HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/09/2004 - AFFORDABLE HOUSING NEEDS AND STRATEGIES REPORT-
Priority Affordable Housing
Needs and Strategies
Fort Collins, Colorado
Community Planning & Environmental Services
Advance Planning Department
October 2003
DRAFT #1
-
Priority Affordable Housing Needs and Strategies - i
Priority Affordable Housing
Needs and Strategies
Fort Collins, Colorado
October 2003
Prepared by:
Community Planning & Environmental Services
Advance Planning Department
281 N College Av/PO Box 580
Fort Collins, CO 80522-0580
Tel: 970-221-6376
Email: aplanning@fcgov.com
Web: www.fcgov.com/affordablehousing
-
ii - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - iii
Acknowledgements
We would like to thank the following groups for their important contributions to this study.
CARE Housing, Inc
Catholic Charities of Northern Colorado
City of Fort Collins Affordable Housing Board
Colorado Division of Housing
Colorado Housing and Finance Authority (CHFA)
Colorado State University Off-Campus Student Housing
Countrywide Home Loans
Disabled Resources
Family Self-Sufficiency
Foothills Gateway
Funding Partners for Housing Solutions
Larimer County Department of Human Development
Larimer Center for Mental Health
Larimer County Office on Aging
National Association of Home Builders
Neighbor To Neighbor
Northern Colorado AIDS Project (NCAP)
Project Self-Sufficiency
The Group Inc
The Fort Collins Housing Authority
US Department of Housing & Urban Development, Denver
-
iv - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - v
Table of Contents
Part I - The Need for High Quality Affordable Housing.......................... 1
Housing Costs as They Compare to Other Colorado Communities..............2
Workforce Housing – Wages vs. Sale Prices......................................12
Our Community’s Current Need for Affordable Housing ...........................16
The Need for Affordable Rental Units ...............................................16
The Need for Affordable For-Sale Housing ........................................33
Affordable Housing Need – Target Groups ........................................40
The Impact of Colorado State University Students .............................41
Affordable Housing Need for Special Populations ..............................43
Economic Trends & Their Affect on Affordable Housing ...........................54
Cost of Living ................................................................................54
Economic Outlook .........................................................................54
Affordable Housing as an Economic Development Issue.....................55
Economic Impact of Affordable Housing ...........................................55
Conclusions - Fort Collins’ Priority Affordable Housing Needs..................57
Rental Housing .............................................................................57
For Sale Housing...........................................................................58
Housing Production .......................................................................58
Part II - The Provision of Affordable Housing ..................................... 59
Financial Resources for Affordable Housing Developers..........................59
Federal ........................................................................................59
State ...........................................................................................63
Private .........................................................................................66
Analysis: The Availability of Financing Needed to
Build Affordable Housing .............................................................70
-
vi - Priority Affordable Housing Needs and Strategies
The Affordable Housing Community ........................................................72
The Role of Private For-Profit Developers..........................................72
The Role of Private Not-For-Profit Developers....................................72
The Role of Private Not-For-Profit Service Providers ...........................73
The Role of the Quasi-Public Not-For-Profit Developer
(Housing Authority).....................................................................73
The Role of Financial Institutions.....................................................74
The City of Fort Collins’ Role ..................................................................76
Policies ........................................................................................76
Other Policies: ..............................................................................80
Recommendations: .......................................................................80
Regulation....................................................................................81
Education & Outreach....................................................................83
Funding & Other Incentives.............................................................85
Analysis: Which of the City’s Roles Need Additional Resources?.........89
Part III - Goals and Strategies for Meeting Fort Collins’ Priority
Affordable Housing Needs....................................................................91
Introduction ...........................................................................................91
Evaluation of Affordable Housing Goals ..................................................92
Analysis of Units Needed, Available Funding and Needed Funding...........94
Production of New Rental Units ............................................................100
Production of New Rental Units ............................................................101
Goal: To assist very low-income renters (below 50% AMI) ...............101
Goal: To assist low-income renters (50 to 80% AMI) ......................103
Assistance for First-Time Homebuyers..................................................104
Goal: To assist low-income first time homebuyers
(below 80% AMI)......................................................................104
Facilitation and Production of Affordable Housing Units........................106
Goal: To motivate developers to increase production of affordable
housing, both for rent and for sale..............................................106
-
Priority Affordable Housing Needs and Strategies - vii
Preservation of Affordable Housing Units..............................................111
Goal: To preserve the affordability of existing rental housing ............111
Goal: To preserve existing owner-occupied housing stock................113
Goal: To require new affordable housing units to stay affordable
for as long as feasible..............................................................114
Appendix I – Inventory of Affordable Housing within the City of Fort
Collins GMA ....................................................................................... 117
Appendix II – Status of Affordable Housing within the City of Fort
Collins GMA ....................................................................................... 141
Appendix III – City of Fort Collins Affordable Housing Program
Summary............................................................................................ 153
-
viii - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - ix
Executive Summary
In 1999, the City of Fort Collins approved the Priority Affordable Housing Needs and Strategies
report that investigated and evaluated the City’s affordable housing inventory; determined
existing and future housing needs for low income families; and identified populations with the
most urgent need for affordable housing. The City is now in the process of updating the socio-
economic factors and demand information for affordable housing in the 1999 report. This new
information provides a clearer picture of the priorities and goals for affordable housing
development in Fort Collins.
The first part of the report updates demographic data from the 1999 Priority Affordable
Housing Needs and Strategies report and re-examines the need for rental and for-sale
affordable housing in Fort Collins. A review of the special populations need for affordable
housing is evaluated in this section. The impact and effect of economic development trends and
benefits of affordable housing development is also discussed.
Part II of the report is a description of the various financial resources, institutions, and housing
providers in the affordable housing community, including a comprehensive analysis of the City’s
current roles, responsibilities and programs. A review of current City policies and regulations is
outlined in this section with recommendations to update those policies that no longer reflect
the City’s direction.
Part III of the report reviews specific and measurable short term objectives for the City’s
affordable housing effort. It includes an assessment of existing financial resources that support
affordable housing, both pubic and private. Lastly, it presents recommendations for the City’s
future roles, responsibilities and programs for meeting its affordable housing needs.
The foundation for the housing needs and supply recommendations is existing, readily available
information, such as the 2000 Census, the Multiple Listing Service (MLS), Colorado State
University Off-Campus Student Services, and the Multi-Family Housing Vacancy and Rental
Survey by Gordon E. Von Stroh of the University of Denver (under the sponsorship of the
Colorado Division of Housing). We have also used other existing studies that have been
prepared by city planners, county planners, and consultants working on affordable housing
issues dating back to March 1999. This information has been used to formulate a more current
context of the local housing market and demographics in the study update. We believe that with
this information we can present a reasonable recommendation in regard to the community’s
affordable housing needs and supply problems.
-
x - Priority Affordable Housing Needs and Strategies
There are a number of assumptions underpinning our estimation of the number of affordable
housing units needed in Fort Collins. It is based on the Census and data from HUD. In order to
compensate for the impact of student households, we have restricted need to only family and
elderly households. This gives us a very conservative estimate of units needed. The estimate of
very low income households (at 50% of AMI) needing affordable rental housing (2,214) is
much higher than our potential pool of first-time homebuyers (1,096). We have previously
proposed that the City’s financial resources be approximately split, renters 70% and potential
homebuyers 30%. Staff continues to support this allocation. However, should the City focus its
resources on very low income households at 40% and below AMI, the number of rental units
needing assistance is 1,632, but these units will probably require more financial support.
Conversely, units affordable to households at 40% AMI and lower are in most need, and
represent in most cases, income restrictive units. There are only 136 income restricted housing
units in Fort Collins at 40% AMI and approximately 8,000 households in this income group.
The majority of these units are owned and operated by the Fort Collins Housing Authority and
nonprofit housing providers in the City.
The fundamental role of the City in affordable housing production is two-fold: provide enough
funding to projects early in the planning process, so that developers can approach other
funding sources with concrete evidence that the City supports their project; and, in some cases,
provide gap financing to projects needing the final funding piece to complete the project.
Leveraging public and private, national, state, and local funding sources is the key. We estimate
that an average subsidy of $5,810 for rental and up to $9,000 for owner projects per unit would
be required for assisting low income households in 2003, and that this subsidy should increase
annually based on construction costs and inflation factors. Relatively more funding should be
considered for projects serving extremely low and very low income households. These figures
are the basis of the proposed budget to support the City’s Affordable Housing Program. The
proposed budget is based on a new10-year timeline (2003 - 2012). In light of the City’s
monetary constraints, the Affordable Housing Fund budget is frozen at the funding level of
$735,898 for the 2004 and 2005 period.
-
Priority Affordable Housing Needs and Strategies - xi
Recommended Goals:
Production of New Rental Units in Order
of Priority
Goal: To assist extremely low income renters (40%
and below AMI).
Goal: To assist very low income renters (40% to 50%
AMI).
Goal: To assist very low and low income renters
(50% to 80% AMI).
Assistance for First Time Homebuyers
Goal: To assist low income first time homebuyers
(below 80% AMI).
Production of Affordable Housing Units
Goal: To motivate developers to increase production
of affordable housing, both for rent and for
sale.
Preservation of Affordable Housing Units
Goal: To preserve the affordability of existing rental
housing.
Goal: To preserve existing owner-occupied housing
stock.
Goal: To require new and existing affordable housing
units to stay affordable for 20 years.
Conclusions – Fort Collins Priority Affordable Housing
Needs:
1. Rental Housing. This community’s highest priority must be to produce new rental
units affordable to households earning 40% and below AMI, and then households
earning between 40% and 50% AMI. In 2000, there were approximately 2,214 of
these very low-income family and elderly households paying over 30% of their income
for rent. The next highest priority is families earning 50% to 80% AMI. In 2000, there
were approximately 1,187 of these low-income family and elderly households paying
over 30% of their income for rent. At this time, there appears to be adequate supply of
multi-family rental units that are affordable to this group. This over-supply of 50% to
80% AMI units is expected to be a short term condition (12-18 months).
2. For-Sale Housing. Fort Collins needs to continue to help first-time homebuyers
earning below 80% of AMI to get into affordable homeownership. Based on 2000
Census, there were approximately 1,096 low-income family households (earning
below 80% AMI) that could become first time homebuyers with down payment and/or
closing cost assistance.
3. Housing Production. This community has been proactive in identifying and
securing sites for future affordable housing production. It needs to continue to
examine regulatory concerns, like the ones presented in the Zucker report (Quality
Improvement Plans for Development Review Process), and consider reforming them.
The City needs to continue to be supportive of proposed developments in their quest
for identifying development subsidies. In addition, Fort Collins needs to continue to
invest in the maintenance of the existing affordable housing stock to make it productive
for long as possible.
-
xii - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 1
Part I - The Need for High
Quality Affordable Housing
The first part of this report focuses on data from the Multi-Family Housing Vacancy
and Rental Survey by Gordon E. Von Stroh of the University of Denver (under the
sponsorship of the Colorado Division of Housing). From 1995 to 1999, the Rental
Survey has collected vacancy and rental rates from property owners and managers
every February and September from thirteen communities throughout Colorado. In
2000, the Rental Survey expanded to include twenty communities. The Rental Survey
reflects the conditions in larger, all-rental apartment complexes and does not attempt
to gather information from individually-owned, smaller properties.
In the following sections, we will compare data from the original thirteen communities
in the Rental Survey (Aspen, Colorado Springs, Durango, Eagle County, Fort
Collins/Loveland, Loveland, Fort Morgan, Glenwood Springs, Grand Junction, Greeley,
Lake County, Pueblo and Summit County). These communities were compared in the
City’s “1999 Priority Affordable Housing Needs and Strategies Report.” In addition, the
update compares data from the expanded twenty communities to highlight specific
points or provide additional information. The additional communities are Alamosa,
Buena Vista, Canon City, Gunnison, Montrose, Salida and Steamboat Springs.
Swallow Road Apartments, by CARE Housing, Inc.
Part 1 - The Need for High Quality Affordable Housing
2 - Priority Affordable Housing Needs and Strategies
Housing Costs as They Compare to Other Colorado
Communities
According to the Rental Survey, as of February 2003, the average rent in Colorado
communities varied widely, from $329 in Fort Morgan-Sterling to $1,026 in Aspen. Of
the 13 surveyed areas, Fort Collins-Loveland ranks 4th with an average rent of $743
per month, behind only the resort communities of Aspen, Eagle County, and Summit
County. For these communities rents remained flat or decreased between September
2000 and February 2003. See Table 1.
-
Priority Affordable Housing Needs and Strategies - 3
Table 1: Average Rent by Market Area, September 2000 to
February 2003
Source: “Multi-Family Housing Vacancy and Rental Survey,” February 2003 by Gordon E. Von Stroh, Ph.D.,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing. * Note:
The Multi-Family Housing Vacancy and Rental Survey treats Fort Collins/Loveland as one entity for all
information gathered, except for vacancy rates where they are separately surveyed.
$0
$200
$400
$600
$800
$1,000
$1,200
Aspen
Colorado Springs
Durango
Eagle County
Fort Collins (calculated)
Loveland
Fort Morgan/Sterling
Glenwood Springs
Grand Junction
Greeley
Lake County
Pueblo
Summit County
Average Monthly Rent
Sept 2000
Feb 2001
Sept 2001
Feb 2002
Sept 2002
Feb 2003
Part 1 - The Need for High Quality Affordable Housing
4 - Priority Affordable Housing Needs and Strategies
Table 2 shows a comparison of rent levels for all communities surveyed by the Division
of Housing from 2001 through 2003. Looking at the 20 Colorado communities
surveyed; there is no consistent pattern. In February 2003, rent levels decreased or
were relatively flat, as 15 communities had rent decreases, while the other 5 had flat
rent levels (Canon City, Eagle County, Fort Collins/Loveland, Greeley and Gunnison), as
illustrated by Table 2. From 2001 to 2002, 8 communities showed slight rent
decreases while the remaining 12 had flat to moderate rent increases. This
demonstrates rent levels are influenced more by local market conditions than
statewide trends.
The Loveland, Fort Collins and Greeley market areas have recently experienced
historically high vacancy rates. This condition is due partly to the large number of new
multi-family developments that entered the marketplace in 2002 and the downturn of
the local economy, reflected by fewer jobs being available for workers. Unemployment
has reached an all time high of 5.2% for the year ending 2002. Many low income
renters have also decided to purchase homes due to availability of low mortgage
interest rates, while others without jobs have moved to other areas where there are
more employment opportunities. These circumstances have made it difficult for the
rental market to reasonably absorb all of the vacant units.
Anecdotal information indicates that Fort Collins could also be experiencing some
doubling-up by households that can longer afford to rent their own housing, opting
instead to live with other family members, due to job loss or cutbacks in the number of
hours they work. This situation could also temporarily affect the vacancy levels in Fort
Collins until the employment picture improves.
-
Priority Affordable Housing Needs and Strategies - 5
Table 2: Average Rent, All Communities, September 2001 to
February 2003
Source: “Multi-Family Housing Vacancy and Rental Survey,” February 2003 by Gordon E. Von Stroh, PhD,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing.
$0
$200
$400
$600
$800
$1,000
$1,200
Alamosa
Aspen
Buena Vista
Canon City
Colorado Springs
Durango
Eagle County
Fort Collins (calculated)
Loveland
Fort Morgan/ Sterling
Glenwood Springs
Grand Junction
Greeley
Gunnison
Lake County
Montrose
Pueblo
Salida
Steamboat Springs
Summit County
Average Monthly Rent
Sept 2001
Feb 2002
Sept 2002
Feb 2003
Part 1 - The Need for High Quality Affordable Housing
6 - Priority Affordable Housing Needs and Strategies
For the 13 original communities surveyed, rental vacancy rates varied across the State
in February 2003 as indicated in Table 3. Generally, a 5% vacancy rate is considered
an equilibrium rate – below 5%, indicates choice of units is restricted and rents may
increase, while much over 5% generally indicates there may be excessive vacancies
and that there is no current need for additional units. The tightest rental market of the
13 original communities was in Eagle County, with a 2.0% vacancy rate, and out of all
the communities surveyed Gunnison had the lowest vacancy rate at 1.7% indicating a
very high demand for rental units in both communities. In September 2002, Loveland
had the highest vacancy rate at 29.1%, indicating an extremely overbuilt market with
excessive rental housing units. While it remains the highest in the state, Loveland’s
vacancy rate had decreased to 19.6% by February 2003. Fort Collins’ 13.7% vacancy
rate was the second-highest of the communities surveyed, however, this overall vacancy
rate does not reflect the situation in lower rent properties, as there is usually greater
demand for the lower rent properties in the Fort Collins-Loveland MSA.
-
Priority Affordable Housing Needs and Strategies - 7
Table 3: Rental Vacancy Rates by Market Area, September
2000 to February 2003
Source: “Multi-family Housing Vacancy and Rental Survey,” February 2003 by Gordon E. Von Stroh, PhD,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing.
0%
5%
10%
15%
20%
25%
30%
Aspen
Colorado Springs
Durango
Eagle County
Fort Collins
Loveland
Fort Morgan / Sterling
Glenwood Springs
Grand Junction
Greeley
Lake County
Pueblo
Summit County
Vacancy Rate
Sept 2000
Feb 2001
Sept 2001
Feb 2002
Sept 2002
Feb 2003
Market Equilibrium
Part 1 - The Need for High Quality Affordable Housing
8 - Priority Affordable Housing Needs and Strategies
Table 4 shows the vacancy rate for all the communities surveyed by the Division of
Housing in the 2001 to 2003 period. In February 2003, five communities had vacancy
levels below the 5% equilibrium rate, three communities had a vacancy rate of
approximately 5% and twelve communities exceeded that level.
-
Priority Affordable Housing Needs and Strategies - 9
Table 4: Vacancy Rates for all Market Areas, September 2001
to February 2003
Source: “Multi-family Housing Vacancy and Rental Survey,” February 2003 by Gordon E. Von Stroh, PhD,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing.
0%
5%
10%
15%
20%
25%
30%
Alamosa
Aspen
Buena Vista
Canon City
Colorado Springs
Durango
Eagle County
Fort Collins
Loveland
Fort Morgan / Sterling
Glenwood Springs
Grand Junction
Greeley
Gunnison
Lake County
Montrose
Pueblo
Salida
Steamboat Springs
Summit County
Vacancy Rate (%)
Sept 2001
Feb 2002
Sept 2002
Feb 2003
Market Equilibrium
Part 1 - The Need for High Quality Affordable Housing
10 - Priority Affordable Housing Needs and Strategies
The median price of a single family home has been rising across the State, as shown on
Table 5. Of the communities selected for comparison in the 1999 Needs and Strategies
report, Fort Collins saw the 5th largest dollar increase in home price between 1992
and 2000, and had the 3rd highest median sale price. Homeownership in Fort Collins
is getting more expensive. Only Boulder County and Summit County had higher prices.
Yet, Fort Collins posted only a modest increase in median sale prices between 1996
and 2000, (18.6%), placing it seventh behind Summit County, Logan County, Metro
Denver, Colorado Springs, and Pueblo County.
-
Priority Affordable Housing Needs and Strategies - 11
Table 5: Median Annual Price of a Single Family Home in
Selected Market Areas, 1992, 1996 & 2000
Source: Colorado Association of Realtors; Prowers County Assessor, Mesa, Summit, Boulder and Logan
County Boards of Realtors; Fort Collins Board of Realtors and U.S. 2000 Census. *Averages were used for
Boulder and Summit Counties as medians were not available.
$94,453
$153,004
$155,989
$56,516
$66,002
$88,293
$40,317
$86,907
$132,437
$220,498
$217,070
$79,716
$115,000
$143,000
$65,000
$119,945
$165,800
$241,900
$317,500
$95,200
$118,900
$169,600
$87,700
$147,100
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Metro Denver Boulder County Summit County Pueblo County Mesa County Fort Collins Logan County Colorado Springs
Median Annual Home Price
Median Price 1992
Median Price 1996
Median Price 2000
Part 1 - The Need for High Quality Affordable Housing
12 - Priority Affordable Housing Needs and Strategies
WORKFORCE HOUSING – WAGES VS. SALE PRICES
Table 6 shows how the average wage change between 1992 and 2000 compares to the
change in median sale price in Colorado for a single family home for selected areas in
Colorado. In the areas selected, housing prices rose faster than wages. However, the
fourth greatest disparity was in Fort Collins, with a 91% increase in the price of
housing and only a 41% increase in wages during this time.
This disparity is partially explained by the high proportion of service-related and retail
jobs in Fort Collins, which accounted for 48% of its labor force in 2000. This was
consistent with the 48.7% of all Colorado workers employed in services and retail at
the same time. In 2000 the average wage rate in the retail sector was $16,950
compared to $59,350 in manufacturing. Lower paying retail trade and services have
exhibited the most rapid job growth in Fort Collins’ economy, with a 65% increase
between 1985 and 2000. Statewide, these two industries are projected to grow 42% by
the year 2008.
Fort Collins’ position as a regional retail center is important both to its economy and to
the City’s fiscal health. In 2002, total general revenues were $153,866,389 and sales
and use taxes contributed $69,519,992 or 45.18% of total revenue. This is an increase
over the 2001 sales and use tax contribution to total revenue of 44.95%. If service and
retail employees, current and future, do not have affordable housing options in town,
they will be forced to look elsewhere – for housing, and quite possibly for jobs. The
obvious implication is that as more people are forced to commute to the city, the
greater its traffic congestion and related air-quality problems will be. Not so obvious is
the loss of dollars spent on goods, services and entertainment in their home
communities. Long commutes reduce employee’s attendance and productivity. They
also make it more difficult for employers to find and keep quality employees, thus
reducing productivity and restricting business growth. Finally, if growth in wages
continues to lag behind growth in housing costs, many current Fort Collins residents
will find that their quality of life is stagnating.
-
Priority Affordable Housing Needs and Strategies - 13
Table 6: Percent Change in Average Wage for all Industries
vs. Percent Change in Median Price* of a Single Family Home
in Selected Market Areas, 1992 to 2000
Source: Colorado Association of Realtors, Boulder, Logan, Mesa, Summit and Fort Collins County Board of
Realtors; U.S. 2000 Census; Colorado Employment and Wages, Annual Averages 1992 and 2000. *Averages
were used for Boulder County as medians were not available.
$27,737
$19,701
$20,760
$22,903
$17,518
$22,687
$153,004
$94,453
$155,989
$56,516
$66,002
$88,293
$40,317
$86,907
$45,562
$41,414
$25,201
$25,490
$26,224
$32,393
$22,662
$33,039
$284,598
$195,289
$98,839
$112,202
$168,810
$84,167
$147,100
$25,828
$12,784
$333,333
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Boulder County Metro Denver Summit County Pueblo County Mesa County Fort Collins Logan County El Paso County
1992 Average Wage
1992 Median Price
2000 Average Wage
2000 Median Price
Part 1 - The Need for High Quality Affordable Housing
14 - Priority Affordable Housing Needs and Strategies
The National Association of Home Builders’ Housing Opportunity Index (Table7) is
calculated quarterly for 191 metro areas across the nation. For the first quarter of
2002, in Fort Collins, 57.2% of all houses sold were affordable to families earning
median income. Nationally, Fort Collins is currently ranked 153rd out of the 191
metro areas. Regionally, out of the 53 metro areas surveyed in the West, it is the 23rd
most affordable as compared to the 12th in 1997.
Table 7: Housing Opportunity Index – First Quarter 2002
Source: The National Association of Home Builders. Note: *Denotes population below 250,000. +Denotes
population of 250,000 to 1 million. Capital letters denotes population over 1 million. * Affordability ranks in
parentheses are for Fourth Quarter 1997
Affordability Rank
Median
Family
Income
Median
Sales
Price
Share of Homes
Affordable for
Median Income
National
n=191 (n=193)*
Regional
n=53 (n=45)*
National $54,400 $160,000 64.8%
DENVER PMSA $69,900 $208,000 59.6% 146 (112) 20 (6)
Pueblo MSA* $39,400 $108,000 64.1% 131 (129) 12 (10)
Fort Collins-Loveland MSA* $60,800 $187,000 57.2% 153 (133) 23 (12)
Boulder-Longmont PMSA+ $87,900 $255,000 62.4% 137 (140) 16 (14)
Colorado Springs MSA+ $56,800 $174,000 60.1% 144 (140) 18 (14)
Greeley PMSA* $47,900 $165,000 41.3% 166 (157) 33 (23)
-
Priority Affordable Housing Needs and Strategies - 15
Since 1997, purchasing a home in Fort Collins has become less affordable to families
at or below median income with respect to the Housing Opportunity Index. However
this has been possibly offset by lower interest rates which have played a major role in
making housing more affordable for all income groups. If interest rates should move
higher, the ability to afford a house in Fort Collins could decrease. The following
graph, Table 8, shows how affordability has changed over the past 5 years for the
nation and for each of the metro areas in Colorado that were surveyed.
