HomeMy WebLinkAbout1999-016-02/02/1999-ADOPTING THE PRIORITY AFFORDABLE HOUSING NEEDS AND STRATEGIES REPORT RESOLUTION 99-16
OF THE CITY COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING THE PRIORITY AFFORDABLE HOUSING NEEDS AND
STRATEGIES REPORT
WHEREAS, the 1997-1999 staff work plan calls for an affordable housing needs study to
be completed in the summer of 1998; and
WHEREAS,the first phase of the Priority Affordable Housing Needs and Strategies Report
was presented to the City Council at its study session on June 9, 1998 and, based upon the
information contained therein, the Council, by Resolution 98-125, established certain affordable
housing priorities at its August 18, 1998 meeting; and
WHEREAS, subsequent to the adoption of Resolution 98-125, the second phase of the
Priority Affordable Housing Needs and Strategies Report (with enhanced "Goals and Strategies")
was presented to the City Council at its study session on October 27, 1998; and
WHEREAS, the staff, the Affordable Housing Board and other interested groups have
worked diligently to revise the "Goals and Strategies" as contained in the Priority Affordable
Housing Needs and Strategies Report and have recommended that the Council adopt said report;and
WHEREAS,the purpose of the Priority Affordable Housing Needs and Strategies Report is
to assist the City in being more strategic in obtaining housing assistance for the persons who are in
the greatest need of such assistance,and the City Council has determined that it is in the best interest
of the welfare of the citizens of the City that said report be adopted.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the Priority Affordable Housing Needs and Strategies Report (the
it dated February 2, 1999, attached hereto as Exhibit "A" and incorporated herein by this
reference, be and hereby is adopted.
Section 2. That the Council hereby expresses its support for fully funding,over a period
of the next ten years, the "New Unit Production Goals" found on pages 70 and 71 of the Report.
Passed and adopted at a regular meeting of the City Council held this 2nd day of February,
A.D. 1999.
gtvv� Cl-^A
Mayor
ATTEST:
4uzk
`City Clerk
EXHIBIT "A"
Priority Affordable Housing Needs and Strategies
Fort Collins, CO
Prepared by the City of Fort Collins
Department of Advance Planning
February 2, 1999
Priority Affordable Housing Needs and Strategies
Table of Contents
Introduction
Message from the study authors.......................................................... 1
SpecialThanks.................................................:............................ 4
Fort Collins Needs High Quality Affordable Housing
Housing Costs as They Compare to Other Colorado Communities................. 5
Our Community's Current Need for Affordable Housing........................... 10
The Need for Affordable Rental Units............................................. 10
The Need for Affordable For Sale Units........................................... 21
1997 Affordable Housing Need in Fort Collins—Target Groups............... 26
The Impact of CSU Students........................................................ 27
Affordable Housing Need for Special Populations............................... 29
Economic Trends and Their Affect on Housing Affordability..................... 37
Conclusions—Fort Collins' Priority Affordable Housing Needs.................. 39
The Provision of Affordable Housing in Fort Collins
Financial Resources...................................................................... 42
Analysis: The Availability of Financing........... 50
The Affordable Housing Community.................................................. 51
The City of Fort Collins' Role.......................................................... 55
Policy...........................:.............. ......................................... 56
Regulation.................................... .......................................... 60
Education..................................... ........................................ 62
Funding & Other Incentives......................................................... 63
Analysis: Which of the City's Roles Need Additional Resources............. 65
Goals and Strategies for Meeting Fort Collins' Priority Affordable Housing Needs
Introduction............................................................................... 66
Analysis of Units Needed, Available Funding and Needed Funding............. 67
Production of New Rental Units...................................................... 72
Assistance for First-Time Homebuyers............................................... 74
Production of Affordable Housing Units............................................. 76
Preservation of Affordable Housing Units... ....................................... 80
Appendix 1: Existing Affordable Rental Housing Within the Fort Collins UGA
Appendix 2: Affordable Housing Planned or in Production Within the Fort Collins UGA
Appendix 3: City of Fort Collins Affordable Housing Program Summary
Appendix 4: Summary of Public Comments and Responses from the Affordable Housing
Board
Introduction
Message From the Study Authors
While we may all agree that there is a need for more affordable housing in the community, we
may not agree on the specifics -- do we need more housing for very low-income renters, first time
homebuyers, or large families? It would be tempting to answer"all of the above," if there were
unlimited resources available to meet that need. Unfortunately, there are not. This is why the
"Priority Affordable Housing Needs and Strategies" study is so very important. The goal of the
Study is to help the City be more strategic in getting housing assistance to the people who need it
most.
The Priority Affordable Housing Needs and Strategies study began with an investigation of what
kind of affordable housing exists in this community, what kinds are needed, and what the most
urgent need is. In this, the second phase, the intent is to develop specific and measurable, short-
term (five years) objectives for the City's Affordable Housing efforts. It includes an assessment
of existing financial resources that support affordable housing, both public and private. It
contains a description of the roles of various players in the affordable housing community within
Fort Collins, including a comprehensive analysis of current City roles, responsibilities and
programs. Finally, it presents recommendations from staff and the Affordable Housing Board for
the City's future roles, responsibilities, and programs, including specific goals and strategies for
meeting its affordable housing needs.
The basis of our housing needs and supply recommendations is existing, readily available
information, such as 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)
and the Multiple Listing Service. We have also used other existing studies that have been
prepared by city planners, county planners, Colorado State University and others, dating back to
June 1995. We believe we have sufficient information in these studies to form a reasonable
recommendation in regard to the community's affordable housing needs and supply problems
and have been working with housing providers to build a consensus around these
recommendations.
In the long term, we know that more complete and accurate information is needed. However,
this will be a relatively expensive and time-consuming effort. The long-term goal is to develop
the current Affordable Housing Information System (AHIS) into a reliable, easy-to-use tool. We
intend to establish a regular schedule for gathering fresh data and updating the affordable housing
need assessment and affordable housing objectives.
There are a number of assumptions underpinning our estimation of the number of affordable
housing units needed in Fort Collins. It is based on data from HUD, which has run projections
from the 1990 Census to estimate our 1997 need. 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
needing affordable rental housing (2,230) is much higher than our potential pool of first time
homebuyers (960). The numbers are split, 70% renter to 30% potential homebuyers, so we have
proposed that the City's financial resources be allocated proportionately.
The fundamental role of the City in affordable housing production is to provide enough funding
to projects, early in their planning process, so that their developers can approach other funding
sources with concrete evidence that the City supports their project. Leveraging public and
private, national, state and local funding sources is the key. We estimate that an average $5,000
per unit subsidy would be enough to accomplish this. Relatively more funding should be
awarded to projects serving lower incomes. This figure may need to be reevaluated periodically,
but for the present, it is the basis of the proposed budget for the City's Affordable Housing Fund.
The other key element in the proposed budget is the timeline. Unfortunately, affordable housing
developers in Fort Collins do not now have the capacity to develop units fast enough to meet our
need in 5 years, no matter how much money the City is willing to invest. To allow for a ramping
up of that capacity, we propose trying to meet our current needs in 10 years, by 2008.
Conclusions - Fort Collins' Priority Affordable Housing Needs:
1. Rental Housing. This community's highest priority needs to be producing new rental units
affordable to households earning below 50% of AMI. In 1997, there were approximately
2,230 of these very low-income family or elderly households paying over 30% of their
income for rent.
This community also needs to maintain a supply of multifamily rental units that are
affordable for people earning 50% to 80% of AMI. In 1997, there were approximately 710 of
these low-income family or elderly households paying over 30% of their income for rent.
2. For Sale Housing. This community needs to continue to help first time homebuyers earning
below 80% of AMI to get into affordable homeownership. In 1997, there were approximately
960 of these low-income family households (earning between 50% and 80% of AIMI) that
could become first time homebuyers with downpayment or closing cost assistance.
3. Housing Production. This community needs to be more proactive in identifying and
securing sites for future affordable housing development, it needs to examine any regulatory
barriers and consider reforming them, and it needs to be supportive of proposed
developments in their quest for identifying development subsidies. In addition, it needs to
preserve its existing affordable housing stock.
2
Recommended Goals:
Production of New Rental Units
• Goal: To assist very low-income renters (below 50% of AMI).
• Goal: To assist low-income renters (50 to 80% of AMI).
Assistance for First Time Homebuyers
• Goal: To assist low-income first time homebuyers (below 80% of 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 affordable housing units to stay affordable for as long as feasible.
Next Steps
1. Council adoption of Goals and Strategies for the City's affordable housing programs.
2. Reevaluate the City's existing affordable housing policies and possibly revise them so they
coordinate with the new Goals and Strategies.
3. Develop a work program for 5-year strategies.
4. Develop a work program for strategies that need additional investigation.
5. Implement strategies that need immediate attention (within the next 3 to 12 months). They
might include:
• revise existing city-funded programs so they share a common definition of affordable
housing,
• apply various funding strategies to the CDBG and HOME competitive process,
• establish a competitive process for allocation of Private Activity Bonds,
• investigate the Land Bank Concept,
• actively encourage for-profit owners of older affordable complexes (if they are for
sale) to sell them to not-for-profits.
3
Special Thanks
The study authors would like to thank the following groups for their important contributions to
this analysis:
• The City of Fort Collins' Affordable Housing Board
• The Colorado State Division of Housing
• The U.S. Department of Housing and Urban Development, Denver Office
• The National Association of Home Builders
• Colorado State University Off-Campus Student Services
• The Fort Collins Housing Authority
• Rhoades Realty, Inc.
• The Group Inc.
• Funding Partners for Housing Solutions, Inc.
• New Bridges
• Catholic Charities of Northern Colorado
• CARE Housing, Inc.
