows local governments to opt out.
“To be absolutely clear, Proposition 123 is only as successful as the number of cities and counties that choose to participate in the program,” write Lifari and Brown, who will face a variety of challenges. This creates an uncomfortable reality where Coloradans who voted for the passed measure look outside in and are unable to benefit from the measure investments because their local government chooses not to vote.
“Our view is that we don’t yet have to meet a local district commissioner or a councilwoman who says, ‘We don’t want to build affordable housing in our community,'” Johnston replies. “You need to have local partners who believe in it, and we believe those communities will overwhelmingly choose to do that.”