Table 8: Percentage of Homes Sold – Affordable to Median
1997 to 2002
Source: National Association of Home Builders.
25
30
35
40
45
50
55
60
65
70
75
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
97' 98' 99' 00' 01' 02'
Year and Quarter
% Homes Sold Affordable to Median Income
Boulder - Longmont PMSA
Colorado Springs MSA
Denver PMSA
Fort Collins - Loveland MSA
Greeley PMSA
Pueblo MSA
National
Part 1 - The Need for High Quality Affordable Housing
16 - Priority Affordable Housing Needs and Strategies
Our Community’s Current Need for Affordable
Housing
THE NEED FOR AFFORDABLE RENTAL UNITS
The number of responses collected from property owners and managers for the Multi-
Family Housing Vacancy and Rental Survey from Fort Collins-Loveland has grown from
3,532 in February 1998 to 4,112 as of February 2003 as shown in Table 9. When
comparing the overall average net rent levels in Fort Collins-Loveland MSA for 1998
through 2002 for all units, rents have increased by 20% during this period or
approximately 4.2% per year. In spite of the high vacancies, rents continue to maintain
each year in Fort Collins.
As shown in Table 10, there is no consistent pattern of rents increasing or decreasing
in the Fort Collins/Loveland area per unit type each year. Overall, rents have continued
to maintain in this market area according to the Rental Survey.
Colorado State University’s Off-Campus Student Services department collects
information on rents in Fort Collins only. Its information is based on units that are
listed by owners or property managers with that office, available for rent by students.
Although their September 2002 report (Table 11) is based on only 296 units, it does
include information on single family houses. Not surprisingly, 3- and 4 -bedroom
units tend to be in single family houses. Therefore the average rents for those units
found in CSU’s listing may be more accurate than the Division of Housing's survey
results. These rents may also be higher than those reported by the Division of
Housing’s survey because it does not include Loveland, which tends to have lower rents
than Fort Collins. The Division of Housing’s survey is more accurate for 1- and 2-
bedroom unit rents as they tend to be in multi-family complexes and the Rental Survey
is based on so many more responses.
-
Priority Affordable Housing Needs and Strategies - 17
Table 9: Average Rents, Fort Collins-Loveland MSA, February
2003
Source: “Multi-Family Housing Vacancy and Rental Survey”, February 2003.
Unit Type Number Reported % of Total
Approx.Range
of Net Rents Average Net Rent
Efficiency 219 5.3% $301 - 525 $391
1-BR 1,199 29.2% $426 - 850 $643
2-BR, 1-BA 1,135 27.6% $276 - 825 $684
2-BR, 2-BA 1,061 25.8% $501 -1075 $838
3-BR 386 9.4% $626 - 1300 $923
4-BR+ 112 2.7% $926 - 1775 n/a
Total 4,112 100.0% $743
Part 1 - The Need for High Quality Affordable Housing
18 - Priority Affordable Housing Needs and Strategies
Table 10: Trends in Average Rents, Fort Collins-Loveland
MSA, 1998-2003
Source: “Multi-Family Housing Vacancy and Rental Survey, February 2003" by Gordon E. Von Stroh, PhD,
University of Denver sponsored by the Colorado Department of Local Affairs, Division of Housing.
$300
$400
$500
$600
$700
$800
$900
$1,000
Q1-98 Q3-98 Q1-99 Q3-99 Q1-00 Q3-00 Q1-01 Q3-01 Q1-02 Q3-02 Q1-03
Efficiency
One bedroom
Two bed, one bath
Two bed, two bath
Three bedroom
All
-
Priority Affordable Housing Needs and Strategies - 19
Table 11: Average Rents For Student Housing, Fort Collins,
September 2002
Source: "Renter's Information Price Statistics” (Other than Room-in-Home and Rental-To-Share) -- September
2002 -- produced by Colorado State University Off-Campus Student Services.
Unit Type
Number
Reported % of Total
Range of Net
Rents ($/mo)
Avg Rent
($/mo)
Apt 21 $295-700 $521
House 2 $400-850 $625
Condo 8 $475-650 $564
Townhouse
Duplex 4
$375-595 $515
1 BEDROOM
Subtotal 35 11.8% $536
Apt 39 $425-5,750 $783
House 20 $595-1,950 $952
Condo 48 $500-1,100 $773
Townhouse
Duplex 26
$0-1,200 $684
2 BEDROOM
Subtotal 133 44.9% $785
Apt 9 $250-945 $680
House 53 $750-2,000 $1,056
Condo 35 $850-1,500 $989
Townhouse
Duplex 5
$850-1,200 $935
3 BEDROOM
Subtotal 102 34.5% $994
Apt 5 $400-1,400 $880
House 21 $400-1,650 $1,108
4 BEDROOM
Subtotal 26 8.8% $1,064
Total 296 100.0%
Part 1 - The Need for High Quality Affordable Housing
20 - Priority Affordable Housing Needs and Strategies
Generally, rents reported by CSU’s Off-Campus Student Services are higher across the
board since this information was last reported in February 1998, with the exception of
the 4-bedroom units, which are usually found in houses for rent. These properties
have experienced a decrease in the average rent they can demand. There is also a
significant increase in the number of 3-bedroom apartments listed for rent by CSU Off-
Campus Student Services, indicating the market may be getting softer for 3-bedroom
apartments.
Table 12 shows the trend in average rents from 1998 to 2002 according to the
Colorado State University Off-Campus Student Services rent information. Overall, rents
continued to increase, except for efficiency/studio units that have had more variability
in rents from year to year.
The information provided by CSU puts average annual rents close to or slightly higher
than the Division of Housing’s survey information. This is partially explained by the
fact that CSU takes an annual average of rents advertised throughout the year, while the
Rental Survey attempts to pinpoint average rents at off-season times of year (February
and September) when fewer people are looking for rental units and rents tend to drop.
In addition, CSU only collects data on units that are available to students in Fort Collins,
while the Rental Survey looks at all multi-family units in a market area that includes
Loveland.
Despite some years having decreases in rents, both analyses show for the most part an
increase in rents over time. CSU’s data shows year to year changes in rent that vary
from -0.3% to 6%, with a average annual increase of 2.7% for all units from 1998 to
2002, depending on unit size. The Division of Housing’s survey is very similar. Year to
year changes vary from -5% to 11%, with an average annual increase from 1998 to
2002 of 2.4% for all units.
-
Priority Affordable Housing Needs and Strategies - 21
Table 12: Trends in Average Rents, Fort Collins, 1998-2002
Source: Summary Table, Rental Analysis, 1998-2002 produced by Colorado State University Off-Campus
Student Services.
$495
$485
$509
$532
$491
$571
$587
$599
$635 $641
$663
$686
$713
$742
$755712 $
$737 $733
$811
$825
$400
$500
$600
$700
$800
$900
1998 1999 2000 2001 2002
Rent
Efficiency/Studio
1 Bedroom Unfurnished
2 Bedroom Unfurnished
3 Bedroom Unfurnished
Part 1 - The Need for High Quality Affordable Housing
22 - Priority Affordable Housing Needs and Strategies
Shown in Table 13, both nationally and in Fort Collins the traditional target for
affordable rental housing has been households earning 50% - 60% of AMI or less.
Average gross rents for 1-, 2- and 3-bedroom units in Fort Collins are not affordable
for those households that require at least one bedroom per member. These
households would have to earn at least 60% to 70% of AMI to afford the average rent,
an additional $1,146 - $2,049 in annual income. For example, a single parent with a
male and female child would need to earn 70% of AMI ($40,929) to afford the average
3- bedroom unit.
Average rents begin to come in line at levels affordable to households earning 60%
AMI as household size increases beyond one person per bedroom. For example, if the
same single parent’s children are young enough to share a bedroom, or if they are the
same sex, then that family can reasonably occupy a 2-bedroom unit. The average 2-
bedroom, 1-bath rent is affordable at 60% AMI ($30,888), but two baths raise that to
72% AMI ($37,050) for a three person household.
For households filling a unit with 2 people per bedroom, average rents are affordable
to those earning 48% to 57% of AMI. These families would typically consist of a
married couple with children who can share a room. The examples of affordability for
households, with two or more family members sharing a bedroom, is not meant to
exclude the Fort Collins Policy which states that no more than 3 unrelated persons can
live together or 2 unrelated adults and their related children.
The number of households increased 2.7% annually between 1990 and 2000. At the
same time, the size of the average household remained relatively constant from 2.44
persons in 1990 to 2.45 in 2000. The lack of significant growth in the city’s household
size tracks a similar pattern at the national level caused by increasing numbers of non-
traditional households, such as singled-parents, divorced persons, couples without
children, as well as single persons. Male- or female-headed households, with no
spouses present, accounted for 7.9% (3,638) of all households; of these households,
two-thirds (66%) contained children under the age of 18 years in 2000.
-
Priority Affordable Housing Needs and Strategies - 23
Table 13: Affordability of Average Gross Rents by Unit Size in
the Fort Collins-Loveland MSA, 2003
Source: Average Net Rents from "Multi-Family Housing Vacancy and Rental Survey, February 2003” by
Gordon E. Von Stroh, PhD, University of Denver. Sponsored by the Colorado Department of Local Affairs,
Division of Housing. Calculation of affordable rent levels was based on HUD's published Area Median Family
Income for the Fort Collins-Loveland MSA for 2003 and assumes 1.5 persons per bedroom (1 person for
efficiencies). Estimated Utility Allowances from the Fort Collins Housing Authority as of 2003.
Family
Size
Average
Net Rent
Est. Utility
Allowance
Est. Average
Gross Rent
Income
needed 100 % AMI
% AMI
served
Efficiency 1 $391 $51 $442 $17,674 $45,400 39%
1 $45400 63%
1-BR
2
$643 $67 $710 $28,386
$51,800 55%
2 $51,800 60%
2-BR, 1-BA 3 $58,300 53%
4
$684 $88 $772 $30,888
$64,800 48%
2 $51,800 72%
2-BR, 2-BA 3 $58,300 64%
4
$838 $88 $926 $37,050
$64,800 57%
3 $58,300 70%
4 $64,800 63%
5 $70,000 58%
3-BR
6
$923 $100 $1,023 $40,929
$75,200 54%
Part 1 - The Need for High Quality Affordable Housing
24 - Priority Affordable Housing Needs and Strategies
Table 14 compares average rents in the Fort Collins-Loveland MSA to affordable rents
and calculates the amount of subsidy required for unaffordable units. Rents in
affordable housing developments are calculated, by HUD and other funding programs,
based on the Area Median Family Income (AMI) and 1.5 persons per bedroom. Based
on this calculation, rents affordable to households earning 60% AMI are fairly close to
Fort Collins-Loveland MSA average rents. However, this changes dramatically at the
50% AMI rents levels, where subsidies ranging from $44/month to over a $100/month
would be required to afford the average rents (except for efficiencies, which are based
on 1 whole person’s income). At 30% AMI subsidies from $100/month to over
$400/month are required to afford rents for all units.
Availability of Affordable Rental Units
The Rental Survey reports net rents in $25 increments. The following chart (Table 15)
is based on net affordable rents for households earning 50% and 60% AMI, rounded
down to the nearest reported rent increment. It shows 14.5% of the units in Fort
Collins/Loveland (310 units of 2,143) are affordable to those earning 50% AMI. In
comparison to the 1999 report, there were no vacant units available for the 50% AMI
households. The vacancy rate for two and three bedroom units affordable at the 50%
AMI level range from 7.5% (two bedroom/one bath) to 31.6% (three-bedroom unit).
Efficiency and one bedroom units have 5.9% and 6.0% vacant levels respectively.
For families earning between 50% and 60% AMI, 12.9% of units are available for rent
or (122 units of 943) ensuring that there is more than an adequate supply of the 50%
to 60% AMI units, as a 5% vacancy rate represents equilibrium in the market place.
The over-60% AMI units are in greatest supply in Fort Collins/Loveland as of the
February 2003 survey, with approximately 19.3% of these units vacant (176 of 914). It
is anticipated that this over-supply for the 50% and 60% AMI units may be short term
(12 to 18 months), with respect to the Department of Housing and Urban Development
(HUD) Market Watch information dated April 2003.
Conversely, units affordable to households at 40% AMI and lower are in most need,
and represent in most cases, income restrictive units. There are only 136 income
restricted housing units in Fort Collins at 40% AMI and approximately 8,000
households in this income group. The majority of these units are owned and operated
by the Fort Collins Housing Authority and nonprofit housing providers in the City.
Table 14: Comparison of Average Rents to
Affordable Rents by Unit Size and Income in the
Fort Collins-Loveland MSA, 2003
Source: Average Net Rents from "Multi-Family Housing Vacancy and Rental Survey,
February 2003" by Gordon E. Von Stroh, PhD, University of Denver. Sponsored by
the Colorado Department of Local Affairs, Division of Housing. Calculation of
affordable rent levels was based on HUD's published Area Median Family Income for
the Fort Collins-Loveland MSA for 2003 and assumes 1.5 persons per bedroom (1
person for efficiencies). Estimated Utility Allowances from the Fort Collins Housing
Authority as of 2003. Negative numbers are shown in parentheses.
Effi-
ciency 1-BR
2-BR
1-BA
2-BR
2-BA 3-BR
Average Net
Rent $391 $643 $684 $838 $923
Est. Utility
Allowance $51 $67 $88 $88 $100
Estimated
Average
Gross Rent $442 $710 $772 $926 $1,023
Affordable Gross Rents
at 60% AMI $681 $729 $874 $1,011 $1,128
at 50% AMI $567 $607 $728 $842 $940
-
Priority Affordable Housing Needs and Strategies - 25
Table 15: Vacancy Rates By Unit Size and Affordable Net
Rents, Fort Collins/Loveland, February 2003
Source: "Multi-Family Housing Vacancy and Rental Survey, February 2003" by Gordon E. Von Stroh, PhD,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing. Calculation
of affordable rent levels was based on HUD's published Area Median Family Income for the Fort Collins-
Loveland MSA for 2003 and assumes 1.5 persons per bedroom (1 person for efficiencies).
Efficiency
1-BR
2-BR,
1-BA
2-BR,
2-BA
3-BR
Total
# Units as
% of Total
< $526 < $601 < $751 < $751 < $851
Total units 219 498 894 307 225 2143 53.6%
# Vacant 13 30 173 23 71 310
up to 50%
% Vacant 5.9% 6.0% 19.4% 7.5% 31.6% 14.5%
$526 - 675 $626 - 750 $751 - 850 $751 - 875 $851 - 1025
Total units 0 383 241 317 2 943 23.6%
# Vacant 0 35 41 46 0 122
50%-60%
% Vacant 0.0% 9.1% 17.0% 14.5% 0.0% 12.9%
> $675 > $750 > $850 > $875 > $1025
Total units 0 318 0 437 159 914 22.9%
# Vacant - 47 - 71 58 176
over 60%
% Vacant - 14.8% 0.0% 16.2% 36.5% 19.3%
Total units 219 1,199 1,135 1,061 386 4000 100.0%
# Vacant 13 112 214 140 129 608
Total
% Vacant 5.9% 9.3% 18.9% 13.2% 33.4% 15.2%
Part 1 - The Need for High Quality Affordable Housing
26 - Priority Affordable Housing Needs and Strategies
Overall since 2000, vacancy rates have risen in Fort Collins. Table 16 shows vacancy
rates for each unit size from February 2000 to February 2003. Except for efficiency
units, vacancy rates for each unit size have risen fairly consistently over that time. For
efficiency units, vacancy rates were below the 5% market equilibrium most of that time
and only rose above market equilibrium in the first quarter of 2003.
The high vacancy rate for units affordable to households earning 50% of AMI is very
unusual. Historically, Fort Collins maintains a very tight rental housing market. The
Division of Housing’s survey received almost 4,112 responses in February 2003, and
over 2,100 units were affordable to households earning 50% of AMI. This is quite an
improvement over the findings in the 1999 report, when less than 200 units reported
in the Rental Survey were affordable to households at the 50% AMI level.
Some of the renters that fall into the low income category are students, who have
resources beyond their own income to pay for housing. However, not all students
would fall into that income category, and not all of those that do can depend on their
student loans or their parents to pay rent.
In addition, the Division of Housing’s survey does not indicate if any of the units it
reported on were income-restricted. It is likely that some of them are simply in older,
less desirable buildings – not in subsidized, restricted projects. Therefore some of
those affordable units are available to the general public, and higher-income
households can compete with low-income households for those units. With the
current economy and high vacancy rates this might not be occurring as frequently, but
could become more of problem as the economy improves and vacancy rates decrease
again.
-
Priority Affordable Housing Needs and Strategies - 27
Table 16. Vacancy Rates By Unit Size February 2000 to
February 2003
Source: "Multi-Family Housing Vacancy and Rental Survey, February 2003" by Gordon E. Von Stroh, PhD,
University of Denver. Sponsored by the Colorado Department of Local Affairs, Division of Housing.
0% 5% 10% 15% 20% 25% 30% 35%
Efficiencies
1 BR
2 BR
3 BR
4 BR
Total
Vacancy Rate
Feb 2000
Sept 2000
Feb 2001
Sept 2001
Feb 2002
Sept 2002
Feb 2003
Market Equilibrium
Part 1 - The Need for High Quality Affordable Housing
28 - Priority Affordable Housing Needs and Strategies
Table 17 shows the number and percentage of renter households at each level of AMI.
The highest number of rental households fall into the 0-30% AMI category, followed by
the 51-80% AMI category. Only 29.8% (6,756) of renter households earn greater than
80% AMI, while 46.8% (10,622) of renter households earn below 50% AMI. As there
are only approximately 2,100 affordable units to renter households earning 50% AMI,
many of these households must be paying greater than 30% of their income for rent or
doubling up with family members or other families.
Table 17: Number of Renter Households by Percent of Fort
Collins Median Family Income, 2002
Source: Fort Collins Affordable Housing Nexus Report, March 2002
% AMI # of Households % of Total
0-30 6,103 26.9%
31-50 4,519 19.9%
51-80 5,339 23.5%
81-95 1,656 7.3%
96+ 5,100 22.5%
Total 22,717 100.0%
-
Priority Affordable Housing Needs and Strategies - 29
Availability of Income-Restricted Affordable Rental Units
There are currently about 2,030 units of affordable housing in subsidized
developments in Fort Collins, including 154 units of public housing owned by the Fort
Collins Housing Authority. Appendix I lists the income-restricted affordable rental
projects in Fort Collins. All of these projects were funded by agencies that require the
units be income-restricted for some length of time. Most rental projects are capped at
rents affordable to 60% of AMI. Some, especially those created by local nonprofits, are
dedicated to serving people at even lower incomes. HUD-funded developments
generally have Project-Based Section 8 Rental Assistance, which subsidizes rent so
tenants pay only 30% of their income for rent. CARE Housing, Inc. and the Fort Collins
Housing Corporation are unique in providing permanent housing with rents limited to
30% of tenants’ income without such rental subsidies, but they also set a minimum
income (30% AMI) for residents.
Not surprisingly, complexes with the lowest rent have the least turnover and the longest
wait. Senior complexes with rental subsidies have turnover less than 1% of their units
per month, (3 units). A new elderly applicant could wait approximately 12 months to
get a unit. Older complexes, affordable to families earning 40 to 55% of AMI, turn
over approximately 4% of their units each month. Newer tax credit projects, typically
affordable at 60% of AMI, have higher turnover rates than in the past. Some of these
newer tax credit projects have some units affordable at lower income levels – these
units tend to have waiting lists and less turnover. The Fort Collins Housing
Corporation’s 380 affordable units are mostly available on a first-come, first-served
basis.
As either development or rental subsidy contracts expire on these projects, they may be
lost as part of the affordable housing stock inventory. Complexes owned by not-for-
profits will, in the vast majority of cases, remain affordable. Those that are owned by
for-profits are more likely to be converted to market rate housing when their
subsidized mortgages are paid off. DMA Plaza, Oakbrook I and II all have Project
Based Section 8 Rental Assistance, which is currently renewed on an annual basis.
There is a distinct possibility that this program may not always have enough funds to
continue to renew these contracts. If that happens, many very low income elderly may
lose their housing. These three projects have 257 Section 8 units with rental assistance.
It is hoped they also receive portable rental assistance to maintain current funding
levels.
Part 1 - The Need for High Quality Affordable Housing
30 - Priority Affordable Housing Needs and Strategies
Table 18 shows a comparison of rental affordable housing units in construction or
planned for the 1998 and 2002 period. Appendix II provides a list of current
affordable housing projects planned or in production as of September 2002. At this
time, there is only one affordable rental project under construction in Fort Collins. It is
the Volunteers of America (VOA) elderly housing project, which started construction in
October 2003, and will be completed in July 2004 (60 units). In addition, one mixed-
income Private Activity Bond project is in Development Review and most likely will be
approved in the summer of 2004 (192 total units/73 affordable). The earliest this
project might finish construction is the summer of 2005. Projects in the conceptual
stage may or may not have attended a Conceptual Review meeting. Most of them are
simply on the “drawing board,” and their developer may decide not to go forward.
New construction of affordable rental housing is constrained by a number of
commonly understood factors. Available land in Fort Collins is expensive and not
available on the market at the size suitable for small rental developments (50 -150
units). Sites that are close to community facilities and services are particularly hard to
find. Construction costs are rising, due in part to materials, labor costs and changes in
City regulations. The City’s Land Use Code, impact fees, engineering standards and
infrastructure requirements are often cited by developers as too expensive to allow
affordable construction. Acquisition of water rights in special districts can also be very
expensive. Finally, federal financial resources are limited and declining and the
competition for funding is fierce.
-
Priority Affordable Housing Needs and Strategies - 31
Table 18: Affordable Rental Housing Planned or in Production
in the Fort Collins Urban Growth Area
Source: Advance Planning Department, December 2002
40
121
60
14
50
141
145
77
274
4
0
50
100
150
200
250
300
350
1998 2002 1998 2002 1998 2002 1998 2002
In
Construction/Recently
Constructed
Working on
Development
Agreement
In Development
Review
Conceptual
Number of Units
60%-80% AMI
< 50% AMI
Part 1 - The Need for High Quality Affordable Housing
32 - Priority Affordable Housing Needs and Strategies
Availability of Tenant-Based Rental Subsidy
The Fort Collins Housing Authority administers 844 HUD Housing Choice Vouchers,
which subsidize rents in privately owned rental properties. Vouchers may also be used
in affordable housing complexes, such as tax credit projects and nonprofit affordable
units. Applicants are ranked based on preferences. Preferences are:
Involuntarily displaced
Working or attending school full time
Enrolled in an employment training program
Elderly or disabled families
The Fort Collins Housing Authority waiting list has over 700 applicants for the Public
Housing Program. The wait time varies by bedroom size needed, but is typically
between 2 and 3 years, or more. For each bedroom size, the wait is typically:
One-bedroom, 3+ years
Two-bedrooms, 2 years
The waiting list for a Housing Choice Voucher has approximately 1,100 applicants.
Depending on preferences, the wait could be 2 to 4 years unless FCHA receives a new
allocation of vouchers from the U.S. Department of Housing and Urban Development.
Tenants who receive a certificate/voucher have 60 days to find a unit that rents for the
HUD-established Fair Market Rent (FMR) and meets a housing quality inspection.
Voucher holders are allowed to rent a more expensive unit but must pay 30% of their
adjusted gross income plus any amount over the FMR as their share of the rent.
Voucher holders may not spend more than 40% of their adjusted gross income as rent
when they first move into a unit.
The Fort Collins Housing Authority applies for new grants to fund more vouchers as
often as possible, but there is no guarantee of receiving any of these new funds as the
grants are awarded in a competitive process to all Housing Authorities in the United
States. Congress renews funding for these programs on an annual basis, and so the
amount of funding each year may vary.