• Neighbor to Neighbor
• Project Self-Sufficiency
• Family Self-Sufficiency
• Larimer County Department of Human Development
• Larimer County Office on Aging
• Larimer County Mental Health Center
• Foothills Gateway
• Disabled Resources
• Northern Colorado AIDS Project (NCAP)
4
Fort Collins Needs High Quality Affordable Housing
Housing Costs as They Compare to
Other Colorado Communities
Average Rent by Market Area, September 1995 - February 1998
$1,200 ---- ❑September 1995
®February 1996
$1,000 ®September 1996
❑February 1997
®September 1997
„ $800 - ■February 1998
c
d
a
$600
L
v
i
d
$400 -
$200
$0
c_
Qc " ❑ c `0 3 .E u o v ❑
U
0
v
A o a CJ c E
U
Market Area
Source: Multi-family Housing Vacancy and Rental Survey,February, 1998
by Gordon E.Von Stroh,PhD.,University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing.
As of February, 1998, the average rent in Colorado communities varied widely, from $357 in
Fort Morgan-Sterling to $934 in Aspen. Of the 12 areas surveyed, Fort Collins-Loveland
ranks 5th, behind only the resort communities of Aspen, Eagle County, Summit County, and
Glenwood Springs.
5
Rental Vacancy Rates by Market Area, September 1995 - February 1998
9.0% ❑1995 Sept.
M 1996 February
8.0% M 1996 Sept.
❑1997 February
7.0% ®1997 Sept.
■1998 February
6.0%
A 5.0%
T
U
C
°i 4.0%
�a
3.0%
2.0% — -
1.0% — —
0.0% It
00 C C O U
Q. 'C C 7 C C r to C U 7 pDj 7
Q n o = °A c a c
n ° U ° ° o ° rn o U a U
Ll U >
o a OCIO
a "
o W L4 .a [i 3 �] E
U CIO
U
Market Area
Source: Multi-Family Housing Vacancy and Rental Survey,February, 1998
by Gordon E.Von Stroh,Ph.D,University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing.
Rental vacancy rates also varied across the state in February 1998. The tightest market was
in Eagle County, with a 1.2% vacancy rate, indicating a very high demand for rental units.
Colorado Springs had the highest vacancy rate, at 5.8%, indicating a relatively loose market.
Generally, 5% is considered an equilibrium rate— if it is below 5%, that indicates that choice
of units is restricted and rents may increase. A vacancy rate of much over 5% generally
indicates that there may be excessive vacancies and that there is no current need for
additional units. The Fort Collins-Loveland MSA's 5.3% vacancy rate was the third highest
of the communities surveyed, however, this overall vacancy rate does not reflect the
situation in lower rent properties.
6
Median Annual Price of a Single Family Home in Selected Market Areas, 1992 and 1996
❑Median Price, 1992
Colorado Springs !V?48,750
$119,945 ■Median Price, 1996
Prowers County
Logan County $65,000
Fort Collins UR 9
$143,000
Mesa County $115,000
Pueblo County 1 $56.516$79,716
Summit County $217,070
Boulder County 151 On4
$220,498
Metro Denver
$132,437
$0 $50,000 $100,000 $150,000 $200,000 $250,000
Median Annual Home Price
Source: Colorado Association of Realtors;Prowers County Assessor,Mesa,Summit,Boulder,
and Logan County Boards of Realtors;and Fort Collins Board of Realtors.
*Averages were used for Prowers,Boulder,and Summit Counties as medians were not available.
The median price of a single family home has been rising across the state, as shown above.
Of the communities selected, Fort Collins saw the 3rd largest dollar increase between 1992
and 1996, and also the 3`d highest median sale price in 1996. Only Boulder and Summit
County had higher prices. Fort Collins also posted a very high rate of increase in median
sale prices (62%), second only to Mesa County.
Workforce Housing—Wages vs. Sale Prices
The following graph shows how the average wage change between 1992 and 1995 compares
to the change in median sale price of a single family home. In all areas selected, housing
prices rose faster than wages. However, the greatest disparity was in Larimer County. It
experienced the greatest increase in home prices (45%), five times its rate of growth in
wages (9%).
7
Percent Change in Average Wage for all Industries vs. Percent Change in Median
Price of a Single Family Home in Selected Market Areas, 1992 - 1995
50% 45% ❑%Change in average wage for
45% all industries
40%
39% ■%Change in median price of a
o°1n 33% single family home
c 35%
30% 29%
U 30%
u 25% 22%
20%
p, 20% 16%
15% 10% 11% 11% 13%
10% 8% 7% 9% 7%a 7% 8%
5%
0%
Metro Boulder Summit Pueblo Mesa Larimer Logan Prowers El Paso
Denver County County County County County County County County
Area
Source: Colorado Association of Realtors,Prowers County Assessor,Boulder County Board of Realtors,
Colorado Employment and Wages,Annual Averages, 1992 and 1995.
*Averages were used for Prowers and Boulder Counties as medians were not available.
This disparity is partially explained by the high proportion of service-related and retail jobs
in Fort Collins, which accounted for 43% of its labor force in 1990. This split was
significantly higher than the 23% of all Colorado workers employed in services and retail at
the same time. In 1994, the average wage rate in the retail sector was $13,212, compared to
$37,409 in manufacturing. Lower paying retail trade and services have exhibited the most
rapid job growth in Fort Collins' economy, with a 60% increase between 1985 and 1994.
Statewide, these two industries are projected to grow the most by 2005 —the service industry
may grow as much as 50% between 1995 and 2005.
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 46% of general government revenues in
1994). 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.
8
Housing Opportunity Index
Fourth Quarter 1997 Median Median Housing Affordability Rank
. Family Sales Opportunity National Regional
Metro Area Income Price Index (n= 193) (n=45)
National $ 43,500 $ 127,000 64.8%
Denver PMSA 54,900 140,000 67.9 112 6
Pueblo MSA 34,800 90,000 64.8 129 10
Fort Collins-Loveland MSA 50,600 138,000 63.9 133 12
Boulder-Longmont PMSA 61,200 168,000 61.7 140 14
Colorado Springs MSA 45,300 130,000 61.7 140 14
Greeley PMSA 41,300 120,000 57.5 157 23
Source: The National Association of Home Builders
The National Association of Home Builders' Housing Opportunity Index is calculated
quarterly for 193 metro areas across the nation. In Larimer County, 63.9% of all houses sold
during the last quarter of 1997 were affordable to families earning median income.
Nationally, Fort Collins is currently ranked 133rd. Of the 45 metro areas surveyed in the
West, it is the 12th most affordable. The following graph shows how this index has changed
over the past 5 years for the nation and for each of the metro areas in Colorado that were
surveyed.
100 - ----__------ —__ ---_------�--_ Boulder-Longmont PMSA
e
- Colorado Springs MSA
0 —c—Denver PMSA
90
—X Fort Collins-Loveland MSA
Greeley PMSA
u
X�80 � �^-Pueblo MSA
"ice u
+National
u
5 0 a - ,
60
`�
x 50
40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 QI Q2 Q3 Q4
'93 '94 '95 '96 '97
Year and Quarter
Source: National Association of Home Builders
9
Source: "Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E.Von Stroh,Ph.D.,University of Denver
sponsored by the Colorado Department of Local Affairs, Division of Housing.
Our Community's Current Need
For Affordable Housing
The Need for Affordable Rental Units
Average Rents, Fort Collins-Loveland MSA, February 1998
Approximate
Number Range of Average
Unit Type Reported % of Total Net Rents Net Rent
Efficiency 204 5.0% 0-575 343.86
1 br 1164 28.3% 0-700 536.97
2 br, 1 ba 1781 43.3% 251 - 750 614.11
2 br, 2 ba 767 18.7% 251 - 825 677.73
3 br 146 3.6% 501 - 800 684.23
4 br+ 50 1.2% 626- 1425 n/a
Total 1 4112 100.0%a 594.41
Source: "Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E. Von Stroh,Ph.D., University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing.
Since September 1995, Gordon E. Von Stroh, PhD. from the University of Denver has been
conducting the Multi-Family Housing Vacancy and Rental Survey for the Colorado Division
of Housing. Surveys have been collected from property owners and managers every
February and September, and the number of responses from Fort Collins-Loveland has
grown from 2,236 to 3,532 in February 1998. This survey reflects the situation in larger, all-
rental apartment complexes. It does not attempt to gather information on single family
dwellings, and it also tends to miss individually owned rental units in townhouse or
condominium complexes.
10
Average Rents, Fort Collins, February 1998
Number %of Range of Average Number % of Range of Average
Unit Type Listed Total Net Rents Rent Unit Type Listed Total Net Rents Rent.
I bedroom 3 bedroom
apt. 38 395-685 508.92 apt. 5 373 - 1,150 749.60
house 6 325 - 607 497.00 house 22 0- 1,700 965.91
condo 3 475 -560 526.67 condo 3 825 -900 875.00
townhouse 0 townhouse 6 720- 1,110 905.00
duplex 1 500 500.00 duplex 7 696- 1,250 898.00
Subtotal 48 20.7% 325-685 508.35 Subtotal 43 18.5% 0- 1,700 914.86
2 bedroom 4 bedroom
apt. 53 240- 830 564.45 apt. 2 950- 1,250 1,100.00
house 19 550- 1,450 816.32 house 32 850-2,500 1,220.00
condo 17 550- 1,000 658.53 Subtotal 34 14.7% 850-2,500 1,212.94
townhouse 9 625 - 1,050 866.11
duplex 9 400-750 565.89 Total 232 100.0%
Subtotal 1 107 46.1% 240- 1,450 649.62
Source: 'Renter's Information Price Statistics--All Listin.gs,February 1998"
produced by Colorado State University Off-Campus Student Services
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 February
1998 report is based on only 232 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 because they tend to be in multi-family complexes and because it is
based on so many more responses.