Three-bedrooms, 2 years
Four-bedrooms, 3 years
Residents of Public Housing who are over-or under-housed or who
need an accessible unit
Single Room Occupancy resident of at least 6 months duration
Residents of Larimer County
-
Priority Affordable Housing Needs and Strategies - 33
THE NEED FOR AFFORDABLE FOR-SALE HOUSING
The Rate of Homeownership
The rate of homeownership in Fort Collins has increased by 4% from 53% to 57%
since the 1990 Census. This rate is lower than the national rate of 66.2% and the
statewide rate of 67.3%. Fort Collins lower rate of homeownership is typical of cities
with a large student population. Two other Front Range college towns have similar or
lower rates – 58.4% of Greeley’s households own their homes, and only 49.5% of
Boulder’s do.
The average sale price of all homes sold in the Fort Collins area during 2002 was
$217,076 as seen in Table 19. Calculations of the average sales prices for the Fort
Collins area includes some areas outside of city limits, such as Wellington, but does not
include Loveland or Windsor. Over 40% of the units sold in 2002 were 3-bedrooms
homes. Not surprisingly, existing units were less expensive than new homes and
attached units were less expensive than detached single-family units. Also, smaller
units were more likely to be found as attached units than 3-bedroom and larger units.
Table 19: Average Sale Prices in the Fort Collins area, 2002
Source: Multiple Listing Service, provided by The Group Inc.
1-BR 2- BR 3-BR 4- BR+ All Units
Unit Type # Sold Average $ # Sold Average $ # Sold Average $ # Sold Average $ # Sold Average $
New 76 $115,478 463 $173,225 472 $234,946 172 $362,181 1,183 $221,570
Existing 94 $98,021 703 $153,116 1,224 $213,630 976 $273,601 2,997 $215,301
Single 25 $117,816 366 $189,373 1,498 $224,951 1,123 $288,960 3,012 $243,532
Attached 145 $103,758 800 $148,166 198 $178,795 25 $193,111 1,167 $148,807
All Units 170 $105,825 1,166 $161,101 1,696 $219,562 1,148 $286,873 4,180 $217,076
Chestnut Village Condominiums, Homebuyer’s Assistance Program recipient.
Part 1 - The Need for High Quality Affordable Housing
34 - Priority Affordable Housing Needs and Strategies
Affordability of Average Sale Prices by Unit Size
The following chart, Table 20, shows that the average prices of 1-bedroom units are
affordable to families with 1 to 2 members earning up to 80% AMI. Two-bedroom
units, however, are not generally affordable for families with 1 to 4 members earning
up to 80% AMI, with the exception being a 4-person household occupying a 2-
bedroom unit. This is quite different from the 1999 report, which showed that all 1-
and 2-bedroom units were affordable to 1 to 4 family members. Over two-thirds of the
units sold in 2002, however, had 3 or 4 bedrooms. The average price of 3- and 4-
bedroom units were not affordable to families earning 80% of AMI or less. Since the
average price of new units is invariably higher than that of all units (including existing
stock), most new units are probably out of reach of households earning 80% AMI or
less.
-
Priority Affordable Housing Needs and Strategies - 35
Table 20: Affordability of Average Sale Prices by Unit Size
Average sale prices provided by The Group, Inc. Mortgage insurance calculation provided by Pacific
Mortgage. Taxes are calculated as 1% of the sale price divided by 12. Insurance is calculated as 0.4% of the
sale price divided by 12. Calculation of affordability was based on HUD's published Area Median Family
Income for the Fort Collins-Loveland MSA for 2003 and assumes 1.5 persons per bedroom (1 person for
efficiencies). Utility allowances are based on information from the Fort Collins Housing Authority in 2003.
1-BR 2-BR 3-BR 4-BR
Family Size 1 2 2 3 4 3 4 5 6 4 5 6 7
Sale Price $105,825 $161,101 $219,562 $286,873
Downpayment (3%) $3,175 $4,833 $6,587 $8,606
Principle $102,650 $156,268 $212,975 $278,267
Monthly Rate
(7%/yr) 0.58% 0.58% 0.58% 0.58%
Term (mos) 360 360 360 360
Mortgage Payment $683 $1,040 $1,417 $1,851
Mortgage
Insurance $68 $103 $141 $184
PropertyTaxes $88 $134 $183 $239
Home Insurance $28 $43 $59 $76
"PITI" (Subtotal) $867 $1,320 $1,799 $2,351
Utilities $149 $167 $167 $186 $204 $186 $204 $223 $241 $204 $223 $241 $260
Total Housing
Cost $1,016 $1,034 $1,487 $1,506 $1,524 $1,985 $2,003 $2,022 $2,040 $2,555 $2,574 $2,592 $2,611
Income Needed $32,092 $32,660 $46,965 $47,565 $48,134 $62,695 $63,263 $63,863 $64,432 $80,683 $81,283 $81,851 $82,451
80% AMI $36,300 $41,450 $41,450 $46,650 $51,850 $46,650 $51,580 $56,000 $61,150 $51,850 $56,000 $60,150 $64,300
Income Needed
as % of AMI 88% 79% 113% 102% 93% 134% 123% 114% 105% 156% 145% 136% 128%
Part 1 - The Need for High Quality Affordable Housing
36 - Priority Affordable Housing Needs and Strategies
The following chart, Table 21, shows how much subsidy would be required for families
at various income levels to afford an average-priced, appropriately sized unit. At 70%
AMI, the disparity ranges from $2,600 for a 3- or 4-person family buying a 2-bedroom
unit, up to $128,300 for a 4-person family buying an average-priced 4-bedroom unit.
At 50% AMI, the required subsidy is very large – $100,000 and higher for 4-bedroom
units.
-
Priority Affordable Housing Needs and Strategies - 37
Table 21: Comparison of Average Sale Prices to Affordable
Sale Prices by Unit Size and Income
Average sale prices provided by The Group Inc. Calculation of affordable sale prices were based on HUD's
published 2003 Area Median Family Income for the Fort Collins-Loveland MSA. * Table is only a generalized
comparison of housing subsidy required for the average home price. The average home price here does not
including down payment costs, utility costs, property taxes, housing insurance and interest.
1-BR 2-BR 3-BR 4-BR +
Family
Size 1 2 2 3 4 3 4 5 6 4 5 6 7
Average Sale Price
$105,825 $161,101 $219,562 $286,873
Affordable Sales Prices
80%
AMI $131,045 $150,025 $150,025 $169,080 $188,189 $169,080 $188,189 $188,896 $202,475 $188,189 $188,896 $202,475 $216,258
70%
AMI $110,046 $126,007 $126,007 $142,053 $158,478 $142,053 $158,478 $172,941 $187,307 $158,478 $172,941 $187,307 $201,640
60%
AMI $93,960 $107,677 $107,677 $121,421 $135,522 $121,421 $135,522 $148,143 $160,731 $135,522 $148,143 $160,731 $172,832
50%
AMI $75,469 $86,481 $86,481 $97,568 $109,043 $97,568 $109,043 $119,538 $130,034 $109,043 $119,538 $130,034 $140,529
Subsidy Required to make Average Sale Price Affordable
80%
AMI ($25,220) ($44,200) $11,076 ($7,979) ($27,088) $50,482 $31,373 $30,666 $17,087 $98,684 $97,977 $84,398 $70,615
70%
AMI ($4,221) ($20,182) $35,094 $19,048 $2,623 $77,509 $61,084 $46,621 $32,255 $128,395 $113,932 $99,566 $85,233
60%
AMI $11,865 ($1,852) $53,424 $39,680 $25,579 $98,141 $84,040 $71,419 $58,831 $151,351 $138,730 $126,142 $114,041
50%
AMI $30,356 $19,344 $74,620 $63,533 $52,058 $121,994 $110,519 $100,024 $89,528 $177,830 $167,335 $156,839 $146,344
Part 1 - The Need for High Quality Affordable Housing
38 - Priority Affordable Housing Needs and Strategies
There were a total of 4,180 homes sold in the Fort Collins area (Table 19) through the
Multiple Listing Service in 2002. You can see very few of them were affordable to and
large enough for a family of four earning 80% of AMI, without some type of homebuyer
assistance, owner equity, sellers’ concessions and adjustable mortgage interest rates.
An low number of homes (170) were priced under $120,000, which would be
affordable to a 2-person family. There were also only 25 attached 4-bedroom homes
in the affordable range of low income large family households.
According to the 2000 Census, there were nearly 37,392 persons aged 25 to 44 years,
making up 31.5 % of the city’s population as compared to 35% in this age group in
1990. This represents a decrease in the number of persons in the age group since
1990. Since this age group is the prime child-bearing cohort, the decreasing numbers
in this age group might impact the demand for new traditional single-family units
needed in the future.
The market appears to be serving the households that need 3- and 4- bedroom single-
family units, without any problems for families in excess of 100% AMI. Substantial
subsidies, however, are required for people earning 80% AMI or less to afford the
average priced 3- or 4-bedroom home.
Generally, affordable units that are currently in construction (Provincetowne - 141 sale
units) are becoming available on a limited basis and will be affordable to families at
80% and below AMI. One project (Old Town North - 44 affordable units) is in the
process of finalizing its Development Agreements approval and might start construction
in the spring of 2004, and be available early 2005 and beyond, depending on
construction scheduling. There is no way of estimating when, or if, projects in
Development Review (78 sale units) will be approved, or when they might come on
line. The earliest they might finish construction is the fall of 2005. Affordable projects
in the conceptual stage may or may not yet have submitted plans at a Conceptual
Review meeting. Most of them are simply on the “drawing board,” and their developer
may decide not to go forward.
-
Priority Affordable Housing Needs and Strategies - 39
Table 22 highlights the number of owner affordable housing units in construction or
planned for the 2002 period versus 1998.
New construction of owner affordable housing is constrained by some of the same
factors as rental housing. Available land in Fort Collins is expensive and scarce not
available on the market at the size suitable for small owner developments. Sites that are
close to community facilities and services are particularly hard to find. Construction
costs are rising, due in part to materials, labor costs and changes in City regulations.
The City’s Land Use Code, Impact Fees, engineering standards and infrastructure
requirements are often cited by developers as too expensive to allow affordable
construction. Acquisition of water rights in special districts can also be very expensive.
Finally, federal financial resources are limited and declining and the competition for
funding is fierce.
There is one very serious implication to the lack of available for sale housing
affordable to families earning about 80% of AMI. Families that want to own, but either
cannot find an affordable unit or do not have a down payment, are forced to continue
to rent. Based on information from the 2000 Census, City staff estimates there are
2,669 households that fall into this category.
Table 22: Affordable For-Sale Housing Planned
or in Production in the Fort Collins GMA
Source: City of Fort Collins, Advance Planning Department.
160
27
101
78
33
408
44
220
150
15
0
50
100
150
200
250
300
350
400
450
1998 2002 1998 2002 1998 2002 1998 2002 1998 2002
In Construction Working on
Development Agreement
In Development Review Conceptual Unknown Status
Number of units
Single Family or Duplex for sale
Townhouse or Condo for sale
Part 1 - The Need for High Quality Affordable Housing
40 - Priority Affordable Housing Needs and Strategies
AFFORDABLE HOUSING NEED – TARGET GROUPS
(Courtesy of U.S. Department of Housing and Urban Development, Denver Office –based on 2000 Census)
7,030 renters (36% of all renters) have incomes less than 50% of the median and
pay over 30% of income for housing costs. This group is the traditional target for
subsidized rental housing. Providing units affordable to these families typically
requires a combination of subsidies/incentives. These families are eligible for
Section 8 rent subsidy but there is not enough available for all in this group.
1,526 renters (8% of all renters) have incomes between 50% and 80% of the
median and pay over 30% of income for rent. Even though their income is
sufficient at the higher income AMI levels, many of these families have not
accumulated enough savings for down payment of $4,000 to $5,000 typical on an
FHA loan in this price range.
2,997 renters (15% of all renters) have incomes between 50% and 80% of the
median and pay less than 30% of income for rent. These families are not currently
rent-burdened, but they do have sufficient income to afford homes priced in the
$68,000 to $157,000 range. If this product were available and these families had
the necessary down payment, many would likely purchase homes instead of
continuing to rent.
3,629 owners (14% of all owners) have incomes less than 80% of the median and
pay over 30% of income for housing costs. Many of these households are
spending a high proportion of income on housing voluntarily but many could be
spending this high proportion due to a decline in income. These families may
need counseling regarding debt restructuring, budgeting and/or refinancing to
avoid foreclosure. They may also need access to daycare and transportation so a
spouse can return to work.
These target groups include a total of 15,182 households (33% of all households) who
are either struggling with their present housing cost or could benefit from some
assistance to help them become homeowners.
-
Priority Affordable Housing Needs and Strategies - 41
THE IMPACT OF COLORADO STATE UNIVERSITY STUDENTS
There were 24,735 full-time students enrolled at Colorado State University (CSU) in the
fall of 2002. In the residence halls 4,777 (95.7%) of the 4,991 beds were occupied. In
CSU apartments, normally 95% of the 1,018 contracts for 1 and 2 bedroom units are
filled. In the fraternity or sorority houses there are approximately, 588 students. It is
estimated that 2,400 students commute from areas around Fort Collins. This leaves
roughly 16,000 students to find housing off-campus. Students therefore have an
enormous impact on the rental housing market in Fort Collins. They also tend to
distort estimates of the need for affordable housing, because the stereotypical student
household may appear low-income, but has resources other than their own income to
pay rent.
Colorado State University commissioned a study of its future student housing needs that
was completed in April of 2001. The study reviewed the current demand for student
housing options, and determined future projections up to the year 2010. The analysis
divided housing options into two categories: on- and off-campus. On-campus, CSU
provides a variety of housing options such as traditional dorms, suites and CSU - run
apartments. On average, about 25% of the total student population is housed on
campus. The majority of students living on-campus are freshmen and sophomores due
to the requirement that freshmen live on-campus. Off-campus housing ranges from
apartments to houses with one to several bedrooms. A demand model created
specifically for this study determined that CSU currently has a small surplus of
residence hall beds and a significant deficit of both suite and apartment beds. Future
student population projections were calculated using an annual percentage increase of
1.4%, a conservative indicator based on national data projections of 2% growth a year.
At this growth rate, CSU’s student population would be 26,500 in 2010. This would
double the already significant deficit in suite and apartment beds, and decrease by
three-fourths the surplus in traditional residence hall beds. To combat these shortfalls
in housing, the report recommended moving forward with the “South Residence Halls:
Long Range Plan (Draft)” proposal to construct 700 new suite-style residence hall
beds. The University is currently moving ahead with this phase and has received
permission from the Colorado Commission of Higher Education to proceed with
construction. The new hall should be ready for occupancy for the 2004 fall semester.
Part 1 - The Need for High Quality Affordable Housing
42 - Priority Affordable Housing Needs and Strategies
While there is a demand for more CSU managed apartments, the report recommended
addressing this as a secondary concern due to the importance of retaining freshman
and sophomores in suite and traditional-style campus housing. Additionally, the
consultants felt that the private market provides enough suitable options for students
wanting apartment living. Building more apartments would be a significant risk for CSU
as it would be competing with private market developments.
The U.S. Census collects data on household types, such as “family,” “elderly,” and
“non-related” households. Non-related households include people living alone or
people sharing a home with someone they are not related to by blood, marriage or
adoption. In Fort Collins, 30% of very low income and 14% of low income renter
households are neither related nor elderly. The stereotypical student household would
fall into that category. Students who lived with their families would not (their parents
or spouses and/or children). However, non-related households could also include
people who are not students, including people who work full-time but need to share a
home to reduce their housing costs.
The City of Fort Collins has analyzed 2000 Census data to show household type by
income level and housing problems. In Fort Collins, 69% of renter households that
earn less than 50% of AMI and pay over 30% of their income for rent are neither
elderly nor living with family. The “Affordable Housing Need-Target Groups” is based
on projections from the 2000 Census and provided by the U.S. Department of Housing
and Urban Development. Therefore, it is possible to modify the rental “Target Groups”
to take out non-related, non-elderly households from the estimates of affordable
housing need. This analysis removes all typical student households, plus others,
resulting in a very conservative estimate of the non-student housing need. It would read
as follows:
Affordable Housing Need – Target Groups Excluding Students
(Courtesy of U.S. Department of Housing and Urban Development, Denver Office –based on 2000 Census)
7,030 renters (36% of all renters) have incomes less than 50% of the median and
pay over 30% of income for housing costs. Approximately 1,650 of them are family
households and 564 are seniors. This group is the traditional target for subsidized
rental housing. Providing units affordable to these families typically requires a
combination of subsidies/incentives.
-
Priority Affordable Housing Needs and Strategies - 43
1,526 renters (8% of all renters) have incomes between 50% and 80% of the
median and pay over 30% of income for rent. About 982 of them are family
households and 205 are elderly. Even though their income is sufficient at the
higher AMI, many of these families have not accumulated enough savings for down
payment of $4,000 to $5,000 typical on an FHA loan in this price range.
2,997 renters (15% of all renters) have incomes between 50% and 80% of the
median and pay less than 30% of income for rent. Approximately 1,096 of them
are family households and 163 are elderly. These families are not rent burdened,
but if this product were available and these families had the necessary down
payment, many would likely purchase homes instead of continuing to rent.
AFFORDABLE HOUSING NEED FOR SPECIAL POPULATIONS
Emergency Shelter
In March 2001, the New Bridges day shelter closed due to financial problems. Before it
closed, New Bridges served about 165 people per month with a variety of services
including a message board, phones, and laundry facilities. Local churches and other
agencies have opened their doors on cold weather days to fill in the void. The Open
Door Mission started a day shelter that offers shower facilities, computers, a phone, a
mailing address, and a separate area for women and their children. Staff of Open Door
Mission estimates the maximum served during times of inclement weather was 20-25
clients. A group of local churches, Urban Congregations in Partnership, set up the
Severe Weather Hospitality Center operating out of the Mennonite Church. It was open
inclement weather weekdays, February through March 2002 and served 167
individuals, 75% of whom were single men. In addition, the Abyssinian Christian
Church was open inclement weekends for the same time period and served a total of 7
clients. This small number was due to the shelter being open only a few weekends, and
the location of the church far from downtown. In response, the weekend shelter now
operates at Catholic Charities’ The Mission as needed. Families are able to go to the
Family Center on weekdays, where a few programs are offered during the day. In 2001,
the Family Center served 27 distinct homeless families from March 2001 to December
2001, with a total of 34 children under the age of five. A frequent complaint of clients
was the need for services and activities at the day shelters, such as a phone, laundry,
message boards, mail pick-up, health care, child care, employment/benefits assistance,
and classes. The cold weather Hospitality Center continued to operate for the winter of
2002-2003.
Part 1 - The Need for High Quality Affordable Housing
44 - Priority Affordable Housing Needs and Strategies
Catholic Charities’ The Mission has a total of 40 emergency shelter beds, including 28
for single men, 6 for single women, and 4 rooms for families. It also has 3 transitional
units for families. They serve 1,600 people per year, 30% of whom are repeat clients.
The maximum stay at The Mission is 30 consecutive days for single individuals and 60
days for families. Families may also stay up to 6 months in The Mission’s Addition.
After an initial 2 weeks for single people and 30 days for families, an extension to the
maximum time is granted based on progress towards self-sufficiency. After each stay,
clients may not receive shelter there again for 4 months. Up to 25 single clients and 50
families find permanent housing each year.
The Open Door Mission also provides emergency shelter for up to 3 consecutive
Fridays. It has beds for 60 men and 24 women, and space for 7 families. There are
six long-term rehabilitation programs and two recovery programs. Additionally, anyone
can stay at the Open Door Mission for $5.00 a night, and counseling is provided.
Crossroads Safehouse also provides emergency shelter and services for victims of
domestic violence. The Larimer County Social Services’ Youth S.A.F.E. has been
replaced by “The HUB” Juvenile Assessment Center. “The HUB” is a coordinated multi-
agency program that provides emergency foster care for at-risk youth.
When they are not at an emergency shelter, the homeless are typically doubled up with
either friends or family – Catholic Charities’ staff has heard of up to 10 people sharing
an apartment or motel room. They may stay part of a month at a “kitchenette motel”
for $150 per week, or they may stay in a tent or in their car. These are the only
housing options that do not require references or credit checks.
Both Catholic Charities and Open Door Mission staffs receive many reports of their
clients typically working at least one and often 2 or more jobs at a time; they want to
work. At Catholic Charities, 53% of their clients come in employed or find employment
while receiving services. In 2002, staff has seen a reduction in the work the clients
were able to obtain. At minimum wage, they generally earn about $10,000 to $15,000
per year. Their incomes are less than 30% AMI, not enough to meet the minimum
income needed for affordable housing without Section 8 assistance. Over 60% of the
families served are from Colorado. A significant portion, (30 - 50%) have mental
health and/or alcohol and substance abuse problems. These agencies have seen an
increase in the number of disabled persons who are becoming homeless, due to the
lack of housing for those on minimal disability payments.
-
Priority Affordable Housing Needs and Strategies - 45
Transitional Housing
There are two main sources for transitional housing units for homeless individuals.
The Fort Collins Housing Authority’s Homecoming buildings have 26 SRO units with
on-site management and counseling. These units are usually full. There are 15 other
SRO units in Fort Collins, but they do not have services. Larimer Center for Mental
Health Center operates 2 transitional facilities with a total of 14 beds, plus a 4 unit
apartment building with Project Based Section 8 rent subsidies.
Neighbor to Neighbor provides housing counseling for people at all points of the
housing continuum, from homelessness to home ownership. During 2002, 793
households received rental counseling in Fort Collins. 90% of these households
earned less than 80% of AMI, 85% earned less than 50% of AMI, and 66% earned
below 30% of AMI. Over 60% were female-headed households, and 12% were
disabled.
Neighbor to Neighbor’s Transitional Housing Program is a low-income housing
program which assists homeless families with children. This is a two-year program that
provides a subsidized rental unit and ongoing advisory support. Participants pay 30%
of their income toward monthly rent and are required to set and achieve personal
goals, including education and/or job skills training. Families also work to obtain
affordable, permanent housing within the two-year time limit. Neighbor to Neighbor's
Transitional Housing Program operates at a 96% success rate, meaning that graduating
clients have stabilized in their housing after two years.
In 2002, Neighbor to Neighbor provided Transitional Housing to 13 participant
families in Fort Collins. The number of participants served by this program has
decreased steadily over the past several years, due to diminished funding and more
stringent guidelines and restrictions. The need, however, continues to grow, as
revealed by rising rates of homeless clients seen by Neighbor to Neighbor housing
counselors and a longer waiting list for openings in the Transitional Housing Program.
This waiting list is generally 60 to 100 families, who may have to wait anywhere from 5
days to 6 months before they move in. In addition, Neighbor to Neighbor staff states
that for families ready to graduate, there is a critical need for permanent housing in the
20 - 40% AMI income range.
Catholic Charities has 5 Housing Choice Vouchers for clients in Larimer and Weld
Counties, 1 of which is currently in use in Fort Collins. The vouchers have a 2 year
Part 1 - The Need for High Quality Affordable Housing
46 - Priority Affordable Housing Needs and Strategies
time limit, and recipients must be working with a case manager towards self-
sufficiency.
Project Self-Sufficiency (PS-S), an independent non-profit serving Larimer County,
provides services to single parent families that want to become independent of all
public subsidies. It serves about 110 clients county-wide, 60 in Fort Collins. Some
clients come to the program with Section 8 subsidy or a Neighbor to Neighbor
transitional housing unit, but about 85% have some kind of housing need. Many are
either paying an excessive amount of their income for rent, or are doubled up in an
unstable situation. All of PS-S’s clients need Section 8-type subsidies. Until recently,
Project Self-Sufficiency was given top priority for getting housing or certificates from
the Fort Collins Housing Authority. Now they get some points on the priority ranking,
but there is no way to predict how long it will take to get a unit or voucher. Housing
subsidy is always the last subsidy that clients graduate from.
Family Self-Sufficiency, operated by the Fort Collins Housing Authority, provides the
same kind of services as Project Self-Sufficiency, but also has incentives to save money.
It has two programs: Section 8 Housing Choice Vouchers and Public Housing. They are
both HUD-sponsored programs, intended for people (not just single parent families)
who already have vouchers or live in public housing.
While those resources are helpful, there are no transitional units available for couples
without children. Even for those who can benefit from the existing transitional housing
stock, there is no housing that they can afford to transition to, especially not if they
earn $6 an hour. Even at $9-10 per hour, it can be difficult to find units. The loss of
mobile home units has hurt this population.
Both Larimer Center for Mental Health Center and Catholic Charities staff see a need
for additional units of SRO housing, with different levels of supervision and support
services. A small boarding house would be good for transitional housing for people
who are able to share a house with others, including married couples without kids.
They also believe that a group home with on-site supervision and services is needed.
Minorities
Of the 4,907 minority households in 2000, 47% are classified as within the very low
income range. In comparison, non-minority households comprise 39% of very low
income households (2000 Census). Thus it appears a disproportionate number of
minority households fall in the very low income category. This is borne out by the high
-
Priority Affordable Housing Needs and Strategies - 47
number of minorities who are on the waiting list for the Fort Collins Housing
Authority’s public housing, rental subsidy, and affordable housing programs.
Seniors
Between 1990 and 2020, the most notable shift in Colorado’s population will be the
increase in the number of older adults as the baby boom generation ages. During
these 30 years, the number of Coloradoans aged 55-64 is expected to increase 187%,
and the number aged 65 to 74 is expected to increase 167%. However, the percentage
of Fort Collins’ population over the age of 65 years is slightly lower than the rest of the
state, at 7.9% for the city versus 9.7% for Colorado.
Most people in the 65-74 age group live with a spouse, enjoy good health, and enjoy
their leisure time. Most of those who are 75 and older are women and are in generally
poorer health. They are more apt to live alone, with relatives, or in institutions. They
are also most likely to have disabilities and therefore require accessible housing
and/or assistance with daily living. In 2000, 508 seniors were identified as living below
the poverty level. In 2002, there were approximately 1,101 seniors paying 30% or
more of their income for housing.
Larimer County staff expanded on the forecast published in “Affordable Housing
Demand in Larimer County, 1996-2000” to highlight information on the status of
seniors in 1996. According to that report, of the 12,486 households headed by
someone 65 or older, 23% earned less than $10,000, which equaled 30% of AMI for a
single person that year. Thirty-two percent earned between $10,001 and $20,000, up
to 60% of AMI for a single person. In addition, seniors make made up approximately
one-fifth of all renters in the County. Senior renters tended to have even lower incomes
– 35% earned less than $10,000 and 38% earned between $10,001 and $20,000 per
year. An update to this information is available with the recent census. In the 2000
Census, there were 15,070 households headed by someone 65 or older, representing a
33% increase from the 1990 Census. The percentage of seniors earning less than 30%
AMI, increased to 37% for single persons with incomes less than $15,000. There were
53% of seniors earning up to 60% AMI in 2000 or incomes of $15,001 to $29,999 for
single persons. See Table 23.
DMA Plaza provides studio and 1-bedroom apartments affordable to low and very low
income persons, 62 years of age or disabled. It was built in 1973 with a 40-year
affordability requirement, enforced by HUD. Fifty of its 126 units have Project Based
Section 8 Assistance or assistance that stays with the building. The average age of its
Table 23: Senior Household Paying More
than 30%, 2000
Source: Compass of Larimer County, December 2002. Produced by Larimer
County Department of Health and Human Services
Householder is 65+
years old
Larimer
County Fort Collins
All Households 12,202 4,922
Total Paying 30% or
more 2,411 1,101
Percent Paying 30% or
more 19.8% 22.4%
Renter Households 2,786 1,397
Total Paying 30% or
more 1,363 722
Percent Paying 30% or
more 48.9% 51.7%
Owner Household 9,416 3,525
Total Paying 30% or
more 1,048 379
Percent Paying 30% or
more 11.1% 10.8%
Part 1 - The Need for High Quality Affordable Housing
48 - Priority Affordable Housing Needs and Strategies
residents is 77 years, although there are a few younger people there who qualify based
on a physical or mental disability. The vast majority are single person households,
earning an average of $10,000 annually. At the end of December 2002, there were 7
people waiting for an efficiency unit, 6 waiting for a one bedroom and one person
waiting for an accessible unit. With a turnover rate of 1 unit a month, the last person
on the list will wait at least 7 months for an efficiency, and 6 months for a one
bedroom. Applicants are generally not homeless, but are living with family or in an
unaffordable apartment paying more than 30% of their income for housing.
Oakbrook I was built in 1977. All of its 107 units are subsidized by Project Based
Section 8 Assistance. It offers 102 one-bedroom units and 5 two bedroom units. Like
DMA Plaza, it serves mostly low and very low income senior citizens and some people
with disabilities. It turns over about 1 unit per month. As of December 2002, there
were 16 people on the waiting list for one bedroom units and two bedroom units are
available based on an in-house waiting list. It could take anywhere from 12 to 15
months to get a unit in Oakbrook I.
Oakbrook II built its 100 units in 1980. It used the same financing as Oakbrook I, but
has a different owner and management company. It also has Project Based Section 8
Assistance for low and very low income senior citizens and people with disabilities.
Like Oakbrook I, it turns over about 1 unit per month. While the number of people on
its waiting list is not available, it could take a new applicant 1 year to get a unit.
As the population ages, the city government will face issues of elder care demands and
responsibilities. The vast majority of older adults will likely stay in their own homes,
especially the more affluent seniors. Therefore, there will be an increased need for
services that allow older adults to remain in their own residences, such as
housekeeping, personal care, home-delivered meals, yard maintenance and
transportation. Some will not be able stay in their own home, either as they become
too frail to live alone or they cannot afford property taxes and home maintenance.
There are various models of new independent living options being developed
nationally, such as congregate housing, retirement condo/co-op complexes, and
continuing care retirement communities (which include independent, assisted and
nursing home units). An exhaustive analysis would need to be done to determine if
there is a need for such facilities in Fort Collins.
Oakbrook Apartments
-
Priority Affordable Housing Needs and Strategies - 49
Mentally Ill
The Larimer Center for Mental Health (LCMH) became fully operational as a 501 (c)
(3) on January 1, 2000. This organization was formerly known as Larimer County
Mental Health Center.
Services offered at LCMH include case management, medical services, therapy,
vocational counseling, and housing. LCMH serves approximately 2,100 enrolled
clients at any given time and 3,250 enrolled clients annually. Additionally, 2,000
individuals receive services from LCMH through other specialized programs. About
half of its clients are Fort Collins residents. Staff estimates there is another 2,700
persons the system cannot assist because there are not enough resources to serve
them.
Clients who do not have stable housing are the hardest to counsel, because they are in
a constant state of crisis, fighting just to survive. They live in trailers, doubled up with
family or friends (usually with a series of people), in motels for the few weeks out of
the month they can afford for with their $545/month SSI benefit, in emergency
shelters, or they are unsheltered.
LCMH does have some housing resources. They include the administration of:
109 Section 8 vouchers through the Colorado’s Supportive Housing and Homeless
Program;
9 Shelter Plus Care vouchers through the Colorado’s Supportive Housing and
Homeless Program;
5 transitional housing slots through the Colorado Coalition for the Homeless;
4-unit apartment building owned by the Fort Collins Housing Corporation which
has Project Based Section 8 rent subsidies.
6-unit apartment building owned by the Fort Collins Housing Corporation rented
at lower than market rate to Larimer Center for Mental Health
LCMH also operates 2 facilities – an 8-bed home with 24-hour staff supervision and a
5-6 person house. These facilities are intended to be transitional; however, clients
usually stay there longer than they need to, because they cannot find other affordable
units. Most are waiting for a place in the Section 8 program or public housing,
because they need rent subsidies. This situation often creates a backlog of clients
waiting for the transitional units.
Part 1 - The Need for High Quality Affordable Housing
50 - Priority Affordable Housing Needs and Strategies
LCMH also worked with the Fort Collins Housing Authority to create the Homecoming
buildings, which provides 25 SRO units. About half of the units are occupied by their
clients. Staff spends about 10 hours/week at Homecoming, providing services to all
residents. These units were rented up quickly when they opened, and they are always
full.
Listed below are housing projects that LCMH staff believes are needed:
1. A long-term group home for clients who cannot live independently. Eight to
ten beds could be filled easily. These clients would need only minimal staff
intervention, and would be encouraged to take advantage of activities and
services offered by LCMH and in the Fort Collins community.
2. An acute treatment facility which would offer 16 crisis beds for individuals
who are being released from psychiatric hospital placements as a step down
to more independent living and for individuals experiencing a crisis and
needing a structured and supportive environment.
3. Another long term Single Room Occupancy facility like Homecoming for
individuals who do not need supervision and are able to function
independently. The need is so great; 20 to 25 beds for singles could be easily
filled.
Disabled
Foothills Gateway is a private nonprofit agency that has served people with
developmental disabilities in Larimer County for the past 30 years. They provide
vocational training, work, activity, residential, and supportive living services to adults.
Their consumers’ incomes range from SSI ($552 per month or $6,624 annually) to
earned income of $11,000 or $12,000.
Disabled Resources Services is the Center for Independent Living in Larimer County.
They provide a wide range of services to people with physical disabilities, most of
whom (93%) have very low incomes. Their clients are generally trying to survive on
public income subsidies. In 2002, Disabled Resources Services received 359 housing-
related inquiries.
Until SSI and SSDI are in place, aid to the Needy Disabled (AND) provides temporary
assistance ($269/month and food stamps). The maximum SSI payment is $552 per
month, or $6,624 annually. SSDI is only for people who previously worked but
-
Priority Affordable Housing Needs and Strategies - 51
became unable to, and its benefit is based on the person’s former income earned and
number of quarters worked.
For the vast majority of people with disabilities, the only way they can survive is with
rental subsidies. Colorado’s Supportive Housing and Homeless Program provide
Housing Choice vouchers to people with disabilities through local agencies. The Fort
Collins Housing Corporation received 165 Housing Choice Vouchers specifically for
non-elderly persons with disabilities. Disabled Resources has 20 vouchers, Larimer
Center for Mental Health has 109 vouchers (for people with mental illness only), and
Foothills Gateway has 106 vouchers (for people with developmental disabilities only).
Foothills Gateway’s program provides an average subsidy of $308 per month per
consumer, or about $384,252 total annual subsidies.
People with disabilities who cannot live alone tend to live with family, in group homes,
in apartments with support, or in Host Homes. Foothills Gateway has a host home
program that matches its consumers with roommates or families that can help care for
them. It also has group homes for people with developmental disabilities. The need
for group homes has been decreased offset somewhat, as supportive living services
have become available allowing more people to live independently. However, there are
very few group homes available for people with other kinds of disabilities, and they
tend to be very expensive ($2,700 - $7,000), including services. For some, their only
option is nursing homes.
For those who can live alone, it is very difficult to find housing that is both affordable
and accessible. Public housing and other HUD subsidized developments for seniors do
allow people with disabilities to live there, but there is often a clash of lifestyles that
makes both people with disabilities and seniors uncomfortable. There is a severe
shortage of places that are fully accessible to people who need to use a wheelchair.
Wheelchair accessibility is not just a matter of an entry ramp, wide corridors and
doorways, it also means accessible fixtures and appliances. For example, roll-in
showers are very difficult to find.
HIV/AIDS
The Northern Colorado AIDS Project (NCAP) began 19 years ago in response to the
unmet needs of both the community at large and those directly affected by HIV/AIDS.
NCAP staff estimates that 5 to 10 of its clients have a housing problem in a typical
month. The key problem is affordability, and the second most common problem is
accessibility. Roommate choices are essentially limited to other NCAP clients. It is
Part 1 - The Need for High Quality Affordable Housing
52 - Priority Affordable Housing Needs and Strategies
interesting to note that most of NCAP’s clients once worked and supported themselves
without any pubic assistance, but their need for that assistance grows as their illness
advances and they are unable to work. On the other hand, those that respond well to
treatment can often return to work once their housing is stabilized.
NCAP can provide emergency assistance funding on occasions, through the support of
community citizens and religious organizations. However, they do not have a constant
source of emergency funding.
Staff expressed concern at the unmet need for affordable housing. NCAP is interested in
exploring new funding strategies to meet the needs in serving HIV/AIDS clients. They
would like to examine the idea of administering their own Section 8 certificates,
similar to Larimer Center for Mental Health. Another goal of NCAP is to identify a good
system to ensure that building units are designated for the disabled.
EMANCIPATED YOUTH
Another need not being met in Fort Collins is the need for housing for young people
who, for whatever reason, are not able to return to their parents’ homes. This includes
young people who have been emancipated after serving sentences with the Department
of Youth Corrections, after undergoing residential treatment for substance abuse or
emotional problems, or after being under the custody of the Department of Human
Services.
The Fort Collins area includes at least six organizations that provide residential care or
detention for adolescents, several of them with multiple facilities. While some of these
organizations provide transitional apartments, the length of stay in these apartments is
severely limited due to limited funding and high demand for this service.
Staff at these organizations indicate young people leaving their programs have
problems finding housing in the general market for three main reasons:
Youth are under age 18 and/or have no credit history and usually need a co-signer
to rent;
Due to these youths’ backgrounds, landlords are hesitant to rent to them; and
It is often unrealistic for these youth to come up with a damage deposit, first and
last months’ rent, and a rental application fee all at the same time.
-
Priority Affordable Housing Needs and Strategies - 53
Data is not available on the exact scope of this need. However, Turning Point, an
organization that manages a transitional housing program, estimated that it had
worked with nearly 20 youth in the most recent six- to nine-month period who had
struggled with this type of housing issues upon leaving its programs. If those involved
in other programs collected this data, the need would obviously be larger. This need
has been growing in recent years.
This group of youth is particularly vulnerable, as they have been categorized as high-
risk and in need of intervention. They also represent a community investment, as they
have already received interventions involving the use of public funds. As they take the
important step of reintegrating into the community, it is particularly important that they
are able to find safe and healthy housing.
In summary, staff at more than one agency expressed a very troubling concern. They
are under the impression the larger Fort Collins community does not care if there are
people who cannot afford to live here. No matter how many training and education
resources are available, there will always be people who work hard in minimum wage
jobs. Fort Collins will always need people to fill those jobs, especially since the service
and retail sectors are the fastest growing sources of employment. It is important that
we change this impression.
Part 1 - The Need for High Quality Affordable Housing
54 - Priority Affordable Housing Needs and Strategies
Economic Trends & Their Affect on Affordable
Housing
COST OF LIVING
For the first quarter of 2003, Fort Collins’ cost of living index was only slightly above
the national average. This was due to comparatively higher costs of healthcare,
transportation, miscellaneous goods and services, and groceries, which together
account for nearly two-thirds of the weighted index. While the continued considerable
increases in new home average sales price probably accounted for most of the jump in
living costs since 1990, housing and utility costs for Fort Collins are below the national
average.
ECONOMIC OUTLOOK
Since year end 2000, the state and local economy has seen a downturn from the boom
of the 1990s. The state economy is the weakest it has been in 15 years due to the
national downturn, indicating the end of the real estate/construction boom, and strong
business climate. From year end 2000, there has been state-wide a net job loss of
56,000, an unemployment increase of almost 3% and a cut in income growth of almost
two-thirds. Fort Collins’ economy has also seen the effects of the state and national
recessions. Year-to-date 2002 sales and use tax revenues were down 4.3% from the
same period of 2001, but were only down 0.6% in 2003 for that same period in 2002.
Building and construction taxes for the first eleven months of 2002 were 19% behind
2001, but are 7.0% higher for 2003 than for 2002.
A predominate part of the employment in Fort Collins is service-related and retail jobs,
accounting for 48% of Fort Collins’ labor force in 2000. This is fairly equal to the
percentage of all Colorado workers employed in services and retail, which was 48.69%
in 2000. Contrary to previous expectations, statewide, the percentage of retail jobs
decreased for the past five straight years. In Fort Collins, the percentage of retail jobs
stayed fairly constant at around 22% to 23%. The percentage of service-related jobs
increased both statewide and locally. The strongest sector in service-related jobs is
business services, followed by health services and lodging services. Construction
-
Priority Affordable Housing Needs and Strategies - 55
increased to 8% of the labor force in 2000. Only the percentage of manufacturing and
mining jobs decreased during this time.
In Larimer County, the average wage in 2000 for service-related jobs was $26,930,
while the average wage rate in the retail sector was $16,950, compared to $59,350 in
manufacturing and $33,859 for construction.
43% of the labor force in low-paying retail trade and service jobs argues for the city’s
need for much more housing that is affordable to households earning $13,500 to
$25,000 a year, or roughly 30 to 50% of AMI for small families.
AFFORDABLE HOUSING AS AN ECONOMIC DEVELOPMENT
ISSUE
Fort Collins’ position as a regional retail center is important both to its economy and to
the City’s fiscal health (sales and use taxes contributed 45.18% of general government
revenues in 2002 a slight increase from sales and use tax contributions in 2001. In
2001, sales and use tax contributions was 44.95% of general government revenues
which had been less than from previous years). If service and retail employees,
current and future, do not have affordable housing options in town, they will be forced
to look elsewhere – for housing, and quite possibly for jobs, due to the City’s increase
in unemployment in the last two years. The obvious implication is that as more people
are forced to commute to the city, the greater its traffic congestion and related air-
quality problems will be.
ECONOMIC IMPACT OF AFFORDABLE HOUSING
Any economic activity, such as the construction and rehabilitation of housing,
generates a number of different effects or impacts in a community. For example, the
construction of a new home has a direct effect on the construction industry in terms of
output (total value of goods and services produced), jobs (full-time equivalent
employment) and income (wages and benefits paid to all employees).
There are some indirect benefits to the creation of new housing units as well, such as
the purchase of material and services (e.g. concrete, wood, electrical services, etc.)
from other industry segments, and their suppliers. The jobs created from affordable
housing construction allows workers to purchase goods and services from all segment
Part 1 - The Need for High Quality Affordable Housing
56 - Priority Affordable Housing Needs and Strategies
of the community. In other words, the construction of affordable housing has direct
and indirect benefits on the local Fort Collins economy.
The National Associations of Homebuilders estimates that “the construction of 1,000
multi-family homes generates 1,030 jobs in construction and related industries,
approximately $33.5 million in wages, and more than $17.8 million in federal, state
and local tax revenues and fees.” Although, it is very difficult to determine the number
of jobs created and other related benefits from affordable housing projects, staff
estimates that for each dollar going for affordable housing production, eight new
dollars are leveraged from the private sector. From 1998 to 2002, the City has
allocated $2,066,209 from the Affordable Housing Fund for affordable housing. These
dollars were combined with $1,953,253 – CDBG and $1,478,450 – HOME for a total
of $5,497,912 which leveraged $43,983,296 from private sources going into the local
economy. This represents approximately a 1 to 8 ratio of City dollars to private
funding.
-
Priority Affordable Housing Needs and Strategies - 57
Conclusions - Fort Collins’ Priority Affordable
Housing Needs
RENTAL HOUSING
Since the February 1998 Rental Survey was completed and its information
incorporated into the 1999 Needs and Strategies Report, the number of vacant
affordable rental housing units has substantially increased in Fort Collins. In the 1998
Rental Survey, there were no vacant units for households with incomes up to 50% of
AMI, and only 3.7% of the units in the 50% to 60% AMI levels were vacant. In contrast,
there are 14.5% vacant units in the up-to- 50% AMI category and a 12.9% vacancy in
the 50% to 60% AMI levels according to the February 2003 Rental Survey. A vacancy
rate of much over 5% generally indicates that there may be excessive vacancies.
According to the 2000 Census, Fort Collins has 7,030 renter households (36% of all
renters) that earn less than 50% AMI and pay over 30% of their income for housing.
Approximately 1,650 of them are family households and 564 are seniors.
Historically, and in the future, the production of 50% and below AMI units will be the
community’s highest priority need, with special emphasis on producing affordable
housing at 40% and below AMI. Based on historical trends, Fort Collins market has
been very tight for 50% and 60% AMI units and the over-supply is probably a short-
term condition. According to HUD’s Economic and Market Analysis office, several
projects were in their initial rent-up stage in Fort Collins in 2002, which affected
vacancy levels. HUD expects Fort Collins market conditions to improve for the 50% and
60% AMI units in the next 12-18 months. As indicated earlier, There is still a present
need for more one bedroom and efficiencies at the 40% AMI levels, and for two
bedroom units at the 40% AMI level.
Average rents in Fort Collins’ existing multifamily housing stock tend to be fairly close
to levels considered affordable to households earning 60% of AMI. However, due to
the rising cost of land and construction in the area, new units cannot be built for this
population without development subsidies. In addition, some of the existing units that
are affordable at 60% AMI are not income restricted, so higher income households
compete for these units. Therefore this community needs to support the construction
of additional units affordable to and restricted to households at the 50% to 60% AMI
income level, when the market shows improvement for these units.
Part 1 - The Need for High Quality Affordable Housing
58 - Priority Affordable Housing Needs and Strategies
Fort Collins is also lacking enough Section 8 type rental subsidies for people earning
less than 30% AMI, especially those with special needs. Many people with disabilities,
be they physical or mental, are not able to work. At $552/month, their SSI payment
cannot cover food, clothing, transportation, etc. as well as rent. But in order to survive
and in order to get better, they must have stable, safe, accessible housing. The only
way to achieve that is with rental subsidies. Therefore this community needs to work
on finding new sources of this subsidy, and on preserving what we have.
FOR SALE HOUSING
According to the 2000 Census, there are 4,523 renters (23% of all renters) that earn
between 50% and 80% of AMI. Many of these families should readily qualify for
monthly payments on starter homes. If this product were available and these families
had the necessary down payment, a segment of these renters would likely purchase
homes instead of continuing to rent. The rate of homeownership in Fort Collins was
just 57% in 2000, low compared to the national rate of 66.2% and the statewide rate of
67.3 %. This is partially explained by the city’s student population and their need for
rental housing. There are many benefits to homeownership: it gives families a sense of
security and stability, it helps to stabilize neighborhoods, it helps to preserve the
housing stock, and it builds wealth. In addition, the more low and moderate income
renters move on to homeownership, the more of our existing affordable rental stock
will become available. Therefore this community needs to continue to help first time
homebuyers earning 80% of AMI and less to get into affordable homeownership.
HOUSING PRODUCTION
Finally, federal financial resources are limited and declining, and the competition for
funding is fierce. In order to implement the recommendations in this updated Needs
and Strategies Report, the community will need to continue to support programs like
land banking, which purchases sites for future affordable housing developments. The
City will also need to continue streamlining the regulatory process to quickly resolve
conflicting development issues in order to speed up the production of affordable
housing projects. In addition, projects that request funding from the City’s competitive
process to primarily preserve and produce new housing units affordable to households
earning at 40% of AMI and below, should receive the highest priority.
-
Priority Affordable Housing Needs and Strategies - 59
Part II - The Provision of
Affordable Housing
Financial Resources for Affordable Housing
Developers
FEDERAL
Community Development Block Grant (CDBG from the
Department of Housing and Urban Development (HUD)
This funding source must primarily benefit low and moderate-income persons, aid in
the prevention or elimination of slums or blight, or meet other urgent community
needs. As a “block grant” program, HUD allocates funds to states and entitlement
communities. A similar program exists for Indian tribes. On a competitive basis, HUD
also funds small cities and special purpose programs. As an entitlement community,
Fort Collins received $1,243,000 in 2002/03. Fort Collins is able to develop its own
funding priorities; affordable housing has been the primary focus. The funds can be
used for acquisition, rehabilitation, new construction, and related costs. Unfortunately,
it requires builders to pay Davis-Bacon wage rates, which adds considerable cost to
projects. Davis-Bacon wage rates are mandated under the Davis-Bacon Act requiring
that all federal construction projects in excess of $2000 pay laborers and mechanics
prevailing wages as determined by the US Department of Labor. Construction includes
alteration and/or repair, including painting and decorating, of public buildings or
public works. Therefore, in practice, this program has been used primarily for land
acquisitions and purchases of existing affordable housing stock.
HOME from HUD
This is another “block grant” program, granted to states, “Participating Jurisdictions,”
and Indian tribes. Each recipient can develop its own funding programs and priorities,
but these funds are specifically restricted by HUD to affordable housing projects for
low and very low income households. It can be used for tenant-based rental assistance,
homebuyer assistance, acquisition, rehabilitation, new construction, transitional or
permanent housing, and capacity building for Community Housing Development
Organizations (CHDOs). At least 15% of each jurisdiction’s funding must be awarded
Eagle Tree Apartments, by CARE Housing, Inc.
Part 2 - The Provision of Affordable Housing in Fort Collins
60 - Priority Affordable Housing Needs and Strategies
to CHDOs. In Fort Collins, CARE Housing, Inc. and Neighbor to Neighbor are is the only
qualified CHDOs eligible to receive this funding. In 2003/04, Fort Collins received
$726,510 in HOME funds.