11
Trends in Average Rents, Fort Collins-Loveland MSA, September 1995 to February 1998
—*—Efficiency
$1,100 —U--One bedroom
—& Two bed,one bath
$1,000 -A Two bed,two bath
$900 Three bedroom
CIE—All
$800
_ $700
cY $600 L - -
$500
$400
$300
$200
Q31995 Q11996 Q31996 Q11997 Q31997 Q41998
Year and Quarter
Source: "Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E.Von Stroh,Ph.D, University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing
Trends in Average Rents, Fort Collins, 1993 to 1997
$900 ____ -_ - - --- --O—Efficiency
--a-1 Bedroom
$800 -2 Bedroom
--0--3 Bedroom
$700
$600
$500
$400
$300
1993 1994 1995 1996 1997
Year
Source: "Summary Table,Rental Analysis 1993-1997"
produced by Colorado State University Off-Campus Student Services
The information provided by CSU puts average annual rents either close to or somewhat
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
12
other 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 other survey looks at all multifamily units in a market area that includes Loveland.
Both analyses show a trend of increasing rents. CSU's data show a 6 to I I% average annual
increase in rents from 1993 to 1997, depending on unit size. The Division of housing's
survey is more conservative, with a 2 to 6% average annual increase from 1995 to 1998 (4%
for all units)
Affordability of Average Gross Rents by Unit Size in the Fort Collins-Loveland MSA, 1998
Efficiency I br 2br, I ba
Family size 1 1 2 2 3 4
Average Net Rent 343.86 536.97 536.97 614.11 614.11 614.11
Est. Utility Allowance 40 54 54 69 69 69
Est. Average Gross Rent 384 591 591 683 683 683
Income needed 15,354 23,639 23,639 27,324 27,324 27,324
AMI 35,625 35,625 40,750 40,750 45,812 50,900
% AMI served 43% 66% 58% 67% 60% 54%
2br, 2ba 3br
Family size 2 3 4 3 4 5 6
Average Net Rent 677.73 677.73 677.73 721.12 721.12 721.12 721.12
Est. Utility Allowance 69 69 69 83 83 83 83
Est. Average Gross Rent 747 747 747 804 804 804 804
Income needed 29,869 29,869 29,869 32,165 32,165 32,165 32,165
AMI 40,750 45,812 50,900 45,812 50,900 55,000 59,062
% AMI served 73% 65% 59% 70% 63% 58% 54%
Average Net Rents from"Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E.Von Stroh,Ph.D.,University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing.
Three bedroom rents were modified by rental data for single family houses from"Renter's Information Price Statistics--
All Listings,February 1998"by Colorado State University Off-Campus Student Services.
Estimated Utility Allowances from the Fort Collins Housing Authority.
Nationally and in Fort Collins, the traditional target for affordable rental housing has been
households earning 60% of AMI or less. As shown above, 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 66 - 70% of AMI
to afford the average rent, an additional $2,000 - $4,600 in annual income. For example, a
single parent with a male and female child would need to earn 70% of AMI($32,165) to
afford the average three bedroom unit.
13
Efficiency or studio apartments are the only units with an average rent affordable to someone
earning less than 50% AMI. These units can only serve singles.
Average rents begin to come in line with levels affordable to households earning 60% AMI
as household size increases beyond one person per bedroom. 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 occupy a two bedroom unit. The average two bedroom, one bath rent is affordable at
60% AMI($27,324), but two baths raise that to 65% AMI ($29,869) for a three person
household.
For households that can fill a unit with 2 people per bedroom, average rents are affordable to
those earning 54% to 59% of AMI. These families would typically consist of an adult
couple with children who can share a room. .
The number of households increased 6.9% annually between 1980 and 1990. At the same
time, the size of the average household decreased from 2.5 persons in 1980 to 2.44 persons
in 1990. The decrease in the city's household size tracks a similar pattern at the national
level caused by increasing numbers of non-traditional households, such as single-parents,
divorced persons, couples without children, as well as single persons. Male- or female-
headed households, with no spouses present, accounted for 10.2% (3,262) of all households;
of these households, almost two-thirds (65%) contained children under the age of 18 years in
1990. In 1990, the income of these households was about 64% less than families with both
parents present. Housing is thus a serious issue for these households.
14
Comparison of Average Rents to Affordable Rents by Unit Size and Income in the Fort
Collins-Loveland MSA, 1998
Efficiency 1 br 2br, Iba 2br,2ba 3br
Average Net Rent 344 537 614 678 721
Est. Utility Allowance 40 54 69 69 83
Est. Average Gross Rent 384 591 683 747 804
Affordable Gross Rents
at 60%AMI 534 572 687 687 794
at 50%AMI 445 476 572 572 661
at 40%AMI 356 381 458 458 529
at 30%AMI 267 286 343 343 397
Subsidy required to make average rents affordable
at 60%AMI (150) 19 (4) 60 10
at 50%AMI (61) 115 111 175 143
at 40%AMI 28 210 225 289 275
at 30%AMI 117 305 1 340 404 407
Average Net Rents from"Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E.Von Stroh,Ph.D.,University of Denver
sponsored by the Colorado Department of Local Affairs,Division of Housing.
Three bedroom rents were modified by house rental data from"Renter's Information Price Statistics
All Listings,February 1998"by Colorado State University Off-Campus Student Services
Calculation of affordable rent levels was based on HUD's published Area Median Family Income to
Fort Collins-Loveland MSA for 1998 and assumes 1.5 persons per bedroom(I person for efficie
Estimated Utility Allowances from the Fort Collins Housing Authority.
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, except for efficiencies and 2 bedroom, 2 bath
units. However, this changes dramatically at the 50% AMI rents, where subsidies of over
$100/month would be required to afford the average rents (except for efficiencies, which are
based on I whole person's income).
15
Availability of Affordable Rental Units
Vacancy Rates By Unit Size and Affordable Net Rents, Fort Collins, February 1998
#Units as
Efficiency I br 2br, 1 ba 21hr, 2ba 3br Total % of Total
up to 50%AMI <$400 <$425 <$500 <$500 <$575
#Vacant 0 0 0 0 0 0
Total units 111 40 20 2 4 177 4.5%
% Vacant 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
50% -60%AMI $400-475 $425-500 $500-575 $500-575 $575-700
#Vacant 0 1 29 0 3 33
Total units 6 229 576 0 89 900 22.8%
%Vacant 0.0% 0.4% 5.0% 0.0% 3.4% 3.7%
over 60%AMI >$475 >$500 >$575 >$575 >$700
#Vacant 1 44 76 53 4 178
Total units 87 821 1145 765 51 2869 72.7%
%Vacant 1.1% 5.4% 6.6% 6.9% 7.8% 6.2%
Total
#Vacant 1 45 105 53 7 211
Total units 204 1,090 1,741 767 144 3946 100.0%
%Vacant 0.5% 4.1% 6.0% 6.9% 4.9% 5.3%
Source: "Multi-Family Housing Vacancy and Rental Survey,February 1998"
by Gordon E. Von Stroh,Ph.D.,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 1998 and assumes 1.5 persons per bedroom(l person for efficiencies).
The Multi-Family Housing Vacancy and Rental Survey reports net rents in $25 increments.
The following chart is based on net affordable rents for households earning 50% and 60%
AMI, rounded down to the nearest reported rent increment. It shows that Fort Collins has no
vacant units that are affordable to those earning 50% AMI.
For families earning between 50% and 60% AMI, only 2 bedroom 1 bath units are relatively
available—the market for all other units affordable at that level is extremely tight. These
survey results contradict the testimony of some affordable housing providers, who are
finding their 3 bedrooms more difficult to rent than 2 bedrooms. They find that their tenants
are looking for the smallest possible unit their families can fit in, in order to pay the lowest
possible rent. Some are therefore choosing to live in conditions bordering on overcrowded
to afford rents in the most affordable developments in town.
The market loosens considerably for units that rent for more than 60% AMI, except for
efficiency units, which are still in high demand.
16
Number of Renter Households by Percent of Fort Collins Median Family Income, 1995
%AMI # %of Total
0-30 4719 24.4%
31 -50 3984 20.6%
51 - 80 4759 24.6%
81 -95 1459 7.5%
96+ 4437 22.9%
Total 19358 100.0%
Source: Housing Affordability Index Model,BBC Research&Consulting
*BBC estimated Fort Collins'Median Family Income as$45,074 in 1995,slightly higher than HUD's
calculation of the Area Median Family Income of the Fort Collins-Loveland MSA,which was$44,200.
The zero vacancy for units affordable to households earning 50% of AMI is not unusual, but
it is still worrisome. The Division of Housing's survey received almost 4,000 responses in
February 1998, but less than 200 of them (4.5%) were affordable to households earning 50%
of AMI. According to 1995 figures, 45% of renters in Fort Collins earn less than 50% of
Fort Collins' Median Family Income (which is slightly higher than the Fort Collins-
Loveland MSA's AMI, which is used to calculate affordable rents). Even if these
households could stretch their budgets to pay for rents at the 60% AMI level, only 27.3% of
apartments would be within their reach. This supports current estimations done by HUD
Denver, which show that 39% of all renter in Fort Collins earn less than 50% of AMI and
pay more than 30% of their income for rent.
At least some of Fort Collins' very low-income households are students, with 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. This competition is almost certainly a factor for units
affordable at the 50 to 60% AMI level.
17
Availability of Income-Restricted Affordable Rental Units
There are currently about 1,800 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 non-profits, 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. The Fort
Collins Housing Authority receives operating subsidies from HUD to allow its public
housing tenants to pay only 30% of their income for rent. CARE Housing, Inc. is 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 turn over less than I% of their units per month,
(3 units). A new applicant could wait anywhere from 6 months to 2 years to get a unit.
Older complexes that are affordable to families earning 40 to 55% of AMI turn over
approximately 4% of their units each month, and have a 3 month to 1 year wait to get a unit.
Newer projects, typically affordable at 60% of AMI, only turn over 3% of their units each
month. Some these projects have some units affordable at lower income levels —these
projects have even longer waiting lists and less turn over. The Fort Collins Housing
Corporation's 246 affordable units have 263 people on its waiting list, with an average wait
of about 8 months (see chart on page 17). Its longest average wait is approximately 14
months for a 1-bedroom unit.
As either development or rental subsidy contracts expire on these projects, they may be lost
to the affordable housing stock. 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. Vine
Street Apartments prepaid its HUD contract in 1998. It will hopefully be sold to someone
who intends to keep it affordable. Northwood Apartments has also considered prepaying its
contract with HUD, and will probably do so in 1999. Coachlight Apartments' contract with
HUD expires in just 4 years. Most of the residents in those three complexes will be eligible
to receive portable Section 8 Rental Assistance. DMA Plaza, Oakbrook I and II all have
Project Based Section 8 Rental Assistance, which is now 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 258 units with rental assistance. Hopefully, they will also receive
portable rental assistance.
18
Affordable Rental Housing Planned or in Production in the Fort Collins UGA
300 -� ❑Rentals<50°lo AMI
®Rentals<60%ANII
250
200
•� I
,°. 150
a
E � — 1
z too �I
50
o
In ConstructiaVRecently Waking on avelopn=1 In aveloprnent Review Conoeptual
Conpleted Agreanent
Project Setts
Source: Gty of Fat Collins,Advance Planning Dcpartn ent
Appendix II shows a detailed list affordable projects that were either planned or in
production as of September 1998. There were about 210 units in production for very low-
income (50% AMI) family or elderly households. Those 5 projects had Planning & Zoning
approval and/or they had already been awarded funding from the City's CDBG, HOME, or
PAB programs. However, there are about 200 units in 2 existing affordable projects that
will be sold within the next year, and most of those units will not remain affordable. In
September 1998, there were another 360 units in 5 projects in development that will be
affordable to households earning 60% of AMI. They will probably house some households
who earn less than 50% of AMI. Unfortunately, those households will have to pay over 30%
of their income to live there. There are more projects in the conceptual stage, which may or
may not have yet attended a Conceptual Review meeting. Most of them are simply on the
"drawing board," and their developer may yet decide not to go forward.
New construction of affordable housing is constrained by a number of commonly understood
factors. Available land in Fort Collins is expensive and scarce. Sites that are close to the
appropriate infrastructure and services are particularly hard to find. Affordable housing
developers are often at a disadvantage when competing with market-rate developers for sites.
Construction costs are rising, due in part to changes to the Uniform Building Code. 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.
Infrastructure development in special districts can also be very expensive. Finally, federal
financial resources are limited and declining, and the competition for funding is fierce.
19
Availability of Tenant-Based Rental Subsidy
The Fort Collins Housing Authority administers 454 HUD Section 8 certificates and
vouchers, which subsidize rents in privately owned rental properties. Section 8 may also be
used in affordable housing complexes, such as Rose Tree Village and Fort Collins Housing
Corporation units. Applicants are ranked based on a priority point system. High priorities
include: paying over 50% of income for housing, living in substandard housing,
involuntarily displaced, working or attending school, seniors and people with disabilities.
Individuals without special needs may apply, but are not considered until all other elderly,
disabled, and displaced individuals are served. The following chart illustrates the current
waiting list. Depending on their priority ranking, applicants may wait anywhere from 1 to 4
years.
Fort Collins Housing Authority, Waiting List Statistics
Public Housing Section 8 Affordable
Housing
Total 1273 100% 1029 100% 263 100%
Racial Minority 112 9% 87 8% 32 12%
Hispanic 286 22% 265 26% 45 17%
Disabled 348 27% 267 26% 104 40%
Average Days Waiting
0 br 39 46 49
l br 630 748 416
2 br 629 705 229
3 br 854 782 312
4+br 520 791 222
overall 534 614 245
Source: Waiting List Report,Fort Collins Housing Authority,5127/98
Tenants who receive a certificate have 60 days to find a unit that rents for the HUD-
established Fair Market Rent and meets a housing quality inspection. They will pay no more
than 30% of their income, and the Housing Authority pays the balance. Recipients of
vouchers are allowed to rent a more expensive unit, but the tenant must pay 30% of their
income plus any amount over Fair Market Rent.
There is very little opportunity to increase the amount of funding for additional certificates
and vouchers in Fort Collins. HUD renews funding for this program annually, and there is
no guarantee that the amount of funding that is currently available will be maintained. In
order to save money, HUD even requires that relinquished certificates and vouchers be held
for 90 days before awarding them to the next applicant.
20
The Need for Affordable For-Sale Housing
Average Sale Prices in the Fort Collins area, 1997
1 br 2 br 3 br 4+br All Units
#Sold Average$ #Sold Average$ #Sold Average$ #Sold Average$ #Sold Average$
Unit Type
New 21 85,798 311 124,490 425 183,899 149 259,003 906 173,450
Existing 69 74,722 485 100,731 943 144,226 758 182,912 2,255 145,760
Single 27 91,867 351 121,140 1,228 159,940 899 195,916 2,505 166,678
Attached 63 71,066 445 101,237 140 126,833 8 129,258 656 104,143
All Units 1 90 77,306 1 796 110,013 1 1,368 156,552 1 907 195,328 1 3,161 153,692
Source: Multiple Listing Service,provided by Rhoades Realty,Inc.
The average sale price of all homes sold in the Fort Collins area during 1997 was $153,692.
It includes some areas outside of city limits, such as Wellington, but does not include
Loveland or Windsor, etc. Close to half of the units sold in 1997 were three bedrooms. Not
surprisingly, existing units were less expensive than new homes and attached units were less
expensive than single family units. Also, smaller units were more likely to be found as
attached units than 3 bedroom and larger units.
Affordability of Average Sale Prices by Unit Size
The following chart shows that the average prices of all 1 and 2 bedroom units are affordable
to families earning up to 80% AMI with 1 to 4 family members, but just barely for 2 people
shopping for a 2 bedroom unit. However, almost three quarters of the units sold in 1997 had
3 or 4 bedrooms. The average price of a 3 bedroom is only affordable to families earning
80% AMI for 6 persons. 80% of AMI for families of any size is not enough to afford the
average price of a 4 bedroom unit. 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.
The Rate of Homeownership
The rate of homeownership in Fort Collins was just 53% in 1990, low compared to the
national rate of 64% and the statewide rate of 62%. This is partially explained by the city's
student population. Two other Front Range college towns have similar or lower rates—54%
of Greeley's households own their homes, and only 46% of Boulder's do. Regardless, the
National Homeownership Strategy has as its goal a national rate of over 67% by the year
2000.
21
Affordability of Average Sale Prices by Unit Size
I br 2 br
Family size 1 2 2 3 4
Sale Price 77,306 77,306 110,013 110,013 110,013
Dpmt(5%) 3,865 3,865 5,501 5,501 5,501
Principle 73,441 73,441 104,512 104,512 104,512
Rate(71/o) 0.58% 0.58% 0.58% 0.58% 0.58%
Term 360 360 360 360 360
Payment $488.60 $488.60 $695.32 $695.32 $695.32
PMI 49.60 49.60 70.59 70.59 70.59
taxes 64 64 92 92 92
insurance 26 26 37 37 37
PITI total $628.40 $628.40 $894.26 $894.26 $894.26
utilities 120 135 135 150 165
Total Monthly
Hsg Cost $748.40 $763.40 $1,029.26 $1,044.26 $1,059,26
Income needed 23,634 24,107 32,503 32,977 33,450
AMI 35,625 40,750 40,750 45,812 50,900
%AMI served 66% 59% 80% 72% 66%
3 br 4+br
Family size 3 4 5 6 4 5 6 7
Sale Price 156,552 156,552 156,552 156,552 195,328 195,328 195,328 195,328
Dpmt(5%) 7,828 7,828 7,828 7,828 9,766 9,766 9,766 9,766
Principle 148,724 148,724 148,724 148,724 185,562 185,562 185,562 185,562
Rate(7%) 0.58% 0.58% 0.58% 0.58% 0.58% 0.58% 0.58% 0.58%
Term 360 360 360 360 360 360 360 360
Payment $989.47 $989.47 $989.47 $989.47 $1,234.55 $1,234.55 $1,234.55 $1,234.55
PMI 100.45 100.45 100.45 100.45 125.34 125.34 125.34 125.34
taxes 130 130 130 130 163 163 163 163
insurance 52 52 52 52 65 65 65 65
PM total $1,272.57 $1,272.57 $1,272.57 $1,272.57 $1,587.76 $1,587.76 $1,587.76 $1,587.76
utilities 150 165 180 195 165 180 195 210
Total Monthly
HsgCost $1,422.57 $1,437.57 $1,452.57 $1,467.57 $1,752.76 $1,767.76 $1,782.76 $1,797.76
Income needed 44,923 45,397 45,870 46,344 55,350 55,824 56,298 56,771
AM 45,812 50,900 55000 59062 50,900 55000 59062 63125
%AMIserved 98% 89% 83% 78% 109% 101% 95% 90%
Average sale prices from the Multiple Listing Service,provided by Rhoades Realty,Inc.
PM►means Private Mortgage Insurance,calculation provided by Pacific Mortgage.
Taxes are calculated as I%of the sale price divided by 12.
Insurance is calculated as 0.4%of the sale price divided by 12.
Utility Allowances are based on information from the Fort Collins Housing Authority.