Section 202 Supportive Housing for the Elderly and Section 811
Supportive Housing for Persons with Disabilities from HUD
These are two of the very few remaining funding sources for affordable housing that
the federal government directly administers. They are very similar in how they operate,
with the only major difference being the special populations they are intended to serve.
Section 202 is for very low income senior citizens 62 years of age or older. Section 811
is for very low income persons with physical disabilities, developmental disabilities
and/or chronic mental illness.
Both programs provide a “capital advance,” or grant, to finance new construction, or
purchase and rehabilitation of rental units. The grant typically covers all on-site
construction and related development costs. No repayment of the capital advance is
required as long as the project continues to meet HUD’s tenancy and affordability
requirements for 40 years. In addition, the program provides project-based rental
assistance. Tenants pay only 30% of their adjusted gross income for rent, and the
subsidy pays the difference between HUD-approved operating costs and rental income.
Therefore this is, practically speaking, the only affordable housing funding program
that builds new affordable housing for people earning less than 30% AMI.
Both programs are extremely competitive. Regional HUD offices accept applications
once a year. HUD Denver handles applications from Colorado, Utah, Wyoming,
Montana, North Dakota and South Dakota. In 2002, the program had $5,723,000 to
award for Section 202 projects in metro areas, and $10,688,100 for non-metro areas.
For Section 811, it had $3,161,300. At a cost of roughly $77,503 per unit, these
programs can build about 276 units in those 6 states. However, the Section 202 project
in Fort Collins developed by Volunteers of America will cost $98,874 per unit, a 22%
increase over the average cost per unit for typical 202 projects. It is not unheard of for
first-time applicants to have to reapply each year for as many as 3 or more years before
they are awarded funds.
Continuum of Care from HUD
HUD operates a collection of programs to address and prevent homelessness,
including the Supportive Housing Program, the Section 8 Moderate Rehabilitation SRO
Program, and Shelter Plus Care. “Continuum of Care” refers to the entire spectrum of
-
Priority Affordable Housing Needs and Strategies - 61
housing and service needs of very low and low-income households. Through these
programs, HUD encourages local housing and social service agencies to work together
to identify the “cracks” in their regional system and to fill them. Most of the programs
are for housing related services, and emergency and transitional housing.
Private Activity Bonds from the Department of the Treasury
The Tax Reform Act of 1986 grants each state the authority to allocate $50 of tax-
exempt Private Activity Bonds (PABs) per capita each year. Each state decides how to
spread that authority around to various units of government. In Colorado, the
Department of Local Affairs, Division of Housing, handles the State’s roughly $338
million federal authority. It gives half of it to statewide authorities (including the
Colorado Housing Finance Agency, CHFA) and half to cities and counties. About $150
million goes directly to jurisdictions with populations of over 40,000, including Fort
Collins and Larimer County. Those jurisdictions can then award their authority to
specific projects. The remaining $22 million goes to a “statewide balance” for which
projects compete. Projects from communities without their own allocation get
preference. The project sells the bonds to investors, who in effect become the lenders
for that project. These bonds are “private” because the project is obliged to pay back
its investors, not the government. In fact, federal law prevents the City from making
payments on the bonds.
This financing is very flexible. It can be used for manufacturing, redevelopment of
blighted areas, student loans, local utility facilities, nonprofit hospitals and nonprofit
private universities. CHFA uses PABs to help first time homebuyers with mortgage
revenue bonds and mortgage credit certificates, and for a variety of other programs.
They are described in more detail on the following pages. New construction or
substantial rehabilitation of affordable rental housing can also be financed with these
bonds. In Colorado, at least 45% of the project’s units must be affordable at 60% of
AMI, or 25% of its units must be affordable at 50% of AMI.
The City Council decides which projects receive private activity bond authority from
Fort Collins’ allocation. It has been used for many projects ranging from the Holiday
Inn on Prospect Road, to pollution-control projects for Anheuser-Bush, to small
manufacturing, to retail development and renovation. In 2000, City Council adopted
Resolution 2000-150 establishing affordable housing as the highest priority in the use
of the City’s PABs allocation.
Part 2 - The Provision of Affordable Housing in Fort Collins
62 - Priority Affordable Housing Needs and Strategies
PABs were allocated to 5 new affordable rental housing projects and one assisted living
project. All of the projects have been built, with the exception of one of the affordable
rental housing projects, which is currently in the city’s development review process. In
2002, Fort Collins received the authority to grant about $4.5 million in bond financing.
Fort Collins allocates PABs to affordable rental housing projects, but they do not have
the same impact as other sources like CDBG or HOME. PABs are intended to provide
the entire permanent loan financing for a project, and the cost to issue them is too
much to use on projects with less than about 100 units. They do, however, work for
mixed income projects that have units affordable to families earning between 50% and
60% of AMI and market rate units. PABs have been distributed on a first-come, first-
served basis in Fort Collins. Generally, this has worked fairly well with one major
project applying for the City’s PABs each year. The PABs balance for affordable housing
projects have come from Larimer County, the State, and/or from combining two years
of allocations.
Low Income Housing Tax Credits, from the Department of the
Treasury, IRS.
This program is similar to PABs in that the federal government allocates each state the
ability to grant a certain amount of federal income tax credit based on the state’s
population. At $1.75 per capita, Colorado received about $6.45 million in 2003. Those
tax credits may translate into roughly $64 million of equity invested into affordable
rental housing projects. There is an annual application process for these “9% credits,”
which is very competitive.
A successful applicant will receive tax credits equal to about 9% of its eligible basis
each year for 10 years. “Eligible basis” includes most construction and development
expenses, less any grants received by the project. The developer then sells all 10 years
worth of its tax credits to investors and uses the proceeds to build the project. The
investors become limited partners in the corporation created to own the project (the
developer/applicant is usually the general partner). The proceeds from the sale of
these 9% tax credits usually amount to a little over half of the total project costs.
Developers usually seek to finance the balance with low interest loans. Not-for-profits
can receive grant money for a project and then lend it to the limited
partnership/project owner at a very low interest rate (1%). This may allow them to
provide units affordable for people earning less than 50% or 60% of AMI.
-
Priority Affordable Housing Needs and Strategies - 63
Four percent tax credits are also available to any project that receives PABs financing.
Their supply is limited only by the amount of PABs used for affordable housing – they
are not part of each state’s per-capita allocation of 9% credits. However, the project
only receives about 4% of its eligible basis in tax credits. Roughly 75% of the total
project financing needs to be made up by loans. The loan financing comes from
issuing of the bonds, which results in a below-market interest rate (about 5.5%).
Private for-profit developers providing units affordable to people earning 60% of AMI
generally use this financial structure.
To be eligible for any tax credits, the project must be for affordable rental housing. At
least 40% of the project’s units must be affordable at 60% AMI, or 20% of its units
must be affordable at 50% AMI. Usually, 100% of the units in these projects are
affordable, because tax credits are only given for the affordable units. To compete for
the 9% credits, projects need to commit to serving the lowest incomes possible. Since
4% credits are not competitive, and since they do not provide as much subsidy, they
are usually only used for projects renting at 60% AMI. The units must remain
affordable for at least 15 years per federal regulation, but states can require longer
affordability periods. Longer commitments may help a project in the competition for
9% credits. A 20 or 30 year commitment is typical. Some projects have been planned
as “lease-purchase” deals. Their units would be rented for 15 years and then sold to
residents.
STATE
The Colorado Housing Finance Agency (CHFA)
CHFA offers tax-exempt bond financing to private not-for-profit organizations and local
public housing authorities. The loans can be used for new construction, acquisition
and/or rehabilitation of affordable rental housing, and are generally at 1% to 3% below
market interest rates. This financing can be used with 4% tax credits, and carries the
same affordability requirements.
CHFA is also the state agency designated by the Governor to administer the Low Income
Housing Tax Credits (LIHTC) program, created by the 1986 Tax Reform Act to provide
a federal income tax incentive for investors developing qualified low income rental
housing. CHFA's role is to allocate the credits to eligible developments, which must
reserve a specified proportion of housing units for low-income occupancy for a
minimum of 20 years. Each year, CHFA publishes a Qualified Allocation Plan, which
describes a competitive process for allocation of the tax credits and determining the
Part 2 - The Provision of Affordable Housing in Fort Collins
64 - Priority Affordable Housing Needs and Strategies
amount of credit to be allocated to each development. CHFA also monitors compliance
with the low-income use requirements. Projects may be acquisition and rehabilitation
or newly constructed housing. Approximately $6.45 million in federal tax credits are
available annually to Colorado through a per capita allocation formula established in
the enabling legislation. In addition, rental developments financed with tax-exempt
PABs may access tax credits outside of the competitive process mentioned above. As of
the end of 2000, CHFA had allocated approximately $50 million in tax credits to assist
developers of low-income units affordable to households at 50% or 60% AMI in 243
developments.
CHFA also operates a FHA Risk Sharing Program that provides federally insured, tax-
exempt or taxable financing for new construction, acquisition and/or rehabilitation of
rental housing for families or elderly sponsored by nonprofit, public or for-profit
developers. Under the program, CHFA commits Federal Housing Administration (FHA)
mortgage insurance to the loans and then shares the risk of loss 50/50 with FHA. Its
commitment of mortgage insurance gives the bonds an AA rating. CHFA handles the
loan underwriting, closing and servicing of affordable rental housing. For-profit
developers as well as not-for-profit organizations and local public housing authorities
can use it. The affordability requirements are slightly more stringent than for tax
credits and other bond financing – at least 25% of the units must be affordable to 50%
of AMI or 45% of the units must be affordable to 60% of AMI. The program is funded
by the proceeds from tax exempt 501(c)(3) bonds, PABs, and taxable bonds. The
maximum tax-exempt loan amount is $10 million. As of December 31, 2000, 46 loans
have closed for approximately $212 million.
CHFA’s 501(c)(3) General Obligation Bonds are available for private and public
nonprofit organizations providing housing to meet a wide variety of rental housing
needs. The beneficiaries include families, frail elderly, mentally ill, physically disabled,
troubled youth and ex-offenders in both independent and group living facilities. Loans
may be used for property acquisition, rehabilitation, new construction, and in some
cases refinancing existing debt. CHFA requires a minimum of 25% to 45% low- and
very-low-income occupancy for the term of the loan. The program generally serves the
need for small loans (e.g., $100,000 to $1,000,000). The program has provided 65
loans totaling approximately $50 million as of December 31, 2000.
The CHFA Housing Fund provides short-term interim loans (maximum two years) for
nonprofit or public housing authority borrowers for pre-development costs,
acquisition or construction of low- and moderate income housing. Both rental and
-
Priority Affordable Housing Needs and Strategies - 65
homeownership permanent financing must be committed by CHFA or some other
source. As of December 31, 2000, 10 loans had been made totaling $10.7 million.
CHFA Housing Opportunity Fund provides long-term financing for housing facilities for
households with very low incomes and/or special needs who need non-traditionally
designed housing or services in addition to housing. Such households include the frail
elderly, developmentally or physically disabled, chronically mentally ill, homeless
families, troubled children, and victims of domestic violence. CHFA financing is
available primarily to nonprofit corporations and local public housing agencies for
acquisition, rehabilitation, and new construction of housing facilities including both
independent apartment and group living facilities. Direct loans are available up to the
lesser of $200,000 or 95% of development cost. Funds come from an internal fund
established by the Board of Directors with savings from a refund of 1982 bonds, and
CHFA projects cash flows. As of December 31, 2000, the program has financed 61
loans totaling $7.5 million throughout the state for a variety of special needs and low-
income populations.
The Rental Acquisition Program (RAP) allows CHFA to purchase apartment
developments and rehabilitate them to provide safe, sanitary and affordable rental
housing where at least 40% of the units are affordable to low income families without
federal subsidies. CHFA contracts with private firms to manage these properties. Each
year, surplus cash from the RAP properties adds $1 million or more to the Housing
Opportunity Fund. In 1990, CHFA added a new component to the program: the
purchase and resale of apartment developments from the Resolution Trust Corporation
(RTC), or other federal agencies. Depending on the need of the subsequent nonprofit
buyer, CHFA provides rehabilitation services and financing. Otherwise, it resells the
property immediately for cash. CHFA acquired and resold more than 2,000 units (34
properties) in this manner. CHFA owns 13 rental developments totaling 1,362 units. In
total, from 1987 to 2002, CHFA acquired 50 properties including 36 from the RTC, 31
of which have been resold to nonprofits and housing authorities the same day or upon
completion of rehabilitation. The properties CHFA owns are located in 12 different
communities and range in size from 12 to 492 units.
Mortgage Revenue Bonds (MRB) are one use for PABs. CHFA sells PABs, and then uses
the proceeds to purchase mortgage loans from participating lenders. The MRB First
Step program offers a low, competitive interest rate fixed for 30 years with an optional
0% interest rate second mortgage for down payment and closing costs. The MRB First
Step program has income and purchase price limits and is reserved for first-time
Part 2 - The Provision of Affordable Housing in Fort Collins
66 - Priority Affordable Housing Needs and Strategies
homebuyers. The Taxable Home Opener program also offers a below market interest
rate fixed for 30 years. Income limits are not as restrictive as those for MRB First Step
and there are no purchase price limits. You also do not have to be a first time
homebuyer to qualify for this program. In 2002, over $415 million in MRB First Step
funds assisted 3,388 families around the state purchase their first home. Beginning in
2003, CHFA enhanced its MRB First Step program by replacing its previous cash
assistance product with a 0% deferred second loan mortgage, which is due upon sale
of the property, transfer of title or refinance of the first mortgage. To date, the program
appears very successful with almost $98 million in purchased loans in first quarter
2003.
The Mortgage Credit Certificate (MCC) Program also uses PABs financing. It is for low-
and-moderate-income homeowners. With an MCC, the owner can claim up to 20% of
their mortgage interest paid as a federal income tax credit, instead of a deduction.
They may still claim the balance as a deduction. As of December 31, 2002 there have
been 4,286 homeowners who benefited from this program.
Division of Housing
The State of Colorado receives an annual allocation of CDBG and HOME money from
HUD. It is primarily intended for rural areas that do not have their own local allocation
of those funds. In 2002/03, the State received $11.69 million of CDBG (of which DOH
received only $3,778,400) and $7.613 million of HOME. For the past five years,
projects in Larimer County received an average of $1 million a year of that funding.
The State Legislature recently approved a 2003 budget with only $10,000 for affordable
housing. In the past, the State has provided substantial funding for affordable housing,
but due to budgetary constraints, the funding was cut.
PRIVATE
The Federal Home Loan Banks (FHLB)
The Federal Home Loan Banks (FHLB) is a nationwide system of banks that invests a
portion of its member-shareholders’ income in affordable housing projects twice each
year. It is government-sponsored, but not government-funded. Its mission is to support
residential mortgage lending and related community development lending by its
member-shareholders. Its members include commercial banks, savings institutions,
credit unions and insurance companies. The FHLB provides members with access to
wholesale credit and technical assistance. Each member contributes the greater of
-
Priority Affordable Housing Needs and Strategies - 67
$100 million or 10% of their net income each year to the FHLB’s Affordable Housing
Program (AHP).
The Federal Home Loan Bank of Topeka is one of the 12 regional FHLBs in the
country. It has jurisdiction in Colorado, and had $8.5 million available in 2002.
Locally, First National Bank is a member of this system, and can make applications to
the FHLB of Topeka on behalf of affordable housing projects. Once a loan or grant is
awarded, the member bank/applicant administers disbursements to the projects.
FHLB’s AHP can be used for new construction and/or purchase and rehabilitation of
owner or renter-occupied affordable housing. The subsidy can be in the form of a low-
interest loan or a grant. It is a competitive process with applications being accepted
every April 1st and October 1st. Generally speaking, it is one of the more flexible and
accessible pools of money for affordable housing. Its “Community Investment Program
(CIP)” funds are available on a continuous basis to projects that meet its application
criteria. They are only available as loans, and the interest rates are only slightly below
market rates.
Neighborhood Reinvestment Corporation (NRC) and
Neighborhood Housing Services of America
The NRC is a national nonprofit that was created in 1978 by an act of Congress to
revitalize America’s older, distressed communities by establishing and supporting a
national network of local nonprofit agencies. Its members are resident-led
partnerships of lenders, business leaders, and local government officials known as
“NeighborWorks” or “Neighborhood Housing Services” organizations. The network
consists of 215 local organizations serving 1,700 communities nationwide.
The Neighborhood Housing Services of America was created in 1974 to support
NeighborWorks organizations by operating a secondary market for home mortgage
loans. Their program is now known as “Full Cycle Lending.”
NRC provides technical assistance tailored to individual members and in week-long
“Training Institutes” offered throughout the year in various locations. Through the
“NeighborWorks Network” it keeps the lines of communication open between
members so that they can learn from each other. Finally, it has financial assistance
available for both capacity building and for project start-up.
Part 2 - The Provision of Affordable Housing in Fort Collins
68 - Priority Affordable Housing Needs and Strategies
Fannie Mae Foundation
Fannie Mae is the largest secondary market mortgage lender in the US. It created the
Fannie Mae Foundation in 1979 and spun it off as an independent nonprofit
philanthropic entity in 1996. Its mission is to “create affordable homeownership and
housing opportunities through innovative partnerships and initiatives that build
healthy, vibrant communities across the United States.” It makes grants and low
interest loans, primarily to not-for-profits, with an average grant size of about $25,000
to $100,000. They are generally for housing production, capacity building, operating
expenses, and/or computer equipment. It provides technical assistance through
intermediaries like Local Initiatives Support Corporation (LISC) or Enterprise
Foundation. Loans are typically 0 to 2% with a 5-year term for land acquisition,
predevelopment, or other bridge financing. Two example programs of the Foundation
are a national consumer-education advertising campaign, “Your Credit Matters”, and
the University-Community Partnership Initiative (UCPI). “Your Credit Matters” aims to
assist people in understanding how credit works, and the impact it has on their ability
to buy a home. The UCPI awards $5 million to 14 universities across the U.S. to
revitalize distressed neighborhoods, with the main focus on expanding affordable
housing.
The Fannie Mae Foundation’s southwestern regional office covers 9 states, including
Colorado, Arkansas, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, Texas and
Utah. It has provided $11.2 million in funding to that region since 1994.
The Enterprise Foundation
This is a national, nonprofit housing and community development organization
launched by Jim and Patty Rouse in 1982 to see that all low-income people in America
have the opportunity for fit and affordable housing, and to move up and out of poverty
into the mainstream of American life. The Enterprise Foundation assists community-
based nonprofit organizations, Native American Tribes and state and local governments
to develop affordable housing and community services. It has 2,200 organizations in
800 locations, including Denver.
Through its Denver office, The Enterprise Foundation provides technical assistance,
training and financial support to nonprofit organizations in metro Denver and
throughout Colorado. It is an operating foundation, not a grant-making one, but it
does function as an intermediary for grants and loans. Most of its loans are provided
through the Mile High Housing Fund, which it seeded and established in partnership
with the City and County of Denver, the Fannie Mae Foundation, and U.S. Bank. It also
-
Priority Affordable Housing Needs and Strategies - 69
works through the Housing Development Project (HDP), which aims to build the
capacity of nonprofit community development organizations to develop, manage and
preserve affordable housing benefiting low and moderate income people and
neighborhoods in metro Denver. HDP was launched with 11 banks and various other
foundations. Since 1994, it has helped to create over 3,800 housing units and to
prepare over 1,000 families for homeownership. The Enterprise Foundation also
provides grants and loans to its affiliate Enterprise Social Investment Corporation
(ESIC), which organizes partnerships of Fortune 500 companies to purchase tax
credits from affordable housing projects.
Local Initiatives Support Corporation (LISC)
The Ford Foundation established this organization in 1979 to support grassroots
community building. LISC provides funding and technical support to community
development corporations (CDCs) to help them develop affordable homes, spur
commercial investment, create jobs and expand opportunity in low-income
neighborhoods. It has programs in 38 cities and urban counties in the U.S., and also
works with 77 CDCs in rural areas in 39 states.
LISC provides grants, and loans and equity investments to CDCs, and its subsidiary, the
National Equity Fund (NEF), which is the largest nonprofit syndicator of tax credit
deals. NEF also organizes partnerships of Fortune 500 companies to purchase tax
credits from affordable housing projects.
Colorado Association of Realtors Housing Opportunity Fund
(CARHOF)
In December 1990 the Colorado Association of Realtors created the Housing
Opportunity Fund. CARHOF is a nonprofit corporation that promotes the availability of
affordable housing, supports education and research in housing, and provides
technical assistance. It uses the interest earned on down payments held for home
closings and on other escrow accounts to fund nonprofit affordable housing initiatives
in Colorado. Local Realtor Boards recommend which projects to fund. Over the last 5
years, (1997-2002) it has granted $1 million, with a maximum per project grant of
$10,000. It is starting to offer loans instead of grants.
Funding Partners for Housing Solutions, Inc.
Funding Partners’ mission is: “To coordinate, enhance and leverage resources to
increase the affordable housing stock attainable to our low-income residents.” It
works with housing developers, lending institutions, businesses and local governments
Part 2 - The Provision of Affordable Housing in Fort Collins
70 - Priority Affordable Housing Needs and Strategies
to make attainable housing happen in Larimer County and along the Front Range. In
1998, it became a Community Development Financial Institution, greatly increasing its
capacity to provide financial assistance to affordable housing projects.
It designs custom housing solutions for each individual project through the Mammel
Affordable Housing Loan Fund, which includes technical assistance and loans. It
directly provides loans and assistance in accessing other sources of funding. In 2002,
it used $547,000 of its Mammel Affordable Housing Loan Funds to create 28 units of
affordable housing and provide $105,000 in cash benefits to local affordable housing
providers.
In 2001, Funding Partners joint ventured with the National Development Council, to
purchase and rehabilitate the Northern Hotel, a significant historical structure in
downtown Fort Collins. The hotel provides a combination of residential, commercial
and public spaces in downtown. It consists of 41 one-bedroom units and 6 two-
bedroom units for senior housing, and 9 commercial spaces for retail businesses.
ANALYSIS: THE AVAILABILITY OF FINANCING NEEDED TO
BUILD AFFORDABLE HOUSING
The previous section has attempted to summarize the existing sources of funding and
other resources used by developers to build affordable housing. Except for CDBG,
HOME and PAB allocations, these are programs for developers to use directly, not for
the City to apply to and reallocate to projects.
There are very many different funding programs available to developers. However, the
application process for each source, to varying degrees, is very competitive. Very few
programs are intended to fully finance a project, so developers need to combine many
sources to do a project. Since the various programs have different requirements,
criteria, targets, funding round schedules, etc., it is very complicated and time
consuming to assemble a complete project’s worth of financing. This is especially true
for not-for-profit developers, who may use as many as 6 different funding sources to
complete a project. It is not unusual for an affordable housing project to take 2 or 3
years just to assemble its financing. This is usually done in conjunction with project
design and the local approval process.
-
Priority Affordable Housing Needs and Strategies - 71
There are three basic stages of financing in an affordable housing project. First is
predevelopment, which covers project feasibility analysis, design, local approvals, etc,
up to the time that construction is ready to begin. Construction financing pays for the
actual building of the structures. Permanent financing pays off both predevelopment
and construction costs with a long-term mortgage loan, equity, and sometimes grants.
Sometimes very short term, “bridge” financing is needed to cover gaps between these
stages. Generally, for-profit developers have the internal resources to cover their
predevelopment expenses. This is often more difficult for not-for-profit developers, but
can be overcome if their consultants are willing to wait to be paid for their services
until the project has started, or even better, completed construction.
Most funding sources are reluctant to be the first one committed to a project,
especially during the early predevelopment or planning stages. Once the first
permanent funding source is in place, it is generally easier to find the rest. If that
source is local, it is even more valuable – most national sources favor projects with
solid evidence of local support. Fort Collins can help local projects by committing
CDBG, HOME, or Affordable Housing Fund dollars early in their planning processes.
That local expression of support should help leverage the balance of financing that
projects need.
Part 2 - The Provision of Affordable Housing in Fort Collins
72 - Priority Affordable Housing Needs and Strategies
The Affordable Housing Community
THE ROLE OF PRIVATE FOR-PROFIT DEVELOPERS
Generally speaking, for-profit developers build affordable rental housing for the
purpose of owning and operating it. They will maintain ownership of it for at least as
long as their funding sources require it to remain affordable. Some profit is made from
the development and construction of the buildings, but the asset, and the earnings that
come from managing that asset, are the ultimate goal. Once the funding sources
remove affordability restrictions from a project, its for-profit owner may or may not
choose to sell it. Either way, it is unlikely to remain affordable.