22
Comparison of Average Sale Prices to Affordable Sale Prices by Unit Size and Income
1 br 2 br
Family Size 1 2 2 3 4
Average Sale Price 77,306 77,306 110,013 110,013 110,013
Affordable Sale Prices
at 80%AMI 96,200 110,300 110,300 124,300 138,200
at 70% AMI 82,300 94,500 94,500 106,400 118,400
at 60% AMI 68,500 78,600 78,600 88,600 98,600
at 50%AMI 54,500 62,600 62,600 70,700 78,800
Subsidy required to make average sale prices affordable
at 80%AMI (18,894) (32,994) (287) (14,287) (28,187)
at 70% AMI (4,994) (17,194) 15,513 3,613 (8,387)
at60% AMI 8,806 (1,294) 31,413 21,413 11,413
at 50%AMI 22,806 14,706 47,413 39,313 31,213
3 br 4+br
Family Size 3 4 5 6 4 5 6 7
Average Sale Price 156,552 156,552 156,552 156,552 195,328 195,328 195,328 195,328
Affordable Sale Prices
at 80%AMI 124,300 138,200 149,200 160,000 138,200 149,200 160,000 170,800
at 70% AMI 106,400 118,400 127,800 137,000 118,400 127,800 137,000 146,300
at 60% AMI 88,600 98,600 106,400 114,000 98,600 106,400 114,000 121,700
at 50%AMI 70,700 78,800 84,900 90,900 78,800 84,900 90,900 97,000
Subsidy required to make average sale prices affordable
at 80% AMI 32,252 18,352 7,352 (3,448) 57,128 46,128 35,328 24,528
at 70% AMI 50,152 38,152 28,752 19,552 76,928 67,528 58,328 49,028
at 60% AMI 67,952 57,952 50,152 42,552 96,728 88,928 81,328 73,628
at 50% AMI 85,852 77,752 71,652 65,652 116,528 110,428 104,428 98,328
Average sale prices from the Multiple Listing Service,provided by Rhoades Realty,Inc.
Calculation of affordable sale prices were based on HUD's published Area Median Family Income for the
Fort Collins-Loveland MSA for 1998.
This chart 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 is as small
as $3,600 for a 3 person family buying a 2 bedroom unit, up to $76,900 for a 4 person family
buying an average-priced 4 bedroom unit. At 50% AMI, the required subsidy is huge-
$98,000 and higher for 4 bedroom units.
23
Availability of Affordable For-Sale Units
Minimum#of Maximum Price
Family Size Bedrooms @ 80%AMI #Sold in 1997
1 1 96,200 474
2 1 100,300 794
3 2 124,300 1,164
4 2 138,200 1,581
5 3 149,200 1,138
6 3 160,000 1,293
7 4 170,800 460
8 1 4 181,700 504
Source: Multiple Listing Service,provided by Rhoades Realty,Inc.
Calculation of affordable sale prices were based on HUD's published
AMI for the Fort Collins-Loveland MSA for 1998.
There were a total of 3,161 homes sold in the Fort Collins area through the Multiple Listing
Service in 1997. Half of them were affordable to and large enough for a family of four
earning 80% of AMI. A very small number of homes (794) were priced under $100,300,
which would be affordable to a 2 person family. There also seemed to be very few (504)
four bedroom homes that would be affordable to large families.
In 1990, there were nearly 31,000 persons aged 25 to 44 years, making up 35% of the city's
population. Since this age group is the prime child-bearing cohort, the large numbers falling
into this age group portend an increase in the number of children aged five and under in Fort
Collins by 2000. A growing number of households with children may spark demand for
larger, single family homes. The market appears to be serving this segment without any
problems for families in excess of 80% AMI.. However, substantial subsidies are required
for people earning 80% AMI or less to afford the average priced 3 or 4 bedroom home.
Appendix II shows a detailed list affordable projects that were either planned or in
production as of September 1998. There were 660 for sale units with Planning &Zoning
approval that will be marketed as affordable, but only 67 of them are actually restricted to
households earning less than 80% of AMI. Projects in the conceptual stage may or may not
have yet attended a Conceptual Review meeting. Most of them are simply on the "drawing
'board," and their developer may yet decide not to go forward.
24
Affordable For-Sale Housing Planned or in Production in the Fort Collins UGA
500 ❑Townhouse or Condo for sale
450 ■Single Family or Duplex for sale
400
h
350 - --
300 —
�. I
E 200
z
150 - -_ _-
100 --
50
0
In Construction Working on Development In Development Review Conceptual
Agreement
Project Status
Source: City of Fort Collins,Advance Planning Department
New construction of affordable housing is constrained by a number of commonly understood
factors. Available land in Fort Collins is expensive and scarce. Sites that are close to the
appropriate infrastructure and services are particularly hard to find. Affordable housing
developers are often at a disadvantage when competing with market-rate developers for sites.
Construction costs are rising, due in part to changes to the Uniform Building Code. 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.
Infrastructure development 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 that is
affordable to families earning about 50 to 80% of AMI. Families that want to own, but
either cannot find an affordable unit or do not have a downpayment, are forced to continue to
rent. These involuntary renters are probably looking for apartments close to 60% AMI rents,
so they can save money for a downpayment. Their presence in the rental market makes the
affordable, unrestricted units even more in demand and harder to find. According to HUD,
there are 2,400 households that fall into this category.
25
1997 Affordable Housing Need in Fort Collins — Target Groups
(courtesy of U.S. Department of Housing and Urban Development, Denver Office)
• 6,300 renters (39 percent of all renters) have incomes less than 50 percent of the median and
pay over 30 percent 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 not there is not enough available for all in this group.
• 1,500 renters (9 percent of all renters) have incomes between 50 and 80 percent of the median
and pay over 30 percent of income for rent. These families are already paying a high
proportion of income for rent and should readily qualify for monthly payments on homes in
the $71,000 to $115,000 price range and possibly higher. Even though their income is
sufficient, many of these families have not accumulated enough savings for downpayment of
$3,000 to $5,000 typical on an FHA loan in this price range.
• 2,400 renters (15 percent of all renters) have incomes between 50 and 80 percent of the
median and pay less than 30 percent of income for rent. These families are not rent burdened
presently but they do have sufficient income to afford homes priced in the $71,000 to
$115,000 range. If this product were available and these families had the necessary
downpayment, many would likely purchase homes instead of continuing to rent.
• 3,500 owners (14 percent of all owners) have incomes less than 80 percent of the median and
pay over 30 percent 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 day-care and transportation so a spouse can return to work.
These target groups include a total of 13,700 households (34 percent of all households) who are
either struggling with their present housing cost or could benefit from some assistance to help
them become homeowners.
26
The Impact of Colorado State University Students
There were 22,523 full-time students enrolled at Colorado State University (CSU) in the fall of
1998. Of the 4,441 beds in residence halls, 4,400 (99.8%) of them were occupied. In CSU
apartments, 961 of the 995 (96.6%) available bedrooms were under contract. Approximately 500
students lived in fraternity or sorority houses. That left roughly 16,660 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.
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, 61% of very-low
income and 54% of low-income renter households are neither related nor elderly. The
stereotypical student household would fall into that category. Students that lived with their
families (either their parents or their spouses and/or children) would not. 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.
HUD has analyzed 1990 Census data to show household type by income level and housing
problems. In Fort Collins, 65% of renter households that earn less than 50% of A-ML I and pay
over 30''n of their income for rent are neither elderly nor living with family. The chart on the
next page illustrates the data for Fort Collins. HUD's "Affordable Housing Need —Target
Groups" is based on projections from the 1990 Census. Therefore it is possible to modify the
rental "Target Groups" to take out non-related, non-elderly households from HUD's estimate 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:
1997 Affordable Housing Need in Fort Collins —Target Groups (revised)
• 6,300 renter households (39 percent of all renters) have incomes less than 50 percent of the
median and pay over 30 percent of income for housing costs. Approximately 1,630 of them
are family households and 600 are seniors. This group is the traditional target for
subsidized rental housing.
• 1,500 renter households (9 percent of all renters) have incomes between 50 and 80 percent of
the median and pay over 30 percent of income for rent. About 570 of them are family
households and 140 are elderly. Even though their income is sufficient, many of these
families have not accumulated enough savings fora downpayment of$3,000 to $5,000
typical on an FHA loan in this price range.
27
• 2,400 renter households (15 percent of all renters) have incomes between 50 and 80 percent
of the median and pay less than 30 percent of income for rent. Approximately 960 of them
are family households and 110 are elderly. These families are not rent burdened presently,
but if this product was available and these families had the necessary downpayment, many
would likely purchase homes instead of continuing to rent.
28
Affordable Housing Need for Special Populations
Emergency Shelter
The New Bridges day shelter is often the first place a homeless person goes to access the
social service system. It served 1780 unduplicated individuals, including single adults
and families with children, between July 1, 1996 and June 30, 1997. Their staff estimate
that there is a total of 2,000 homeless people in Fort Collins. Their clients not only need
housing, but also need counseling for mental illness, addiction, and family support.
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 1600 people per year (about 30% is duplication). The maximum
stay at the Mission is 30 consecutive days, and after each stay, clients may not receive
shelter there again for 6 months. About 8 to 15 of their clients per year find permanent
housing.
The Open Door Mission also provides emergency shelter for up to 30 days. It has beds
for 26 men and 6 women, and some space for families. Crossroads Safehouse provides
emergency shelter and services for victims of domestic violence. Youth aged 13 to 17
can find shelter at Larimer County Social Services' Youth S.A.F.E— it has 18 beds.
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.
Catholic Charities' clients typically are working at least one and often 2 or more jobs at a
time, and they want to work. 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 for CARE Housing units. Most (60%) are singles and from Colorado.
Over 60% of the families they serve are from Colorado. A significant portion (30- 50%)
have mental health and/or alcohol and substance abuse problems.
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. However, even if a unit is
waiting vacant it takes longer than 30 days to get through the application process, which
is not shortened for the homeless. There are 15 other SRO units in Fort Collins, but they
do not have services. Larimer County Mental Health Center operates 3 transitional
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facilities with a total of 18 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 emergency homeless needs to first time homebuyers. During the 6
months between October 1997 and March 1998, they served 576 households in Fort
Collins. Half of them earned less than 50% of AMI and half earned under 80% of AMI.
Close to half were female-headed households, and 14% were disabled.
Neighbor to Neighbor has 41 units of transitional housing for families in Fort Collins.
They have a pre-screened waiting list of 10 to 30 families, who may have to wait
anywhere from 5 days to 6 months before they move in. The occupants have a 2 year
time limit before they are supposed to move to permanent housing. Staff there feels that,
for families ready to graduate, there is a critical need for permanent housing in the 20 -
40% AMI income range.
Catholic Charities has 10 Section 8 housing vouchers for clients in Larimer and Weld
Counties, 6 of which are currently in use in Fort Collins. The certificates have a 2-year
time limit, and recipients must be working towards self-sufficiency.
Project Self-Sufficiency provides services to single parent families that want to become
independent of all public subsidies. It serves about 110 clients countywide, 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 their clients need Section 8 type subsidies. Until recently,
they were 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 certificate. Housing subsidy is always the
last subsidy that clients graduate from.
Family Self-Sufficiency and Family Investment Program provide the same kind of
services as Project Self-Sufficiency, but also have incentives to save money. They are
both HUD-sponsored programs, intended for people (not just single parent families) who
already have Section 8 housing subsidy or live in public housing. The lack of affordable
housing in Fort Collins keeps some clients from becoming independent of Section 8
subsidies. Some have had to leave the city in order to find affordable units.
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.
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Both Larimer County 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 3177 minority households in 1990, over 50%o are classified as within the very low-
income range. Minority households comprise 74% of very low-income households (1990
Census). Thus it appears a disproportionate number of minority households fall in the
very low-income category (Consolidated Plan). This is borne out by the
disproportionately high number of minorities who are on the waiting list for the Fort
Collins Housing Authority's public housing, rental subsidy, and affordable housing
programs.
Housing thus becomes a serious issue for these households, especially if their housing
choice is limited by discrimination. Because discrimination can come in very subtle
forms, the annual Fair Housing Forum attempts to educate tenants and landlords about
housing discrimination issues.
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 Coloradans 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 relatively low compared to the rest of the
state, 7.7% for the city versus 10% for Colorado. In 1990, 731 seniors were identified as
living below the poverty level. In 1996, there were approximately 1,400 seniors in Fort
Collins with incomes below $10,000 annually.
Larimer County staff expanded on the forecast published in "Affordable Housing
Demand in Larimer County, 1996-2000" to call out information on the status of seniors in
1996. Of the 12,486 households in the County 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 (32%) earned between $10,001 and $20,000, up to 60% of AMI for a
single person. In addition, seniors make up approximately one-fifth of all renters in the
County. Senior renters tend to have even lower incomes— 35% earned less than $10,000
and 38% earned between $10,001 and $20,000 per year.
Forty nine percent of all of Larimer County's population resided in Fort Collins in 1996.
The chart on the following page applies the same percentage to the senior population to
arrive at a very conservative estimate of the number of seniors in Fort Collins in 1996.
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This estimate is low because seniors are less likely to live in rural areas and more likely to
live in urban areas than the general population.
Senior Household Estimates, 1996
Householder is %AMI %AMI Latimer County Fort Collins
65+years old 1 person 2 people # % estimated#
All Households 12486 100% 6118
<$10,000 30% 26% 2923 23% 1432
$10,001 -$20,000 60% 52% 3954 32% 1937
Renter Households 5982 100% 2931
<$10,000 30% 26% 2094 35% 1026
$10,001 -$20,000 60% 52% 2273 38% 1114
Owner Households 6504 100% 3187
<$10,000 30% 26% 829 13% 406
$10,001 -$20,000 1 60% 52% 1681 26% 824
Source: Affordable Housin.a Demand in Larimer County, 1996-2000,update
produced by Larimer County Department of Human Development in June 1996
DMA Plaza provides studio and I-bedroom apartments affordable to very low-income
seniors. 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. The average age of its
residents is 72.7 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$9,225 annually. At the end of April, there were 9 people waiting
for an efficiency unit and 12 waiting for a one bedroom. With a turnover rate of a little
over 1 unit a month, the last person on the list will wait approximately 6 to 8 months for
an efficiency, and 8 to 12 months for a one bedroom. Applicants are generally not
homeless, but are living with family or in a nursing home.
Oakbrook I was built in 1977. All of its 108 units are subsidized by Project Based
Section 8 Assistance. It offers 104 one-bedroom and 4 two-bedroom units. Like DMA
Plaza, it serves mostly very low-income senior citizens and some people with disabilities.
It turns over about 1 unit per month. While the number of people on their waiting list is
not available, it could take anywhere from 7 months to 2 years to get a unit.
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 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 their
waiting list is not available, it could take a new applicant 1 year to get a unit.
As the population ages, the City will face issues of elder care demands and
responsibilities. The vast majority of older adults will likely stay in their own homes,
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especially 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 because they become too frail to live alone or because 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.
Mentally III
Larimer County Mental Health Center (LCMHC) serves about 1100 enrolled clients at a
time with case management, medical services, therapy, vocational counseling, and
housing. About half of their clients are Fort Collins residents. Staff estimates that there
are another 2700 - 3000 people in Larimer County who need these services and are unable
to get into the system 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 their $494/month SSI benefit, in emergency shelters, or they are
unsheltered.
LCMHC does have some housing resources. They administer 27 Section 8 certificates
and 20 vouchers through HUD Denver's Supportive Housing and Homeless Program.
They also operate 4 facilities— an 8 bed home with 24 hour staff supervision, a 4 bed
home with daytime staff, a 6 person house and a 4 unit apartment building with Project
Based Section 8 rent subsidies.
LCMHC's housing units are intended to be transitional. However, clients usually stay
there longer than they need to, because they cannot find other affordable units to move to.
Most are waiting for a place in the Section 8 program or public housing, because they
need rent subsidies. This situation creates a backlog of clients waiting for the transitional
units.
LCMHC also worked with the Fort Collins Housing Authority to create the Homecoming
buildings, which provide 26 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 rented up quickly when they opened, and they are always full.
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There are four kinds of housing projects that LCMHC staff believe are needed:
1. A long term group home for clients who cannot live independently. 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
LCMHC. Private for profit group homes charge $1,200 to $1,500 per month for
rent and services. They are typically full of frail elderly and persons with
developmental disabilities.
2. An acute treatment facility which would offer 10 short term crisis beds for
individuals who are being released from psychiatric hospital placements. These
beds could also be utilized by mentally ill homeless clients who are waiting for an
opening in a long term living facility. LCMHC receives daily requests for
housing the mentally ill homeless.
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, another 25 beds for singles could be filled.
4. The community needs a half-way house for mentally ill violent offenders, newly
released from prison. LCMHC is not able to serve these individuals.
Another option to develop is Home Community Based Services, a funding program for
assisted living services. It is currently only available in a nursing home, but it could be
used to provide services in individual's homes.
Disabled
Foothills Gateway is a private non-profit that has served people with developmental
disabilities in Larimer County for the past 25 years. They provide vocational training and
supportive living services to adults. Their consumer's incomes range from SSI
($494/month or $5,928 annually) to earned income of$11,000 or $12,000.
Disabled Resources is the Center for Independent Living in Larimer County. They
provide a wide range of services to people with physical disabilities, most of whom
(90%) have very low incomes. Their consumers are generally trying to survive on public
income subsidies.
Aid to the Needy Disabled (AND) provides temporary assistance ($229/month and food
stamps) until SSI and SSDI are in place. The maximum SSI payment is $494/month, or
$5,928 annually. SSDI is only for people who used to work but became unable to, and its
benefit is based on the person's former income earned and number of quarters worked.
Therefore it is generally not available to persons with developmental disabilities. In
1997, Disabled Resources received 127 housing-related inquiries.
For the vast majority of people with disabilities, the only way they can survive is with
rental subsidies. HUD Denver's Supportive Housing and Homeless Program provides
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Section 8 certificates and vouchers to people with disabilities through local agencies.
Disabled Resources has 1 certificate, Larimer County Mental Health Center has 27
certificates and 20 vouchers (for people with mental illness only), and Foothills Gateway
has 51 certificates and 32 vouchers (for people with developmental disabilities only).
Foothills Gateway's program provides an average subsidy of$263 per month per
consumer, or about $262,000 total annual subsidies.
People with disabilities who cannot live alone tend to live with family or in group homes.
Foothills Gateway has a host home program that matches their consumers with
roommates or families that can help care for them. It also has group homes for people
with developmental disabilities. The demand for these group homes has decreased, as
supportive living services have improved to allow 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 ($1,200 - $1,500, including services).
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
disabled young adults 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
Northern Colorado AIDS Project (NCAP) began as a pilot project of the United Way 3
years ago. NCAP staff estimates that 5 to 10 of their 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.
Housing choice is very limited by discrimination, especially against same-sex partners. It
is interesting to note that most of NCAP's clients once worked and supported themselves
without any public 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 has some emergency financial assistance to help clients with utilities, rent or
mortgage payments. It also rents an apartment from the Fort Collins Housing Authority,
which is subletted to clients in emergencies.
NCAP would like to administer some of its own Section 8 certificates, like Larimer
County Mental Health does. Staff sees a need for an affordable assisted living facility for
people with AIDS (existing privately run group homes are much too expensive at $1,200
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- $1,500 per month). They are currently exploring funding to purchase and rehabilitate a
small apartment building for their clients who are able to live independently.