The Low Income Housing Tax Credit program and the available bond financing have
been instrumental in getting for-profits to build affordable rental housing. These
programs have also involved private investors in affordable housing production to a
greater extent than was ever seen before. Most of the projects built by for-profits with
this financing mechanism provide housing at the top end of the “affordable” scale – to
households earning 60% of AMI. Where competition for tax credits dictates, they may
attempt to reach lower income families. Because of the expense and complexity of
bond financing and tax credits, they tend to do rental projects of at least 100 units or
more. There are currently no local developers constructing this kind of project, but
regional and national development companies are doing them.
THE ROLE OF PRIVATE NOT-FOR-PROFIT DEVELOPERS
There are two fundamental differences between for-profit and not-for-profit
developers. The first, most obvious, is that not-for-profits have a charitable purpose.
The other is that not-for-profits do not distribute corporate profits to shareholders.
However, that is not to say that they do not earn profits on their projects. Indeed, not-
for-profits need to earn money from projects in order to survive and grow. So long as
their profits are reinvested in their charitable purpose, their 501(c)(3) tax-exempt
status is protected. In addition, most not-for-profits are able to raise funding from
outside sources to cover administrative and operating costs, in case profits from
projects do not. Therefore they can attempt somewhat riskier projects than for-profits
might.
-
Priority Affordable Housing Needs and Strategies - 73
Not-for-profit organizations are able to access some financing sources that for-profits
cannot use. Other funding sources may be available to both, but give preference to not-
for-profits. Not-for profits tend to be more willing to mix and match different financing
sources to make a project as affordable as possible. Therefore their projects generally
serve lower income families than for-profits do. Unfortunately, not-for-profits generally
do not have the capacity to develop as many affordable housing projects as for-profits
do. “Capacity” refers to the number of staff, the experience of staff, and to the
availability of start-up or predevelopment capital. As a result, their projects also tend to
be smaller in size. Because the competition for 9% tax credits favors the not-for-
profits, they do use that program. However, they generally do not use bond financing.
The Fort Collins Housing Authority (FCHA) and Habitat for Humanity are the only not-
for-profits interested in developing affordable, for-sale housing. Habitat uses volunteer
labor and donations to keep its home affordable, while the FCHA depends on grants
and low-interest mortgages from CHFA.
THE ROLE OF PRIVATE NOT-FOR-PROFIT SERVICE PROVIDERS
Providing affordable, stable housing for low and very-low income families often
involves more than just putting a roof over their heads. Additionally, some of the
services needed may include: credit and budget counseling, foreclosure intervention,
life skills training, parenting skills, job training, high school or college level education,
English as a second language, health care, child care, substance abuse counseling,
family counseling, etc. All of these services contribute to a stable and healthy home.
This is especially true for families or individuals who are trying to escape
homelessness. HUD’s Continuum of Care programs are intended to fund such services.
Up to 15% of CDBG program funds may also be awarded to service providers. In Fort
Collins, there are a few not-for-profits that try to coordinate these kinds of services,
and others that provide these specific services.
THE ROLE OF THE QUASI-PUBLIC NOT-FOR-PROFIT
DEVELOPER (HOUSING AUTHORITY)
The Fort Collins Housing Authority (FCHA) is a quasi-governmental agency created by
the City of Fort Collins. The City Council appoints its Board of Commissioners, but has
no involvement in its day-to-day activities. Its basic mission is to own and operate
public housing units and to operate the Section 8 Housing Choice Voucher program,
Part 2 - The Provision of Affordable Housing in Fort Collins
74 - Priority Affordable Housing Needs and Strategies
which subsidizes rents in privately owned rental properties. These programs are
generally the only affordable housing option that families earning less than 30% of AMI
have. HUD pays the FCHA an operating subsidy for its 154 public housing units, so it
can charge only 30% of their income and Fair Market Rent (which is determined by
HUD). The FCHA inspects the units and administers payments to the landlords.
The FCHA has a subsidiary known as the Fort Collins Housing Corporation (FCHC) and
owns 379 affordable housing units. The FCHA also operates the Larimer County
Housing Authority, which commits 100 Housing Choice Vouchers in the area.
THE ROLE OF FINANCIAL INSTITUTIONS
Since 1977, all federally insured financial institutions (commercial banks, savings
banks, and savings and loan associations) have been subject to the Community
Reinvestment Act (CRA). Under this law, such institutions have a continuing and
affirmative obligation to help meet the credit needs of their entire communities,
including low- and moderate-income neighborhoods, consistent with safe and sound
operation. The federal agencies that regulate these institutions are responsible for
evaluating how well each one meets this obligation, and are required to take that
record into account when the institution applies for expansion or restructuring, such
as a new branch, merger, or acquisition. The evaluation takes into account the
institution’s financial capacity and size, legal impediments and local economic
conditions and demographics, including the competitive environment. The assessment
does not rely on absolute standards. Institutions are not required to adopt specific
activities or offer specific types or amounts of credit. Each institution has considerable
flexibility in determining how it can best help meet the credit needs of its entire
community.
Many lenders got into the business of mortgage lending to lower income first time
homebuyers because of CRA requirements, but they now see targeted affordable and
minority loans as good business. According to Freddie Mac, low-income homebuyers
now make up 40% of the national home mortgage market, up from 30% in 1990.
Most major banks now offer targeted loan products through more flexible loan terms
or underwriting standards and subsidized interest rates or closing costs. Outreach,
education and credit counseling are usually major components of these efforts. Many
also offer lower down payment requirements or higher maximum debt-to-income
ratios to low-income borrowers.
-
Priority Affordable Housing Needs and Strategies - 75
The secondary mortgage market, primarily Fannie Mae and Freddie Mac, also plays a
part. Mortgage lenders sell loans on the secondary market so they can get cash to lend
again. Fannie Mae and Freddie Mac bundle those loans and sell them as securities. In
order to securitize the loans, they have to meet strict underwriting standards. Those
standards, in effect, excluded lower-income borrowers. To serve that market, local
lenders have to issue “non-conforming loans” and keep them in their own portfolio –
the loans do not meet the secondary market’s requirements, so they can not be sold.
Therefore the pool of money available to make loans to lower-income borrowers is
very restricted. More recently, Fannie Mae has begun investing in “seasoned” CRA
loans. In other words, the local lender may need to hold a loan in portfolio for a few
years until the borrower has established a good payment history. Once that is
established, Fannie Mae will consider buying the loan.
Construction and permanent loan financing for affordable rental developments is also
covered in CRA reviews. Most of the large, for-profit, national developers do not get
their loan financing from local banks. CARE Housing, Inc. and the Fort Collins Housing
Authority both have good relationships with area banks that allow them to access
relatively low-interest loans. However, these loans need to be as small a part of project
financing as possible to keep their rents as low as possible.
Funding Partners for Housing Solutions, Inc., has a special niche in the local financial
community. It provides loans, grants, and assistance in accessing other sources of
funding to affordable housing projects. Since it has a fairly small pool of funds to work
with, it has primarily served smaller projects and/or provided bridge financing to
projects.
Part 2 - The Provision of Affordable Housing in Fort Collins
76 - Priority Affordable Housing Needs and Strategies
The City of Fort Collins’ Role
There are four essential components to the City’s role in the provision of affordable
housing. They include policy, regulation, education, and funding.
Through its policies, the City’s role is to create an atmosphere that encourages a
balance of housing types and costs, so all of its people can live in safe and affordable
housing. Its policies should encourage both the construction of new and preservation
of existing affordable housing.
In regulation, the City’s role is to expedite the process for developing affordable
housing. It should review new and existing regulations that discourage production of
affordable housing, whether they are land use, building code, engineering, tax code, or
other regulations. Whenever possible, those regulations should be revised to
encourage affordable housing. Revisions might be generally applicable to all
residential development or specifically targeted to affordable housing projects only.
In education, the City’s role is to expand public awareness and the understanding of its
citizens of the benefits of affordable housing to the community. To do that, it needs to
thoroughly understand the community’s need for affordable housing, why it is needed,
and it must put a face on that need. The City should also market the incentive and
assistance programs it operates to encourage affordable housing.
Through the City’s funding and other incentive programs, its role is to be the first piece
of the funding puzzle, to help affordable housing providers leverage the balance of
financing needed to complete their projects from state, federal, or other sources.
POLICIES
Since 1992, the City has adopted a variety of affordable housing goals and policies that
have governed the development of the City’s affordable housing programs and
distribution of affordable housing resources. The major goals and policies are
described below. Recommendations to specific policies are listed at the end of the
Policy section:
-
Priority Affordable Housing Needs and Strategies - 77
Goal 1: Our community will be a place where all of its people
will have an opportunity to live in safe, habitable, and affordable
housing.
(Source: City Plan)
Policy: The City’s priorities for housing are as follows:
Source: Resolution 98-125 of the Council of the City of Fort Collins
Rental Housing. This community needs to produce new rental units affordable to
families earning below 80% of AMI, and to acquire existing rental units so as to
preserve their affordability. Highest priority will be given to rental units affordable
to families earning at or below 50% of AMI.
For Sale Housing. This community needs to continue to help first-time
homebuyers earning less than 80% of AMI to get into affordable homeownership,
but place higher priority on potential homebuyers earning below 60% of AMI.
Senior and Special Needs Housing. This community should try to find new
sources of rental subsidy for families earning below 30% of AMI, particularly for
senior citizens and others with special needs such as mental or physical
disabilities.
Housing Production. This community needs to maintain an adequate supply of
affordable land for housing low- and moderate-income persons and families. It
needs to be more proactive in identifying and securing sites for future affordable
housing development. The City also needs to examine any regulatory barriers to
affordable housing and consider reforming them, and it needs to be supportive of
proposed developments in their quest for identifying development subsidies.
Housing Preservation. This community needs to preserve its existing affordable
housing stock. City-assisted affordable housing should carry a minimum 20-year
commitment to affordability. Priority should be given to units that will be kept
affordable for periods in excess of 20 years, with the highest priority given to units
committing to permanent affordability.
Part 2 - The Provision of Affordable Housing in Fort Collins
78 - Priority Affordable Housing Needs and Strategies
Policy (con’t): The City’s priorities for housing are as follows:
Source: Consolidated Plan, City Plan, and Affordable Housing Policy
Increase the supply of affordable rental housing through new construction and
acquisition of existing units
Increase homeownership opportunities for low- and moderate-income households
To improve the community through the enhancement of non-housing facilities,
services and amenities, and through the promotion of economic development
Policy: The supply of housing will be proportionately balanced to the wages of our
labor force. Source: City Plan
Policy: The City will permit residential development in all neighborhoods and
districts in order to maximize the potential land available for development
of housing and thereby positively influence housing affordability. Source: City
Plan
Policy: The priority/need level for specific housing types, family size and income is
as shown in Table 24: Source: Consolidated Plan
Policy: The City will support and encourage the private sector, federal and state
agencies, nonprofit housing developers and citizens to meet the affordable
housing needs of the citizens of Fort Collins through partnerships,
incentives, and reducing barriers to the construction of additional units.
Source: City Plan, Affordable Housing Policy and Consolidated Plan.
Policy*: The City will cooperate with other Larimer County communities to provide
and expand affordable housing in the region. Source: Housing Authority
Annual Report. *The above policy no longer exists.
Policy**: The Fort Collins Housing Authority’s mission is to promote, develop,
provide and operate affordable and accessible housing for low-income
families, elderly and physically and mentally challenged individuals, and
encourage self-improvement for families to evolve from dependency to self-
sufficiency. Source: Housing Annual Report. **The above policy has been
revised. The new policy is as follows:
Table 24 – Priority Need Levels
*Need Ratings: H=High, M=Medium, L=Low, N=No Such Need
AMI Priority Need Levels
Housing Needs
0-
30%
31-
50%
51-
80%
Small Family
Cost Burden > 30% H H H
Cost Burden > 50% H H M
Physical Defects H M L
Overcrowded H M L
Large Family
Cost Burden > 30% H H L
Cost Burden > 50% H L L
Physical Defects H M M
Overcrowded H H H
Elderly
Cost Burden > 30% H M M
Cost Burden > 50% H M N
Physical Defects H H M
Renter
Overcrowded L L N
Cost Burden > 30% H H H
Cost Burden > 50% H M L
Physical Defects H M L
-
Priority Affordable Housing Needs and Strategies - 79
Policy: The Fort Collins Housing Authority’s mission is to provide and promote safe,
affordable housing, economic opportunity and a living environment free
from discrimination. Source: Fort Collins Housing Authority 5-Year Plan
PHA Fiscal Year 2003-2007.
Goal 2: Fort Collins will provide a mix of housing distributed
throughout the community.
Source: City Plan
Policy: Neighborhoods will include a mix of housing types for all economic levels
that are well served by public transportation and close to employment
centers, services and amenities. Source: City Plan and Consolidated Plan.
Policy: Affordable housing, including special needs, will be geographically
dispersed throughout the community to avoid creating over-concentration
in any neighborhood. Source: City Plan.
Policy: Fort Collins will promote development of well-designed, compatible, high-
quality multi-family developments and accessory homes throughout the
community. Source: City Plan.
Policy: The City will assure an acceptable minimum level of quality within
affordable housing units. Source: Affordable Housing Policy.
Policy: The City’s older housing stock and neighborhoods will be preserved to the
extent practical. Source: City Plan.
Goal 3: Fort Collins will create an environment that meets the
special needs of our residents.
Source: City Plan
Policy: The City’s priorities for housing for 1995 - 2000 are as follows: Source:
Consolidated Plan.
To serve the homeless and assist in breaking the cycle of homelessness through
expanding the capacity and services of the emergency shelters, and expanding
transitional housing and prevention programs
Part 2 - The Provision of Affordable Housing in Fort Collins
80 - Priority Affordable Housing Needs and Strategies
To preserve and increase the assisted affordable housing stock and services for
persons with special needs
OTHER POLICIES:
Policy: Higher priority will be given to funding projects with federal funds that have
the following aspects: Source: CDBG Selection Guidance System.
Acquisition proposals which provide assets to the community will be given greater
weight over proposals that are operational in nature.
Leveraging of private and non-federal funds.
Policy: The City will collect, maintain, and disseminate information and vital
statistics on housing affordability such as cost, demand, and supply of
affordable housing stock. Source: City Plan.
Policy: The City should explore ways to mitigate the impact upon residents
displaced through the closure or conversion of either a manufactured
housing park or conversion of rental apartments, particularly single room
occupancy units, to condominiums or other uses. Source: City Plan.
Policy: The City shall assess the effects of new policies and regulations, or changes
to existing policies and regulations on housing development costs and
overall housing affordability, in order to achieve an appropriate balance
between housing affordability and other objectives such as urban design
quality, maintaining neighborhood character, and protecting public health,
safety and welfare. Source: City Plan.
RECOMMENDATIONS:
Below are recommendations for policy changes to make this document consistent with
current practices or changes that reflect the housing market conditions in Fort Collins.
Policy: The City’s priorities for housing are as follows:
-
Priority Affordable Housing Needs and Strategies - 81
This community needs to produce new rental units affordable to families earning
at or below 50% of AMI, with greatest priority to projects serving households at
40% of AMI and below.
Policy: Higher priority will be given to funding projects with federal funds and the
City’s Affordable Housing Funds that have the following aspects: Source:
Competitive Process Criteria.
Primarily targets very low income persons and provides adequate benefit to the
City.
Meets a priority housing need in the community.
Demonstrates public subsidy is needed.
Leverages public funds with private financial investments.
Proven track record and capacity to complete housing projects in a timely
manner.
REGULATION
Fort Collins established its City Plan and Land Use Code in March 1997 to guide and
regulate development in the city. Policies in the City Plan that pertain to affordable
housing are summarized on the preceding pages. The Land Use Code describes the
development review process, general development standards, and zone districts. It
addresses standards for site planning and design, engineering, environmental and
cultural resource protection, compact urban growth, buildings, transportation and
circulation, land use, and specific zone district standards. In addition, the Fort Collins
Municipal Code imposes various fees known generally as “Development Impact Fees,”
intended to help provide the community services and infrastructure needed because of
new development.
Affordable housing projects are subject to the same requirements as other residential
developments, with very few exceptions. Priority Processing attempts to shorten the
development review process, Development Review Fee Waivers reduce the fees
required to start that process, and the Impact Fee Delay and Offset programs reduce
the financial burden of Development Impact Fees.
In addition, the Administrative Construction Fee Exemption program, administered by
the Engineering Department, allows certain construction fees to be exempt for
Part 2 - The Provision of Affordable Housing in Fort Collins
82 - Priority Affordable Housing Needs and Strategies
affordable housing. The City also initiated a Sales and Use Tax Rebate program that
gave a sales tax rebate on construction materials used in building affordable housing to
developers. The Sales and Use Rebate program assisted 143 affordable housing units
(135 rental units and 8 owner units) in Fort Collins at a total cost of $97,711 or $683
per unit. This program had a sunset provision in 2001. It was a very valuable program
for for-profit developers building affordable housing.
On any sites with Low Density Mixed-Use Neighborhood (LMN) zoning, affordable
housing increases the allowable density from 8 to 12 units per acre. Also the landscape
requirements for affordable housing projects in the Land Use Code were relaxed in
2002. These exceptions are intended to help make affordable projects more financially
feasible, while still ensuring that they fit or blend in with their surrounding
neighborhoods, and provide high quality housing opportunities.
Major recommendations of the Affordable Housing Board contained in the report
entitled “Current Status of Affordable Housing and Recommendations for
Improvement” (August 2001) were incorporated by the City. They are as follows:
Designation of a staff person who resolves conflicts between City departments in
regards to development review issues;
Encourage the 120-day review period for housing projects as an internal goal to
be achieved by the Current Planning staff;
Approved a Land Use Code amendment to reduce bonding requirements for
affordable housing;
Broaden the educational process for the general public about affordable housing;
and
Develop a process through the Building Department that provides cost impact
statements when code changes affect housing costs.
The Land Use Code’s affect on the feasibility of affordable housing construction in Fort
Collins appears to be insignificant, with several major affordable housing projects
completed in the last three years.
Regardless of whether the new regulations are deterring affordable housing
developers, there may be ways to reduce construction costs without sacrificing health,
safety, or aesthetic standards. Any such innovation could benefit housing affordability
for residents at all income levels. There are resources available to help. HUD’s Office
of Policy Development and Research has published “Building Innovation for
-
Priority Affordable Housing Needs and Strategies - 83
Homeownership,” which recognizes 63 award-winning housing projects from across
the U.S. It also reports, and issues guidelines on the design, construction, and
inspection of new construction technologies. The Colorado State Division of Housing
has also published “Reducing Housing Costs Through Regulatory Reform: A Handbook
for Colorado Communities.”
EDUCATION & OUTREACH
The City of Fort Collins uses a variety of strategies to inform affordable housing
consumers, developers, decision makers, other agencies and groups, the media, and
community members in general, about the many issues surrounding affordable
housing.
Potential Developers
Potential developers of affordable housing are provided with an extensive information
packet, outlining the City’s incentives and processes as they relate to affordable
housing. In addition, technical assistance is provided in an effort to ensure greater
opportunities for successful development proposals.
Development Review Process
Affordable housing team members attend the Current Planning Department’s
Conceptual Review meetings for new development proposals. Where appropriate,
options for affordable housing components within proposals are discussed with
applicants.
For many new development projects, a neighborhood meeting is held to inform
residents and give them the opportunity to comment on proposals. For affordable
housing projects, staff members should be prepared to address NIMBY-related (Not In
My Back Yard) concerns.
Legislative Support & Efforts
Fort Collins recognizes the importance of educating lawmakers and decision makers
regarding affordable housing. To that end, the City takes a partnering role in
advocating for and monitoring affordable housing-related legislation. Items are
funneled through the City’s legislative liaison. City staff also maintains close contact
with public policy advocates from agencies such as Catholic Charities Northern. A City
Part 2 - The Provision of Affordable Housing in Fort Collins
84 - Priority Affordable Housing Needs and Strategies
staffer serves on the committee currently developing a state-wide affordable housing
trust fund.
Partnering with Other Groups
In an effort to network with advocacy and education groups at a regional level, City
staff also attend meetings for the Affordable Housing Coalition of Larimer County and
the Northern Front Range Continuum of Care. In that capacity, the City participates in
events such as public forums addressing affordable housing concerns.
Affordable Housing Board
The City’s Affordable Housing Board has remained an active policy assistance and
education arm for City Council. The Board has an education and outreach
subcommittee. A few Board members, in a separate initiative, have published an
affordable housing resource guide.
Internet
The City has developed and maintains an internet sub-site for affordable housing within
the “fcgov.com” domain. It serves as an information resource for the full spectrum of
customers needing affordable housing information.
Local Cable
The City’s television station, Cable Channel 27, has been a useful venue for affordable
housing education efforts. Channel 27 repeatedly re-broadcasts programs such as Fall
2002’s “The State of Affordable Housing” public forum. Channel 27 also airs pieces
such “The Many Faces of Housing Assistance,” a helpful video personalizing the
spectrum of affordable housing needs.
Public Awareness Efforts
Whenever possible, the City of Fort Collins is involved in ongoing affordable housing
public awareness efforts. During 2002, the City spearheaded an affordable housing
awareness campaign, “The Faces and Places of Affordable Housing” to distribute a
series of three posters in over 750 locations in Northern Colorado. Each of the posters
dealt with a different aspect of the affordable housing issue. The campaign was a
collaborative effort with a private real estate firm (The Group), and several advocacy
groups (The Northern Front Range Continuum of Care and The Affordable Housing
Coalition). The outreach garnered state and national level attention, and is being used
as a model by other communities.
-
Priority Affordable Housing Needs and Strategies - 85
FUNDING & OTHER INCENTIVES
The City has implemented a number of programs in support of affordable housing. It
administers HUD funds in the Community Development Block Grant (CDBG) program
and the Home Investment Partnership (HOME) program. Since 1993, it has also
invested over $3.6 million of its own general fund dollars into the Affordable Housing
Fund. This city-administered account has funded the Impact Fee Delay and Rebate
programs, the Larimer Home Improvement Program and Funding Partners for Housing
Solutions. In addition, the City has established the Priority Processing system and
Development Review Fee Waiver program to help facilitate affordable housing projects
through the development review process. See Appendix III for a chart summarizing
these programs.
Part 2 - The Provision of Affordable Housing in Fort Collins
86 - Priority Affordable Housing Needs and Strategies
Affordable Housing Fund
Since 2000, all of the General Fund dollars are allocated through the Competitive
Process. Prior to 2000, the funds were allocated via the Fee Rebate Program.
Approximately, $1,037,600 dollars went to projects under the old rebate program as
shown in Table 25. From 2000 to 2002, the Affordable Housing Fund has made
available $2,008,913 dollars to support over 260 affordable housing units through the
Competitive Process. In the 2003 budget cycle, the City will provide $893,000 dollars
for affordable housing production. In addition, the city has provided $1,725,000 for
the Land Bank program. The following table (Table 25) shows how the Affordable
Housing Fund has been allocated from 1993-2002.
Table 25 Affordable Housing Fund Active History (as of March 2003)
* The Rebate Program was discontinued in 1999 and replaced with a new Competitive Process.
** Expense Types include Production, LHIP, Land, Rehab and Other, etc.
Allocation Developers Project Name Rebates* Expense Type** Expense Amount Units
93
$250,000
94
$233,000
1995 LHIP LHIP $22,500
TRAC San Cristo $25,860 75
CARE Greenbriar $71,400 40
1995
$133,000
CARE Rose Tree Village $106,800 120
1996 LHIP LHIP $22,500
Funding Partners Northern Hotel Other $250,000 47
FCHA Hillcrest $26,280 15
FCHA W Mulberry $1,460 1
1996
$383,000
Habitat for Humanity N Briarwood $4,244 1
1997 LHIP LHIP $22,500
CARE W Swallow $79,200 40
1997
$133,000
Habitat for Humanities N Briarwood $3,047 1
Affordable Housing Fund Totals
Allocations $5,356,913
Rebates $1,108,797
Other Expenses $3,368,317
Balance $879,799
-
Priority Affordable Housing Needs and Strategies - 87
Con’t
Table 25 Affordable Housing Fund Active History (as of March 2003)
* The Rebate Program was discontinued in 1999 and replaced with a new Competitive Process.