Staff at more than one agency expressed a very troubling concern. They are under the impression
that if there are people who cannot afford to live here, the larger Fort Collins community does not
care. 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 imperative that we change this impression.
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Economic Trends &
Their Affect on Affordable Housing
Cost of Living
For the first quarter of 1995, Fort Collins' cost of living index was above national
average. This was due to comparatively higher costs of housing, miscellaneous goods
and services, and groceries, which together account for nearly two-thirds of the weighted
index. The significant increase in the average sales price of a new home probably
accounts for most of the jump in living costs since 1990.
Wages
Fort Collins residents are highly educated and enjoy high employment in largely white
collar jobs. Unemployment is relatively low. Wages have been increasing due to low
employment and growing economy—they increased about 3.4% in 1994 and are higher
than national average, but are still lower than Boulder and Denver.
Service-related and retail jobs accounted for 43% of Fort Collins' labor force in 1990.
This split is significantly higher than the percentage of all Colorado workers employed in
services and retail, which was 23% in 1990. The average wage rate in the retail sector
was $13,212 in 1994 compared to $37,409 in manufacturing. Lower paying retail trade
and services have exhibited the most rapid job growth, with a 60% increase between 1985
and 1994. Statewide, these two industries are projected to grow the most by 2005 —the
service industry may grow as much as 50% bctween 1995 and 2005.
Although low unemployment, together with a growing local economy, are contributing to
upward pressures on local wage rates, wages have not increased as much as housing
costs, especially for individuals and families with lower-paying retail trade and service
jobs. 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. That 43% of the
labor force is in low-paying retail trade and service jobs argues for the city's need for
much more housing that is affordable to households earning $12,000 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 46% of general government
revenues in 1994). 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
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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. It is not just a
social issue, but also an economic one—Fort Collins cannot continue to grow as a
regional retail center without a local workforce.
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Conclusions
Fort Collins' Priority Affordable Housing Needs
Rental Housing
Fort Collins has a very serious shortage of rental units affordable to households earning
below 50% of AMI. A very small number of these units exist—only 5% of the city's
multifamily housing stock. Yet approximately 45% of our renters fall within that income
category. Figures from HUD concur with this analysis. According to HUD, Fort Collins
has 6,300 renter households (39% of all renters) that earn less than 50% AMI and pay
over 30% of their income for housing. Sixty-five (65) percent of them are in non-related,
non-elderly households, most of which are probably student households. That still leaves
approximately 2,230 very low-income family or elderly households that pay too much of
their income for rent. Currently there are about 210 units in production that will help
meet this need. Those 5 projects have Planning & Zoning approval and/or they have
already been awarded funding from the City's CDBG, HOME, or PAB programs.
However, there are about 200 units in 2 existing affordable projects that will be sold
within the next year, and most of those units will not remain affordable. Therefore, this
community's highest priority needs to be producing more of these units.
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 this income level. There are now 362
units in 5 projects in development that will help to meet this need. They either have
Planning &Zoning approval or they have already been awarded funding from the City's
CDBG, HOME, or PAB programs. Those units will be affordable to people earning 60%
of AMI, but they will probably house some households who earn less than 50% of AMI.
Unfortunately, those households will have to pay over 30% of their income to live there.
According to HUD, Fort Collins has 1,500 renter households (9% of all renters) that earn
between 50% and 80% of AMI and pay over 30% of their income for housing. About
47%, or 710 of them, are in family or elderly households. While some of the families
may be ready for homeownership, they would have a better opportunity to prepare for it if
they could find affordable rental housing first. Therefore, this community needs to
maintain a supply of multifamily rental units that are priced for people earning
approximately 50 to 80% of AMI. As stated above, there are 389 units now in
development that will be affordable and restricted to households earning 60% of AMI.
39
They may have the added benefit of reducing pressure on unrestricted units that are
affordable for those earning less than 60% AMI.
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 $494/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
The rate of homeownership in Fort Collins was just 53% in 1990, low compared to the
national rate of 64% and the statewide rate of 62%. This is partially explained by the
city's student population. Two other Front Range college towns have similar or lower
rates — 54% of Greeley's households own their homes, and only 46% of Boulder's do.
Regardless, the National Homeownership Strategy has as its goal a national rate of over
67% by the year 2000. 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.
According to HUD, there are 2,400 renters (15% of all renters) that earn between 50 and
80% of AMI and pay less than 30% of their income for housing. Forty (40) percent, or
approximately 960, are in low-income family households. Many of these families should
readily qualify for monthly payments on starter homes, which could be small single
family units, townhouses or condos. If this product was available and these families had
the necessary down payment, many would likely purchase homes instead of continuing to
rent. Therefore, this community needs to continue to help first time homebuyers earning
less than 80% of AMI to get into affordable homeownership. Currently there are 660 for
sale units with Planning &Zoning approval that will be marketed as affordable, but only
67 of them are actually restricted to households earning less than 80% of AMI. However,
since the City's assistance is given to buyers, not developers, the "need" number does not
change.
Housing Production
New construction of affordable housing is constrained by a number of commonly
understood factors. Available land in Fort Collins is expensive and scarce. Sites that are
close to the appropriate infrastructure and services are particularly hard to find.
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Affordable housing developers are often at a disadvantage when competing with market-
rate developers for sites. Construction costs are rising, due in part to changes to the
Uniform Building Code. 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. Finally, federal financial resources are limited and declining, and
the competition for funding is fierce. Therefore, this community needs to be more
proactive in identifying and securing sites for future affordable housing development. It
needs to examine regulatory barriers and consider reforming them, and it needs to be
supportive of proposed developments in their quest for identifying development
subsidies. In addition, this community needs to preserve its existing affordable housing
projects.
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The Provision of Affordable Housing
In Fort Collins
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 $1,162,000 in 1998/99. It is able
to develop its own funding priorities—affordable housing has been our primary focus. The funds
can be used for acquisition, rehabilitation, new construction, and related development costs. It is
especially useful for off-site infrastructure construction costs, which other funding programs
often will not pay for. Unfortunately, it requires builders to pay Davis-Bacon wage rates, which
adds considerable cost to projects. Therefore, in practice, this program has been used primarily
for land acquisition.
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 (CHoDOs). At least 15% of each
jurisdiction's funding must be awarded to CHoDOs. In Fort Collins, CARE Housing, Inc. is the
only qualified CHoDO. In 1998/99, Fort Collins received $569,000.
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 so long as the project
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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% of Area Median
Income.
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 1998, it has $6,803,572 to award for Section 202 projects in metro
areas, and $2,339,655 for non-metro areas. For Section 811, it has $1,514,967. At a cost of
roughly $50,000 per unit, these programs can build about 213 units in those 6 states. 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. There are currently no affordable housing projects in Fort Collins
built with either of these programs.
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 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, 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 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 $200 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 $70 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 $30million goes to a "statewide balance" that projects compete
for (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 private activity bonds to help first time homebuyers with mortgage revenue bonds
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and mortgage credit certificates, and for a variety of other programs. They are described in more
detail below. 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
to pollution-control projects for Anheuser-Busch to small manufacturing to retail development
and renovation. It has also been allocated to three new affordable rental housing projects, none
of which has been built yet. In 1998, Fort Collins received the authority to grant about$2.6
million in bond financing. It chose to assign that authority to CHFA to be used for first-time
homebuyers' low-interest mortgage financing, downpayment and closing cost assistance. That
financing was committed to 4 new for-sale housing developments, helping to make them feasible
projects.
Fort Collins may also allocate Private Activity Bonds (PAB) to affordable rental housing
projects, but they do not have the same impact as the 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 that about 100 units. It is definitely not feasible for
any project to use bonds unless they make up at least $1 million of its permanent loans. The
expense of PABs also makes it very difficult to use it for housing for very-low income renters,
which is Fort Collins' highest priority need. They do, however, work for projects affordable to
families earning 60% of AMI. Roughly $55,000 per unit of PABs is needed to make a project
happen, or$5.5 million for a 100 unit project. With $2.6 million of PAB, Fort Collins could
completely fund about 47 units, less than half a project, each year. The most effective way to
distribute it would be to offer at least $1 million of PA13 to a project—at most, Fort Collins could
award PABs to two projects per year. The balance could 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 private activity bonds 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 $1.25 per capita, Colorado received about $5 million for 1998, which is
administered by the Colorado Housing Finance Agency (CHFA). Those tax credits may translate
into roughly$3.75 million dollars 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
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project cost. Developers usually seek to finance the balance with low interest loans. Not for
profits can receive grant money for a project, then lend it to the limited partnership/project owner
at a very low interest rate (I%). This may allow them to provide units affordable for people
earning less than 50 or 60% of AMI.
Four percent(4%) tax credits are also available to any project that receives private activity bond
financing. Their supply is limited only by the amount of private activity bonds 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% of AMI, OR 20% of its units must be affordable
at 50% of 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 regulations, 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 percent below market interest rates. This
financing can be used with 4% tax credits, and carries the same affordability requirements.
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 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. FHA shares half of the risk of loss, and its
mortgage insurance gives the bonds a AAA rating. The program is funded by the proceeds from
tax exempt 501(c)(3) bonds, private activity bonds, and taxable bonds. Between 1994 and 1996,
16 loans worth $62 million closed and another 11 loans worth $31 million were approved.
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CHFA's 501(c)(3) General Obligation Bonds are available for construction and permanent
financing of rental housing for special needs populations. Private and public not-for-profit
organizations can use it to acquire, rehabilitate, build or in some cases refinance existing debt.
At least 40% of the units must be affordable to low or very-low income households. The
programs generally provide small loans of about $100,000 to $500,000. Between 1986 and
1996, 78 loans worth $57 million were closed.