** Expense Types include Production, LHIP, Land, Rehab and Other, etc.
Allocation Developers Project Name Rebates*
Expense
Type**
Expense
Amount Units
1998 LHIP LHIP $22,500
Habitat for Humanity Laporte $4,244 1
FCHA W Swallow $54,020 34
Kaufman & Broad The Woodlands $119,720 116
1998
$208,000
Habitat for Humanity Albion Way $3,142 1
CARE Eagle Tree Other $103,070 36
FCHA JFK Parkway Other $32,962 12
FCHA Via Lopez Other $80,931 33
1999
$283,000
CARE Windtrail $67,160 50
CARE (land acquisition) Fairbrooke Heights Production $150,000 50
FCHA Rehab Rehab $75,000 144
2000
$443,036
Brisben Companies Buffalo Run $207,450 86
Volunteers of America Elderly Housing Production $219,000 60
Bethphage Westfield Drive Production $111,900 5
Simpson Housing Woodbridge Other $125,000 50
Downpayment Assistance Other $100,000
Habitat for Humanity Torridon Lane Other $6,115 1
Habitat for Humanity HBA & Fees Other $47,000 1
CARE Fairbrooke Heights $69,050 --
Brisben Companies Bull Run $179,580 176
2001
$671,915
Brisben Companies Country Ranch $86,140 118
CARE Fairbrooke Heights Production $200,000 --
2002
$893,962
Downpayment Assistance Other $100,000 14
03-03
$1,725,000 Land Bank Program
(30 Acres) Land $1,677,339
Estimated
360
Part 2 - The Provision of Affordable Housing in Fort Collins
88 - Priority Affordable Housing Needs and Strategies
The CDBG/HOME programs are block grants from the federal government (HUD) to
“Participating Jurisdictions,” including the City of Fort Collins. For the 2002 CDBG
program year, the City received $1,243,000. CDBG dollars must be used to benefit low
and moderate income persons, prevent or eliminate blight, or meet other urgent
community needs. In Fort Collins, as a policy, funds have been used primarily for
housing rehabilitation and acquisition (typically of sites for affordable housing), as
shown on Table 26.
Table 26: Percent of CDBG Funds Allocated by Categories
Activity 1998-1999 1999-2000 2000-2001 2001-2002
Acquisition 73% 67% 32% 62%
Housing Rehabilitation 1% 0% 17% 11%
Public Facilities 1% 5% 10% 2%
Public Services 15% 15% 15% 15%
Planning and Administration 10% 13% 26% 10%
Economic Development 0% 0% 0% 0%
For the 2001 - 2002 HOME program year, the City received $726,510. HOME dollars
must be used to increase the supply of decent, safe, and affordable housing. All of the
funds must benefit low and very low income households (not exceeding 80% of AMI).
The following chart (Table 27) illustrates the City’s use of HOME dollars:
Table 27: Percent of HOME Funds Allocated by Categories
Activity 1998-1999 1999-2000 2000-2001 2001-2002
Home Buyer Assistance 80% 75% 0% 27%
Acquisition/Construction 10% 15% 90% 63%
Administration 10% 10% 10% 10%
-
Priority Affordable Housing Needs and Strategies - 89
ANALYSIS: WHICH OF THE CITY’S ROLES NEED ADDITIONAL
RESOURCES?
Policy and Regulation
City staff reviewing development applications, as well as employees in other related
departments, should be encouraged to watch for innovative ways to reduce housing
construction costs without sacrificing quality. HUD and the State have already done
research into this field. City Advance Planning staff have distributed this information as
appropriate, either amongst themselves or to builders. The City should continue to
evaluate the effects of new or revised policies and regulations on housing development
costs and overall housing affordability.
Education
The City has made a considerable effort to educate its citizens. It should continue its
efforts to reach more citizens, preferably before there is a project in their “backyard.”
A Speaker’s Bureau of interested volunteers has been organized that advocates for
affordable housing. Neighbors of potential affordable housing projects usually feel
more comfortable if they heard from people like them who live near an affordable
housing project. Residents of affordable housing complexes would also make good
speakers, since they could speak from personal experience about their housing needs
and struggles. Again, neighbors of potential affordable housing projects would
probably feel more comfortable if they had an opportunity to meet people who would
live there. Speakers should not just go to project-specific neighborhood meetings. They
should also be available to make presentations to civic and community groups.
Funding
The City has contributed federal funds, general revenues and staff resources to
affordable housing programs, and that effort should continue. It should continue the
amount of general revenues allocated to its Affordable Housing Fund and be strategic
in targeting resources to those in most need. The City should also look for new sources
of funding that it can access and apply to affordable housing, such as general revenue
dedication, sales tax, impact fees, etc.
The City’s investments in affordable housing must also be carefully considered. It has
taken another step with the updating of priority affordable housing needs contained
Part 2 - The Provision of Affordable Housing in Fort Collins
90 - Priority Affordable Housing Needs and Strategies
within this report. Knowing the relative need for rental vs. sale housing will help it to
redirect its resources and provide a “smart strategy” for the City to prioritize its
affordable housing needs. However, building affordable housing is very expensive, and
the City does not have the resources to fully fund developments. As frustrating for the
people trying to assemble financing, leveraging is the key to this industry. There are
virtually no funding sources that will fully fund a development. The City can, however,
play a key role in helping projects assemble their financing sources. By committing
funding to projects in the earliest stages of their development, the City can provide a
tangible show of support for projects. State and national funding sources look very
favorably on projects that have that kind of support from the local government. The
City’s role, therefore, is not to provide so many dollars per unit to a project so the
developer can lower the rents by so many dollars per month. Its role is to be the first
piece of the puzzle, to help developers leverage the bulk of the financing needed to
complete a project. The City may also provide the needed gap financing to complete
the project.
-
Priority Affordable Housing Needs and Strategies - 91
Part III - Goals and Strategies
for Meeting Fort Collins’ Priority
Affordable Housing Needs
Introduction
This chapter is intended to revisit the appropriateness of affordable housing goals,
measurable objectives, and strategies for meeting the goals in the 1999 report. The
specific strategies proposed are based on a set of general affordable housing policies.
Before getting into detailed strategies, it is important to understand the policies and
principles on which they are based.
The City’s role is to set policies that encourage a balance of housing types, to revise
regulations so they encourage affordable housing, to expand public understanding of
the benefits of affordable housing, and to use its resources to help leverage funding for
affordable housing projects.
Leveraging funding is an important concept. The City does not, by itself, have enough
resources to make 4,948 housing units affordable, to meet this community’s needs.
The question is not how much subsidy the City needs to give a project to lower its rents
from market rate to an affordable rate, but rather how much the City needs to award in
order to demonstrate local support for the project, enabling it to win enough
additional funding from other sources to make the project a reality.
In 1999, staff estimated that an average of $5,000 per unit was enough City subsidy to
achieve that leverage. Based on the increased cost of construction since this time, the
amount of subsidy needed today is $5,800 for rental units and $9,000 for owner units.
These figures are averages only. Actual awards may vary widely, based on the relative
merits of different project proposals. A primary factor will be income level served – the
lower the rents, the higher the subsidy should be. It is possible that an average of
$5,800 per rental unit and $9,000 per owner unit is not enough subsidy, especially as
the costs to buy land and build projects increase over time. These figures will need to
be reevaluated periodically.
The Woodlands Apartments, by Kaufman and Broad Multi-Housing Group, Inc
Part 3 – Goals & Strategies
92 - Priority Affordable Housing Needs and Strategies
The City has two main categories of tools – subsidies and incentives. “Subsidies” refer
to financial contributions to a project for activities like land acquisition, construction,
etc. They come from the CDBG and HOME programs as well as the City’s own
Affordable Housing Fund. “Incentives” are programs designed to alleviate regulatory
burden. They include the Priority Processing, Development Review Fee Waiver, and
Impact Fee Delay programs and other incentives. Incentives have some monetary value
to projects, but they are very difficult to predict. Their value is in addition to the
average subsidy per unit figures.
The City’s roles in affordable housing do not include acting as a developer. In order to
achieve its goals, the City will have to actively solicit private developers to work in Fort
Collins.
Evaluation of Affordable Housing Goals
In the 1999 Study, the housing production goals and budget cover the period
from 2002 to 2008, with the implementation having begun in 1999. Funding
sources to address housing need include Community Development Block Grant
(CDBG) funds, of which 65% will be used for housing and the remainder for
other community needs; HOME Program funds, of which 100% will be used for
housing; revolving income from both CDBG and HOME, repayment of loans will
also provide funding for housing and; 100% of Affordable Housing Funds will be
used for the production of affordable housing. The budget scenario shows increased
funds are needed to achieve the housing production goals over the next 10 years.
The projection of new “needed” affordable housing units is based on a 2% annual
compounded growth rate – in 10 years, the City should fund just over 4,000 Housing
Units (HU) to meet the community’s need for affordable housing (Table 28).
In the 4-year period from 1999–2002, the “Priority Affordable Housing Needs and
Strategies Report,” established a goal of 1,357 affordable housing units to be assisted.
This number comprised 950 rental and 407 owner units. In this time period, the City
assisted the production and preservation of 1,007 rental units and 484 owner units for
a total of 1,491 affordable housing units (using CDBG, HOME, Affordable Housing
Funds, PABs and City Incentives). The City has exceeded its goals established in this
report.
1999-2002 Summary of
Production/Preservation
Tenure Units
Rental 1007
Owner 484
Total 1491
-
Priority Affordable Housing Needs and Strategies - 93
Table 28 Affordable Housing Production and Preservation
1999-2002
Source: City of Fort Collins Advance Planning Department
Year Developer Project City Assistance Units Tenure
CARE Eagle Tree $615,000 36 Rental
CARE Windtrail $1,068,160 50 Rental
FCHA Cowan Trail $70,000 19 Rental
FCHA JFK Parkway $275,000 12 Owner
FCHA Via Lopez $620,931 33 Owner
Downpayment Assistance $300,000 60 Owner
1999
1999 Total 210
Neighbor to Neighbor Coachlight $496,809 69 Rental
Brisben Companies Buffalo Run $207,450 86 Rental
Downpayment Assistance $230,000 46 Owner
2000
2000 Total 201
Simpson Housing Reflections $200,000 72 Rental
Brisben Companies Bull Run $179,580 176 Rental
Brisben Companies Country Ranch $86,140 118 Rental
National Health Care PAB $2 Million 22 Rental
Bethaphage $111,900 5 Rental
Habitat for Humanity $53,115 2 Owner
Downpayment Assistance $395,000 79 Owner
2001
2001 Total 474
Simpson Housing Woodbridge $250,000 50 Rental
Marc Hendricks Fox Meadows PAB $2.75 Million 63 Rental
Funding Partners Northern Hotel $235,000 47 Rental
FCHC Sleepy Willow Apartments $650,000 95 Rental
CARE Fairbrooke $820,000 50 Rental
Volunteers of America $540,000 60 Rental
Turning Point $100,000 8 Rental
KB Home Provincetowne Discount Land SID 141 Owner
Mikal Torgerson Cherokee Flying Heights Priority Processing, Fee waiver, Fee delay 19 Owner
Downpayment Assistance $719,912 92 Owner
2002
2002 Total 625
Part 3 – Goals & Strategies
94 - Priority Affordable Housing Needs and Strategies
Analysis of Units Needed, Available Funding and
Needed Funding
There are a number of assumptions made in this analysis. First, the estimates of the
number of affordable housing units needed are readjusted with the current
information available from the 2000 Census. Data for the years prior to 2000 remained
the same as the original report, while 2000 became the new base year for future
projections. These updated base estimates of rental and for-sale units needed were
obtained from HUD’s Comprehensive Housing Affordability Strategy Table 1-C
calculated from the 2000 Census household status and income data.
Second, to attempt project how the need for affordable housing will change in the
future, an annual growth factor of 2% was used. This rate of growth in housing units is
the rate of growth projected in City Plan.
Third, there are arguments that the growth in the need for affordable housing may be
either higher or lower than the growth in overall population. HUD’s projections show
almost no change between 1990 and 2000 in the absolute number of low-income
households living in Fort Collins and paying too much for rent. On the other hand, it
could be argued that those renters are now doubled-up and/or moved to nearby
communities to escape Fort Collins’ growing housing costs, but continued to work in
Fort Collins. A study of the jobs and housing balance in Fort Collins in the City Plan
Market Analysis indicates that Fort Collins has a healthy balance at 1.5 jobs to one
residential unit. The ratio makes the assumption that the type of and mix of jobs
provides opportunities for residents to both live and work in the community. This
assumption could overlook certain income groups that are being forced to other
nearby communities due to housing costs. There still does seem to be indications of
low income workers being forced to live in nearby communities. The job housing ratio
also does not take into account if members of households with two or more working
out of the same home are commuting to other cities. Depending on how quickly the
City’s low-income job supply is growing, there may also be indications that the need for
affordable housing is growing faster than the overall growth rate.
Forth, it assumes a constant amount of CDBG and HOME dollars each year, equal to
the 2002-2003 allocation. There is in fact no way of knowing whether this will happen
– the allocation from HUD may go up or down as time goes by. An estimate of potential
income to the programs (repayment of loans) has been added. Unfortunately, there is
-
Priority Affordable Housing Needs and Strategies - 95
no way to estimate exactly when loans from these programs will be paid back, since
none of them have specific repayment time limits.
The fifth major assumption is that in 2003, an average subsidy of $5,800 per dwelling
unit for rental projects and $9,000 for homeownership is enough to leverage the
balance of funding needed to build or purchase an affordable housing unit. Staff
believes, from past experience with the CDBG and HOME programs, that it will. Future
experience may prove us wrong, especially as the costs to buy land and build projects
increase with time. This figure will need to be reevaluated periodically.
Sixth, factors for construction cost and sale price inflation have been incorporated into
the average subsidy per unit. Over the past 25 years, Engineering New-Record’s
Building Cost Index for Denver has increased by 3% (compounded) each year. For the
past 20 years, average home sale prices have increased by 6.1% compounded each
year (based on average sale prices in Fort Collins, 1979-2002, from the Multiple
Listing Service, courtesy of the Group Inc.). Therefore the average subsidy needed per
unit has increased by 3% for rental housing and 6.1% for sale housing each year from
2003-2012. By 2012, the average subsidy becomes either $7,600 or $15,300
respectively.
Finally, the analysis assumes that virtually none of the City’s subsidy programs (CDBG,
HOME, or the Affordable Housing Fund) will be awarded to rental projects affordable
to families earning between 50% and 60% of AMI, unless some units would be
affordable below 50% of AMI. Instead, Private Activity Bonds (PAB) would continue to
be used to fund such projects.
Fort Collins currently has about $2,541,912 (2003) annually to invest in new
affordable housing units. About 55% of those dollars are from the federal government,
and 45% are from the City. It includes 65% of the City’s 2002-2003 CDBG allocation
(approximately 25% is used for public services or facilities, and 10% is used for
administration), 90% of its 2002-2003 HOME allocation, and all potential program
income that will be available for that funding year. It also includes all of the funds
currently budgeted from the General Fund $893,962 in 2003. It does not include City
funds for staff who work on affordable housing planning and programs.
Based on the relative estimates of current need for very low-income rental housing
(2,214 units) and first-time homebuyers (1,096 units), about 68% of these sources
should be spent on rental housing that is affordable to families earning less than 50%
Part 3 – Goals & Strategies
96 - Priority Affordable Housing Needs and Strategies
of AMI. The balance, 32% of our resources, should be used for down payment
assistance for low-income first time homebuyers.
Table 29 shows calculations made to create goals for new unit production. The “Units
Needed” box demonstrates the effect of a 2% annual compounded growth rate – in 10
years, the City should fund just over 4,000 units to meet the community’s need for
affordable housing. The left side column under “Funding Needed” demonstrates goals
for funding projects, not building them. It could take anywhere from 1 to 3 years for
projects that the City funds to actually produce units. This is not factored into the
analysis because the City has no direct control over how long it takes to build a project.
The right hand column shows potential sources of funds as well as how much
additional money would be needed to meet the funding goals. Each successive year
assumes that the previous year’s “Additional $ Needed” was provided as an ongoing
allocation. This is true except for the 2004 and 2005 Affordable Housing Fund budgets
that are assumed frozen at the funding level of $735,898 in response to the monetary
constrains of the City budget. However, should conditions change and growth in sales
tax revenue be more encouraging to meet affordable housing needs, the Affordable
Housing Fund could be reevaluated for possible increases in funding.
NEW UNIT PRODUCTION GOALS
Number of affordable housing units needed and calculation of funding required
to meet that need, using 65% of CDBG funding:
Annual growth in # units needed = 2.0%
(Based on estimated growth in housing units)
Annual growth in cost of new construction = 3.0%
(Based on the Building Cost Index for Denver, 1973-1997 from Engineering News-Record
First Quarterly Cost Report 1998.)
Annual growth in sale prices = 6.1%
(Based on average sale prices in Fort Collins, 1978-1997, from Multiple Listing Service,
courtesy of The Group Inc.)
Annual growth in # units to be funded = 9%
Table 29 Production of New Rental Units
Source Advance Planning Department.
Year Rental Sale Total
1997 2,230 960 3,190
1998 2,297 989 3,286
1999 2,366 1,018 3,384
Revisions of housing needs
based on 2000 Census
2000 2,214 1,096 3,310
2001 2,280 1,129 3,409
2002 2,349 1,163 3,512
Revisions of housing needs
based on changes to the market
2003 2,396 1,186 3,582
2004 2,444 1,210 3,653
2005 2,493 1,234 3,727
2006 2,542 1,259 3,801
2007 2,593 1,284 3,877
2008 2,645 1,309 3,955
2009 2,698 1,336 4,034
2010 2,752 1,362 4,114
2011 2,807 1,390 4,197
2012 2,863 1,417 4,281
DRAFT – BEING REVISED
-
Priority Affordable Housing Needs and Strategies - 97
Table 30 Funding Needed for Funding Awards: 1999 to 2002
Annual growth in # units to be funded = 9%. Source: Advance Planning Department.
*All AHFund balance, 1999 allocation, and at least $100,400 of the 2000 allocation is needed for the Impact
Fee Rebates and LHIP. ** CDBG, HOME, and Program Income for 1999 and 2003 are actual funding
amounts.
#
units $/unit $/year % of $
CDBG** HOME** Program
Income**
AHFund
(1999)* TOTAL $
Rental 208 $5,000 $1,038,415 70% % 65% 90%
Sale 89 $5,000 $445,035 30% $ $759,850 $553,500 $170,100 - $1,483,450
Total 297 $1,483,450 100%
1999
GOAL
% Inc. n/a
1999
SOURCE
Additional $ Needed -
Rental 226 $5,205 $1,178,279 70% % 65% 90% 0.9
Sale 97 $5,285 $512,738 30% $ $759,850 $553,500 $183,000 $182,673 $1,679,023
Total 323 $1,691,017 100%
2000
GOAL
% Inc. 14.00%
2000
SOURCE
Additional $ Needed $11,995
Rental 247 $5,418 $1,336,982 69% % 65% 90% 0.9
Sale 106 $5,586 $590,741 31% $ $759,850 $553,500 $169,100 $272,495 $1,754,944
Total 352 $1,927,723 100%
2001
GOAL
% Inc. 14.00%
2001
SOURCE
Additional $ Needed $172,779
Rental 269 $5,641 $1,517,060 69% % 65% 90% 0.9
Sale 115 $5,905 $680,611 31% $ $759,850 $553,500 $217,000 $445,273 $1,975,623
Total 384 $2,197,670 100%
2002
GOAL
14.00%
2002
SOURCE
Additional $ Needed $222,047
DRAFT – BEING REVISED
Part 3 – Goals & Strategies
98 - Priority Affordable Housing Needs and Strategies
Table 31 Funding Needed for Funding Awards: 2003 to 2012
*Due to additional affordable units in the marketplace recommendations have been adjusted. ** CDBG,
HOME, and Program Income for 1999 and 2003 are actual funding amounts. ***AHFund for 2003 will be the
new base amount for next 10 years. This is the total actual amount provided by City Council for 2003. Due to
budget constraints the AHFund funding amount will stay constant for 2004 and 2005 with no additional funds
provided. Annual growth in # units to be funded = 5%. Annual growth in Program Income = 10%.
#
units $/unit $/year % of $
CDBG** HOME** Program
Income**
AHFund
(1999)* TOTAL $
Rental 306 $5,810 $1,779,338 70% % 65% 90% 90%
Sale 85 $9,000 $762,574 30% $ $807,950 $675,000 $165,000 $893,962 $2,541,912
Total 391 $2,541,912 100%
2003
GOAL
% Inc. 16.00%
2003
SOURCE
Additional $ Needed -
Rental 281 $5,984 $1,680,244 70% % 65% 90% 90%
Sale 75 $9,547 $720,104 30% $ $807,950 $675,000 $181,500 $735,898 $2,400,348
Total 356 $2,400,348 100%
2004
GOAL
% Inc. <-5.57>%
2004
SOURCE
Additional $ Needed -
Rental 275 $6,164 $1,692,949 70% % 65% 90% 90%
Sale 72 $10,128 $725,549 30% $ $807,950 $675,000 $199,650 $735,898 $2,418,498
Total 346 $2,418,498 100%
2005
GOAL
% Inc. 0.76%
2005
SOURCE
Additional $ Needed -
Rental 288 $6,348 $1,830,924 69% % 65% 90% 90%
Sale 75 $10,743 $808,146 31% $ $807,950 $675,000 $219,615 $735,898 $2,438,463
Total 364 $2,639,070 100%
2006
GOAL
% Inc. 9.00%
2006
SOURCE
Additional $ Needed $200,607
Rental 303 $6,539 $1,980,144 69% % 65% 90% 90%
Sale 79 $11,397 $900,145 31% $ $807,950 $675,000 $241,577 $936,505 $2,661,031
Total 382 $2,880,289 100%
2007
GOAL
% Inc. 9.00%
2007
SOURCE
Additional $ Needed $219,258
DRAFT – BEING REVISED
-
Priority Affordable Housing Needs and Strategies - 99
#
units $/unit $/year % of $
CDBG** HOME** Program
Income**
AHFund
(1999)* TOTAL $
Rental 318 $6,735 $2,141,526 68% % 65% 90% 90%
Sale 83 $12,090 $1,002,618 32% $ $807,950 $675,000 $265,734 $1,155,763 $2,904,447
Total 401 $3,144,144 100%
2008
GOAL
% Inc. 9.00%
2008
SOURCE
Additional $ Needed $239,697
Rental 334 $6,937 $2,316,060 67% % 65% 90% 90%
Sale 87 $12,825 $1,116,756 33% $ $807,950 $675,000 $292,308 $1,395,460 $3,170,717
Total 421 $3,432,816 100%
2009
GOAL
% Inc. 9.00%
2009
SOURCE
Additional $ Needed $262,099
Rental 351 $7,145 $2,504,819 67% % 65% 90% 90%
Sale 91 $13,604 $1,243,887 33% $ $807,950 $675,000 $321,538 $1,657,559 $3,462,047
Total 442 $3,748,707 100%
2010
GOAL
% Inc. 9.00%
20010
SOURCE
Additional $ Needed $286,660
Rental 368 $7,360 $2,708,962 66% % 65% 90% 90%
Sale 96 $14,431 $1,385,491 34% $ $807,950 $675,000 $353,692 $1,944,218 $3,780,860
Total 464 $4,094,453 100%
2011
GOAL
% Inc. 9.00%
2011
SOURCE
Additional $ Needed $313,593
Rental 386 $7,580
$2,929,742 65% % 65% 90% 90%
Sale 101 $15,309 $1,543,216 35% $ $807,950 $675,000 $389,061 $2,257,811 $4,129,823
Total 487 $4,472,958 100%
2012
GOAL
% Inc. 9.00%
2012
SOURCE
Additional $ Needed $343,136
DRAFT – BEING REVISED
Part 3 – Goals & Strategies
100 - Priority Affordable Housing Needs and Strategies
SUMMARY OF 10-YEAR GOAL
# Units $ Total % of $
Rental 3,210 $ 21,564,709 68%
Sale 844 $10,208,487 32%
Total 4,054 $ 31,773,196 100%
Units Needed 4,948
Shortage (226)
SUMMARY OF 10-YEAR FUNDING SOURCES
% $ Total % of Total
CDBG 65% $8,079,500 25%
HOME 90% $6,750,000 21%
Program Inc 90% $2,629,675 8%
AHFund 100% $14,314,020 45%
Total $ $31,773,196 100%
DRAFT – BEING REVISED
-
Priority Affordable Housing Needs and Strategies - 101
Production of New Rental Units
GOAL: TO ASSIST VERY LOW-INCOME RENTERS (BELOW 50%
AMI)
Objectives:
The City should actively solicit the development of 2,214 units of affordable rental
housing for very low-income family, elderly, or other households with special
needs that currently pay over 30% of their income for rent. At an average
development subsidy $5,800 per unit, Fort Collins would have to commit
$12,841,200 to meet this need today.
The City should solicit the development of those units over 10 years.
Assuming a 2% population growth factor, Fort Collins will need 2,863 rental units
for very low-income households by 2012. Although our goal for rental housing is
higher than projected need, the overall housing need has a shortfall of
approximately 900 units by 2012.
Given a 3.0% construction cost growth factor, the average cost of subsidy per unit
will increase to $7,580 by that year. If 70% of the City’s 2003 funding resources
go to very low-income rentals, approximately 306 units could be funded an
average of $5,800 per unit. To meet the need for 2,863 units by 2012, the City
would have to increase the number of units funded by approximately 9% each year
from 2003 until 2012.
Five -Year Strategies
The City of Fort Collins should contribute an average of $5,800 per dwelling unit
towards affordable housing for very low income renters, in the form of either
deferred loans or very low interest loans. That is about 5% of total project costs
for a typical rental development in Fort Collins. Most of the CDBG, HOME, or the
Affordable Housing Fund should be used for this population. With 70% of 2003
resources, 306 units could be funded.
Funding to housing projects in the Competitive Process will be in the form of
loans. These loans, when repaid, will provide sources of revenue for affordable
housing in the future. However, should a developer targeting primarily 40% and
Greenbriar Apartments, by CARE Housing, Inc.
Part 3 – Goals & Strategies
102 - Priority Affordable Housing Needs and Strategies
below AMI units provide documentation that shows the rent structure for the
project could not support any additional debt or secured loans, a grant could be
considered.
$5,800 per unit should be considered an average subsidy. Relatively more funding
should be awarded to projects that serve the lowest incomes.
The City’s total funding for affordable housing production should increase
annually. Construction costs are increasing in Fort Collins at an average rate of
3.0% per year. To be a realistic incentive to affordable housing production, the
average per unit subsidy should be increased at the same rate each year.
The City should commit its financial assistance early in the project planning
process, by being willing to award funding to projects that are still in the
conceptual stage. This will help developers to leverage the balance of their project
financing.
Projects that set aside some of their units for very low-income tenants (under 50%
of AMI) should be given preference in any competitive allocation of PABs.
-
Priority Affordable Housing Needs and Strategies - 103
GOAL: TO ASSIST LOW-INCOME RENTERS (50 TO 80% AMI)
Objectives:
The City should actively solicit the development of 1,187 units of affordable rental
housing for low-income family or elderly households that earn between 50 and
80% of AMI and currently pay over 30% of their income for rent.
The City should solicit the development of those units over 10 years.
Five-Year Strategies:
Additional Private Activity Bond (PAB) financing should be leveraged from Larimer
County or the State. Although every project is different, roughly $9 million to $10
million of PAB financing is needed to make a typical 100-unit project happen.
With 2003’s allocation of $4.5 million of PAB, Fort Collins could fund about 50%
of a project. With just the City’s allocations, approximately 50 units could be built
every year.
Fort Collins should continue to give preference to affordable rental housing
projects when allocating its PABs. The expense of PABs makes them very difficult
to use for housing for very-low income renters. They do, however, work for
projects affordable to families earning between 50% and 60% AMI and a few
below 50% AMI. The City allocates its PAB’s on a first-come first-served basis. This
method has been successful. However, since PAB projects generally have about
60% of the units affordable at 60% AMI, this may dictate a low priority for PAB
funding in the near future due to high vacancies of 60% AMI units on the market.
For projects serving between 60% and 80% of AMI, no grant or loan financing can
or should be awarded. Instead, developers may access incentive programs such as
Priority Processing, the Development Review Fee Waiver, Impact Fee Delay, and
other forms of non-monetary support.
In the absence of feasible projects that would serve very low-income renters (50%
of AMI), some CDBG, HOME, or Affordable Housing Fund dollars could be used to
assist projects serving 50% to 60% of AMI, when market conditions improve.
Fox Meadows, by Marc Hendricks
Part 3 – Goals & Strategies
104 - Priority Affordable Housing Needs and Strategies
Assistance for First-Time Homebuyers
GOAL: TO ASSIST LOW-INCOME FIRST TIME HOMEBUYERS
(BELOW 80% AMI)
Objectives:
The City should assist low-income families to become first-time homebuyers.
There are currently about 1,096 low-income renters in family households that
earn between 50% and 80% of AMI and pay less than 30% of their income for
rent. Generally, they would choose to become first-time homebuyers if both units
and down payment assistance were available. A portion of this need has been
addressed with over 283 families benefiting from down payment assistance and
obtaining new housing in the city since 1999.
Homebuyers should receive a larger subsidy than rental housing projects, due to
the higher costs associated with purchasing a home. With a subsidy of $9,000 per
unit for down payment assistance to first-time homebuyers earning below 80% of
AMI, the City will commit $10,208,487 to meet affordable housing need for low-
income families over the next 10 years. A four-person family earning 80% of the
AMI in 2003 ($51,850) under ideal circumstances (good credit, no other debt)
can afford a sale price of approximately $188,189.
The City should assist those families over 10 years.
Assuming a 2% population growth factor, Fort Collins will need to assist 1,417
low-income households to become first-time homebuyers by 2012. Given a 6.1%
annual increase in sale prices, the average cost of subsidy per unit will increase to
$15,309 by that year. If 30% ($762,574) of the City’s 2003 funding resources go
to first-time homebuyers, approximately 85 families could be funded an average of
$9,000 per unit. To meet the need for 1,417 families by 2012, the City would have
to increase the number of units funded by approximately 9% each year from 2003
until 2012.
West Park Townhomes, by the Fort Collins Housing Authority with the
Homebuyer Assistance Program.
-
Priority Affordable Housing Needs and Strategies - 105
The City should support innovative programs such as EQ2 investments, which
provide down payment and closing costs assistance through Community
Development Finance Institutions (CDFIs) like Funding Partners, Inc.
Five -Year Strategies:
The City of Fort Collins should continue to contribute up to a current average of
$9,000 per dwelling unit to first-time homebuyers (or 4.5% of the FHA Single
Family Mortgage Limit). That is the amount that has been successfully offered
under the City’s existing Homebuyer’s Assistance program. With 30% of the funds
available in 2003 from CDBG, HOME, or the Affordable Housing Fund (CDBG
$808,000, HOME $675,000 and $893,962 AHF) 85 units could be funded.
$9,000 per unit should be considered an average subsidy.
The City’s total funding for affordable housing production should increase
annually. Home prices are increasing in Fort Collins at an average rate of 6.1% per
year. To provide a realistic level of assistance, the average per unit subsidy should
be increased at the same rate each year.
First-time homebuyers will repay the down payment assistance back to the City at
the time of resale or refinancing when taking cash out. The City will charge an
additional 5% fee to participants of the City’s down payment assistance program
beginning January 2004, and any other non-profit or for-profit developer projects
receiving funding from the City will also be subject to the 5% fee.
In the absence of viable rental projects for households earning below 60% of AMI,
Private Activity Bond financing could be used to provide low-interest mortgages
and other assistance for first time homebuyers.
In the absence of viable rental projects for households earning below 50% of AMI,
CDBG or HOME funding could be used as additional homebuyers’ assistance or a
development subsidy to for-sale projects which could assure ongoing affordability
of the project.
Part 3 – Goals & Strategies
106 - Priority Affordable Housing Needs and Strategies
Facilitation and Production of Affordable Housing
Units
GOAL: TO MOTIVATE DEVELOPERS TO INCREASE PRODUCTION
OF AFFORDABLE HOUSING, BOTH FOR RENT AND FOR SALE.
Objectives:
The City should thoroughly understand the community’s need for affordable
housing, including how much is needed, why it is needed, and who needs it.
The City should provide adequate resources to meet the community’s affordable
housing needs.
The City should use its funding in ways that are coordinated, strategically targeted
to priority needs, and that maximize projects’ ability to leverage other funding
sources.
Five-year Strategies:
For the 2003 budget cycle and through 2012, Council should budget for affordable
housing production according to a 10-year goal. In 2004 and 2005 budget cycle, the
Affordable Housing Fund is frozen at $735,898 and additional General Fund dollars
are added to the Fund beginning in 2006. However, should conditions change and
growth in sales tax revenue be more encouraging to meet affordable housing needs,
the Affordable Housing Fund could be reevaluated for possible increases in funding.
In 2006, affordable housing needs should be reevaluated based on market
conditions and the availability of affordable housing units at 50% and 60% AMI
income levels. Goals should be revised accordingly. Needs and goals should be
updated at least every 5 years after that.
In future budget cycles, Council should consider regular increases to the
Affordable Housing Fund, based on availability of funds and on continual
reevaluation of need.
Fossil Creek Condominiums
-
Priority Affordable Housing Needs and Strategies - 107
The City should target the use of the Affordable Housing Fund, CDBG, HOME and
PABs financing to projects that meet existing needs, especially those that serve the
lowest incomes. Most of this financing should be awarded as loans.
This financing should be made available, at a minimum, as deferred loans to
housing developers with qualified affordable housing projects.
The City should continue to update all existing City incentive programs: Priority
Processing, Development Review Fee Waiver, Impact Fee Delay and other
program. The value of these programs is separate from and in addition to any
subsidy or PAB award. The Development Review Fee Waiver is potentially worth a
few thousand dollars per project. The Impact Fee Delay program can save
significant amounts of construction interest. Each rental or for-sale unit might save
about $470 - $520 for each unit. If 10% of units were required to be affordable to
get the entire project’s fees delayed, then a 100-unit project would save roughly
$4,700 - $5,200 per affordable unit.
The City’s contract for banking services should be explored as a way to require its
bank to contribute to affordable housing efforts.
Objectives:
The City should try to reduce neighborhood opposition to new affordable housing.
The City should try to remove regulatory barriers to affordable housing
production.
Five-year Strategies:
Reduce opposition to affordable housing by continuing current efforts to increase
public awareness of the need for and benefits of affordable housing in this
community. Those efforts include: “The Faces and Places of Affordable Housing”
poster campaign, The City of Fort Collins Affordable Housing web site, encouraging
media attention, ensuring staff attendance at neighborhood meetings, etc.
Continue to have the speaker’s bureau make presentations and answer questions
at neighborhood meetings, or meetings of civic community organizations.
Part 3 – Goals & Strategies
108 - Priority Affordable Housing Needs and Strategies
Increase communication between the Affordable Housing Board and the Planning
and Zoning Board. When the time comes to appoint new members to the Planning
and Zoning Board, look for people who strongly support affordable housing.
Watch for and distribute information about innovative ways to reduce the cost of
construction without sacrificing quality. It should be distributed within CPES
and/or to builders, as appropriate.
Continue revisions to the City Code and Land Use Code to add to the existing City
incentive programs. Such revisions should reduce the cost of developing and
constructing affordable housing without sacrificing public health and safety such
as the reduction of landscaping (tree sizes and shrubs) for affordable housing
projects.
Consider the impact on affordable housing projects by revisions to City codes that
increase the cost of producing new housing units.
Objectives:
The City should try to increase the number and capacity of affordable housing
providers working in Fort Collins.
The City should try to make it easier to find appropriate sites for affordable
housing.
Five year Strategies:
Continue to try to increase production capacity at local not-for-profit corporations,
and try to encourage a third Community Housing Development Organization
(CHDO). HOME could fund some capacity-building activities for the first 2 years of
a new CHDO existence. HUD also offers technical assistance for CHDOs.
Continue to actively solicit for-profit developers of affordable rental housing to do
larger-scale (roughly 100 to 200 units), mixed income developments, especially
with units affordable to very low-income families. Giving preference for funding
awards to projects that serve the lowest incomes will help to achieve such an
income mix.
-
Priority Affordable Housing Needs and Strategies - 109
Continue to actively solicit for-profit developers of for-sale housing to build
affordable homes as part of market rate developments. City incentive programs
should be available to projects that make at least 10% of its residential units
affordable.
Continue to actively solicit developers of housing using HUD’s Section 202
Supportive Housing for the Elderly and Section 811 Supportive Housing for People
with Disabilities programs. These programs produce units for special needs
populations and increase the amount of rental subsidy available to the community.
Continue to support efforts by the Fort Collins Housing Authority to increase the
amount of Section 8 Rental Assistance available. For example, the City should write
letters of support for their applications to HUD.
Strategies Implemented and Under Investigation:
Continue to research dedicated sources of funding to the City’s Affordable Housing
Fund (or to a Housing Trust Fund), such as general revenue dedication, a sales tax
or a linkage/impact fee on commercial and/or luxury residential development.
Continue to use a GIS program to help developers find vacant, developable sites.
Continue to financially support the Land Bank program to hold vacant developable
sites that will provide reduced acquisition costs for affordable housing developers
in the future.
Determine the distribution of affordable housing and create options to implement
the City’s goal to distribute affordable units throughout the City, possibly with the
Land Bank.
Examine opportunities to seed development of infill parcels by making
infrastructure improvements to them.
Review the jobs/housing balance to compare job growth with affordable housing
production.
Part 3 – Goals & Strategies
110 - Priority Affordable Housing Needs and Strategies
Explore employer-assistance housing programs to involve employers in the issue
of affordable housing and the jobs/housing balance. Ask employers to at least act
as a conduit for information about affordable housing opportunities. Encourage
employers to make direct contributions to affordable housing production, by
donating land, assisting their employees, etc.
Further examine requiring sites that are annexed to the City to set aside a percent
of their land area or potential units for affordable housing.
Research Tax Increment bond financing for affordable housing development.
Examine other jurisdictions’ use of CDBG funding for affordable housing
development.
Investigate and coordinate a Northern Colorado affordable housing
conference/workshop to explore regional approaches and solutions for
addressing affordable housing needs.
-
Priority Affordable Housing Needs and Strategies - 111
Preservation of Affordable Housing Units
GOAL: TO PRESERVE THE AFFORDABILITY OF EXISTING
RENTAL HOUSING
Apartments owned by not-for-profits will, in the vast majority of cases, remain
affordable in perpetuity. Apartment complexes that are owned by for-profits are more
likely to be converted to market rate housing when their subsidized mortgages are paid
off. This has already started to happen in Fort Collins, at Vine Street Apartments and
Northwood Apartments. The only way to ensure that they stay affordable is to have not-
for-profits purchase them.
There are also many rental units that are scattered throughout the City, in multifamily
condominium complexes and in single family neighborhoods. Their owners tend to be
private investors who own very few properties. Their rents may or may not be
“affordable,” however, they will almost certainly increase whenever major repairs need
to be done. These properties may be either made affordable or maintained as
affordable if they are purchased by not-for-profits, or if rehabilitation assistance is
provided to only those that commit to staying affordable.
Objective:
Investigate ways to encourage and to finance the purchase of existing, older rental
complexes by either the Fort Collins Housing Corporation or by other not-for-
profit organizations, and consider purchasing existing rental projects during this
time of higher vacancy rates when properties are selling at discount.
Five-Year Strategies:
Continue to use CDBG, HOME, or Affordable Housing Fund dollars to partially
finance acquisition of existing, threatened affordable projects. Such proposals
should be given as high a priority as projects that would produce new units.
Use some CDBG, HOME, or Affordable Housing Fund dollars to partially finance
the acquisition and conversion of existing, market-rate rental units to affordable
housing, in the absence of feasible projects that would produce new units or
protect existing affordable projects.
Heritage Park Apartments
Part 3 – Goals & Strategies
112 - Priority Affordable Housing Needs and Strategies
Actively encourage the for-profit owners of affordable complexes to sell them to
either the Fort Collins Housing Corporation or to other not-for-profit
organizations.
Continue to support the Fort Collins Housing Authority campaign to have the first
right to purchase properties that may come on the market by actively soliciting the
owners through personal contacts and written correspondence.
Investigate a rental-rehabilitation program for private owners of rental properties
that would require an affordability commitment.
-
Priority Affordable Housing Needs and Strategies - 113
GOAL: TO PRESERVE EXISTING OWNER-OCCUPIED HOUSING
STOCK
According to HUD, there are 3,629 owners (14% of all owners) with incomes less than
80% of the median that pay over 30% of income for housing costs. Many of these
households are spending a high proportion of income on housing voluntarily but some
could be spending this high proportion due to a decline in income. These families may
need counseling regarding debt restructuring, budgeting and/or refinancing to avoid
foreclosure. They may also need access to day-care and transportation so a spouse can
return to work. Some may need assistance in maintaining their home.
Objective:
The City should support programs that assist low-income homeowners.
Five Year Strategies:
Continue to support the Larimer Home Improvement Program (LHIP) with
Affordable Housing Fund dollars.
Continue to support housing and budget counseling programs with public service
funding from the CDBG program and HOME administration dollars.
Support housing and budget counseling programs by continuing to advertise them
on the City’s affordable housing web page and by other outlets that may be
available.
Homebuyer’s Assistance Program recipient
Part 3 – Goals & Strategies
114 - Priority Affordable Housing Needs and Strategies
GOAL: TO REQUIRE NEW AFFORDABLE HOUSING UNITS TO
STAY AFFORDABLE FOR AS LONG AS FEASIBLE.
Any rental project built with federal or state funding sources will be required to
maintain its affordability for a set amount of time. Most major funding sources require
20 to 30 years, and carry very stiff penalties for failing to meet that requirement. The
City will probably never contribute more than about 10% of a project’s overall cost.
Therefore any attempt by the City to extend that period would not be reasonable. In
addition, the City does not have a mechanism for monitoring or punishing the
developer if a project fails, because it depends upon other funding sources to perform
that role. However, the City does require a 20-year restrictive covenant for affordable
housing projects receiving City incentives.
The City reviews applications to its CDBG and HOME program competitively. Those
federal funds carry a minimum 20-year affordability period. Applicants that offer to
extend that period could be considered more favorably than others.
The City’s Homebuyers’ Assistance Program does not restrict the future sale price of
the home it helped to buy, nor is it feasible to do so. Instead, it requires that whenever
the home is sold, the recipient must pay back the assistance. Therefore the funding will
recycle and be available to help additional buyers.
Objective:
The City should continue to develop and implement policies that encourage
commitments to long-term affordability.
Five Year Strategies:
Continue to require that City-assisted affordable housing carry a minimum 20-year
commitment to affordability. Priority should be given to units that will be kept
affordable for periods in excess of 20 years.
Give the highest priority to units committing to permanent affordability. Only units
that make such a commitment should be awarded grant financing.
Waterglen
-
Priority Affordable Housing Needs and Strategies - 115
Investigate a Limited Partnership/Shared Equity ownership structure to maintain
the affordability of for-sale units. Explore the possibility of making this a
component of the City’s Homebuyers’ Assistance Program.
Part 3 – Goals & Strategies
116 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 117
Appendix I – Inventory of
Affordable Housing within the
City of Fort Collins GMA
134 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 135
136 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 137
138 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 139
140 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 141
142 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 143
144 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 145
146 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 147
\
148 - Priority Affordable Housing Needs and Strategies
-
Priority Affordable Housing Needs and Strategies - 149
150 - Priority Affordable Housing Needs and Strategies
Existing Affordable Housing Map
-
Priority Affordable Housing Needs and Strategies - 151
Appendix II – Status of
Affordable Housing within the
City of Fort Collins GMA
As of October 2003. *City Funds are defined as CDBG, Home and Affordable Housing Funds
Project Name and
Location Developer
# of Units
Type of Units
Target
Population Target AMI
City
Incentive/Subsidies Status
Completion
Date
Adrian Subdivision
SE Corner of Vine and
Impala
Mikal
Torgerson
20
owner/rental
units
Families 20 units below
80% AMI
Priority processing
and development
fee waiver
Under
Development
Review
2005
Caribou Apartments
SW Corner of Caribou
and Timberline
Marc
Hendricks
192
rental units Families
14 units below
50% AMI, 73 units
below 60% AMI
Private activity
bonds: $4.5 million
Under
Development
Review
2004-2005
Cherokee Flying
Heights
105 S Taft Hill Rd
Mikal
Torgerson
19
owner/rental
units
Families 19 units below
80% AMI Priority processing
Approved for
152 - Priority Affordable Housing Needs and Strategies
Proposed and Under Construction Affordable Housing Map
-
Priority Affordable Housing Needs and Strategies - 153
Appendix III – City of Fort
Collins Affordable Housing
Program Summary
Program Name Program Descriptions
Target for
Affordable Rental
Target for Affordable
Home Ownership
Minimum % of Units
Affordable
Priority for Use of
Private Activity Bond
Resolution 2000-150
Establishes affordable housing as the City’s
highest priority in the use of year 2001 Private
Activity Bond allocation.
Maximum gross
rent is 30% of
80% AMI
N/A
45% of units at 60%
AMI or 25% of units at
50% AMI and the
remainder at market
rate
Revised Affordable
Housing Programs and
Definitions
Ordinance #19,1991
Revising definition of affordable housing project
and affordable housing unit for rent and sale,
revising development review fee waiver provision
and impact fee delay program
Maximum gross
rent is 30% of
80% AMI
Pays no more than
38% of 80% AMI for
PITI, utilities and
homeowner fee
10% of the units
affordable
Rebate of Sales and
Use Tax
Ordinances #191,1999 Sunset 2001
and #191,199 Sunset 2001
Establish a program for rebate of the City’s sale
and use taxes for materials used to build
affordable housing
Maximum gross
rent is 30% of
80% AMI
Pays no more than
38% of 80% AMI for
PITI, utilities and
homeowner fee
10% of the units
affordable
154 - Priority Affordable Housing Needs and Strategies
Impact Fee Delay
Ordinances #66,1994 and
#147,1996
Delays payment of fees until CO or 12/1 of the
year building permit issued. $50 administration
fee due with building permit. No letter of credit or
other security required. Applies to:
Water PIF, Sewer PIF, Water Rights Acquisition,
Street Oversizing, Storm Drainage Basin,
Neighborhood Parkland, Community Parkland
Capital Expansion fee (CEF), Library CEF,
Police CEF, Fire CEF, General Government CEF
Maximum gross
rent is 30% of
80% AMI
Pays no more than
38% of 80% AMI for
PITI, utilities and
homeowner fee
10% of the units
affordable
Development Review
Fee Waiver
Ordinance #27.1994
Applies to Development Review Fees authorized
in Section 2.2.3 (E) of the Land Use Code (paid
at time of project submittal to Current Planning)
Maximum gross
rent is 30% of
80% AMI
Pays no more than
38% of 80% AMI for
PITI, utilities and
homeowner fee
10% of the units
affordable
Priority Processing
Directive of the City Manager
Expedited development review, utility plan
review, development agreement, building permit
approval, and building inspections
Maximum gross
rent is 30% of
80% AMI
Pays no more than
38% of 80% AMI for
PITI, utilities and
homeowner fee
10% of the units
affordable
Construction 2004
Farmstead
Laporte and Taft Hill
Mikal
Torgerson
24
owner/rental
units
Families 3 units below 80%
AMI
Priority processing
and development
fee waiver
Under
Development
Review
2005
Old Town North
NE of Vine and College
Monica
Sweere
219
owner units Families
44 units below
80% AMI
None (assisted by
State DOH)
Approved for
Construction 2004
Provincetowne
Lemay and Trilby KB Home
850
total units
(variety of
housing
types)
Families
255 units (30%)
below 80% of AMI,
currently, 141
affordable units in
Phase I
City discounted
property sale price,
priority processing,
development fee
waiver, delay of
development fees,
and sales & use tax
Under
Construction
Phase I
2004
Volunteers of America
1401 W Horsetooth Rd
Volunteers
of America
60
rental units Seniors
60 units below
50% of AMI
*City funds:
$540,000, priority
processing
Under
Construction 2004
Owner
Overcrowded L L L
at 40% AMI $454 $486 $583 $674 $752
at 30% AMI $340 $364 $437 $505 $563
Subsidy required to make average rents affordable
at 60% AMI <$239> <$19> <$102> <$85> <$105>
at 50% AMI <$125> $103 $44 $84 $83
at 40% AMI <$12> $224 $189 $252 $271
at 30% AMI $102 $346 $335 $421 $460