The CHFA Housing Fund provides short-term loans to private not-for-profit organizations and
local public housing authorities for soft costs, acquisition or construction. The applicant must
have permanent financing committed in order to get such a loan. Between 1993 and 1996, 7
loans worth $2.8 million were made.
CHFA's Housing Opportunity Fund is a trust fund established with savings from a refunding of
1982 bonds and from CHFA's projects' cash flows. It provides permanent financing for non-
traditionally designed housing facilities for very-low income and/or special needs populations. It
is primarily available to not-for-profit organizations and local public housing authorities for
acquisition, rehabilitation, and new construction. It can be used to build independent apartment
or group living facilities. It is intended to compliment the 501(c)(3) General Obligation Bonds
financing with loans of up to $200,000 or 95% of development cost. The total trust fund is
limited to about $1 million per year. Between 1989 and 1996, it has financed 18 loans worth
$1.5 million.
The Rental Acquisition Program allows CHFA to purchase apartment developments and
rehabilitate them. At least half of the units must be affordable to low income households without
federal subsidies. It can also purchase developments from the Resolution Trust Corporation and
other federal agencies. CHFA contracts with private property management companies and puts
up to $1 million of cash flow into to the Housing Opportunity Fund each year. Properties also
may be resold to not-for-profit corporations. From 1987 to 1996, CHFA acquired 50 properties
and resold 31.
Mortgage Revenue Bonds are one use for private activity bonds. CHFA sells them, then uses the
proceeds to purchase mortgage loans from participating lenders. The mortgage loans are for first
time homebuyers, and they carry an interest rate I% below the market rate on the day the bonds
were sold. Between 1978 and 1996, 33,357 families have qualified. Down payment assistance is
also available in conjunction with this program. Qualified buyers may get up to 4% of their
maximum loan amount for downpayment and closing costs. From 1994 to 1996, 2,249 buyers
have received such assistance.
The Mortgage Credit Certificate (MCC) Program also uses private activity bond financing. It is
for low and moderate-income homeowners. With a 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. Between 1988 and 1996, 3,661 homeowners have benefited.
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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
1997/98, it received $10.5 million of CDBG and $6.4 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 1999 budget of$2.6 million for affordable housing. It
is targeted to households earning 133% of the poverty level, which is set for the entire country by
the U.S. Census. In Fort Collins, it translates to about 30 to 50% of AMI.
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$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 12 regional FHLBs in the country. It has
jurisdiction in Colorado, and had $5.2 million available in 1997. 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 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—applications are accepted every April 151n and October 15`n
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.
Neighborhood Reinvestment Corporation
Neighborhood Housing Services of America
The Neighborhood Reinvestment Corporation (NRC) is national nonprofit that was created in
1978 by an act of Congress to revitalize America's older, distressed communities by establishing
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and supporting a national network of local nonprofit agencies. Its members are resident-led
partnerships of lenders, other business people, and local government officials known as
"NeighborWorks" or"Neighborhood Housing Services" organizations.
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 4 yearly week-long
"Training Institutes." 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.
Fannie Mae Foundation
Fannie Mae is the largest secondary market mortgage lender in the U.S. It created the Fannie
Mae Foundation in 1979 and spun it off as an independent nonprofit philanthropic entity 1996.
Is mission is to "...transform communities through innovative partnerships and initiatives that
revitalize neighborhoods and create affordable homeownership and housing opportunities across
America." 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 LISC or Enterprise. Loans are typically 0 to 2% with a 5-year term
for land acquisition, predevelopment, or other bridge financing. It has also recently announced a
new "University and Community Partnership" program to provide grants to universities to help
them work with their communities.
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 $1.7 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 and state and local
governments to develop affordable housing and community services. It has over 300 locations,
including Denver.
Enterprise is an operating foundation, not a grant-making one, but it does function as an
intermediary for grants and loans. It offers development loans, multifamily equity investment
and permanent financing, special single-family programs, and financing for assisted living for
frail seniors. "Equity investment" refers to investing in developments by purchasing their tax
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credits. In Colorado, it has generated $50 million in grants and equity investments. It also
provides technical assistance and training related to low-income housing and community
development.
Local Initiatives Support Corporation
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 offices in over 100 cities and urban
counties in the U.S., and also works with 68 CDCs in rural areas.
LISC provides grants and loans to CDCs, and its subsidiary, the National Equity Fund (NEF), is
the largest nonprofit syndicator of tax credit deals. NEF 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 downpayments 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, 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 to make attainable housing
happen in Larimer County. It designs "Custom Housing Solutions" for each individual project,
which included technical assistance, grants, loans, and/or donations. It directly provides loans,
grants, and assistance in accessing other sources of funding. In 1997, it used $344,000 of its own
Project Funds to create $585,000 in cash benefits to local affordable housing projects. In 1998, it
became a Community Development Financial Institution, greatly increasing its capacity to
provide financial assistance to affordable housing projects.
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Analysis: The Availability of Financing Needed to Build Affordable Housing
The past 8 pages of text 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.
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
Iona-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. It is not an
easy task to find consultants who are willing to do this.
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 should help
local projects by committing CDBG, HOME, or Affordable Housing Fund dollars early in their
planning process, by awarding funding to projects that are in the conceptual stage. That local
expression of support should help leverage the balance of financing that projects need.
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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 availability of 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 working on this kind of project, but
regional and national development companies are doing them.
There are very few developers attempting to produce affordable for-sale housing in Fort Collins.
Currently there are two small, local builders who are trying to build entry-level housing without
development or construction subsidies. They keep their costs as low as possible, but since they
are not charitable organizations, and since they do not use financial subsidies with their attendant
restrictions, these developers do not "fail" by not selling to low-income families. They do tend to
use the City's Impact Fee Delay and Rebate programs to help defray their costs.
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 their organizations. 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.
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Not-for-profit organizations are able to access some financing sources that for-profits cannot use.
Other 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 currently developing affordable, for-sale housing. Habitat uses volunteer labor and
donations to keep its homes 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. Some of the services they may need 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 that 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 specific services.
The Role of 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 Directors, 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 Rental Assistance program, which subsidizes rents in privately owned rental
properties. These programs are generally the only affordable housing option that families earning
less than 30% of the Area Median Income have. HUD pays the FCHA an operating subsidy for
its 154 public housing units, so it can charge only 30% of tenants' adjusted gross income for rent
(with a minimum rent of$50 per month). For the 454 households with a Section 8 certificate or
voucher, HUD pays the difference between 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). It operates
like other private not-for-profit developers of affordable housing.
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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 began offering mortgages to lower income first time homebuyers because of CRA
requirements. Now, they 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, subsidized interest rates or closing
costs. Outreach, education and credit counseling are usually major components of these efforts.
Many also offer lower downpayment requirements or higher maximum debt-to-income ratios to
low-income borrowers.
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 had to issue "non-conforming
loans" and keep them in their own portfolio—the loans did not meet the secondary market's
requirements, so they could not be sold. Therefore the pool of money available to make loans to
lower-income borrowers was 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. Earlier this year, Fannie Mae announced its "Flexible
97" product, that would allow downpayments as low as 3% and flexibility in the source of
downpayment funds. Local lenders could issue loans that conform to its requirements (buyers
still need to have very good credit) and be able to sell the loan with no "seasoning" period.
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,
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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. In 1998, it
became a Community Development Financial Institution, greatly increasing its capacity to
provide financial assistance to affordable housing projects.
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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, simply put, to get out of the way. 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, it's 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.
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Policy
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:
Goal: 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:
• 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.
Source: Resolution 98-125 of the Council of the City of Fort Collins
• 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
Source: Consolidated Plan, City Plan, and Affordable Housing Policy
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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
follows:
Priority Need Levels
H = High M = Medium
Priority Need L = Low N = No Such Need
HOUSING NEEDS 0-30% 31-50% 51-80%
Renter/Sm Family/Cost Burden > 30% H H H
Renter/Sm Family/Cost Burden > 50% H H M
Renter/Sm Family/Physical Defects H M L
Renter/Sm Family/Overcrowded H M L
Renter/Lg Family/Cost Burden > 30% H H L
Renter/Lg Family/Cost Burden > 50% H L L
Renter/Lg Family/Physical Defects H M M
Renter/Lg Family/Overcrowded H H H
Renter/Elderly/Cost Burden > 30% H M M
Renter/Elderly/Cost Burden > 50% H M N
Renter/Elderly/Physical Defects H H M
Renter/Elderly/Overcrowded I_ L N
Owner/Cost Burden > 30% H H H
Owner/Cost Burden > 50% H M L
Owner/Physical Defects H M L
Owner/Overcrowded I_ L L
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: Fort Collins Housing Authority 25-Year Achievement Report
57
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: Fort Collins Housing Authority 25-Year Achievement Report
Goal: Our community 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: Our community will create an environment that meets the special needs of our
residents.
Policy: The City's priorities for housing for 1995 - 2000 are as follows:
• 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
• To preserve and increase the assisted affordable housing stock and services for
persons with special needs
Source: Consolidated Plan
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Other Policies:
Policy: Higher priority will be given to funding projects with federal funds which have the
following aspects:
• Acquisition proposals which provide assets to the community will be given greater
weight over proposals which are operational in nature.
• Leveraging of private and non-federal funds
Source: CDBG Selection Guidance System
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
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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 City 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. On infill sites with LMN zoning, affordable housing increases the
allowable density from 8 to 12 units per acre. No design or construction standards are waived or
altered for affordable housing projects. This is intended to help affordable projects fit or blend in
with their surrounding neighborhoods, and ensure that the housing they provide is not inferior or
substandard.
Since the Land Use Code has only been in effect for a year and a half, its affect on the feasibility
of affordable housing construction in Fort Collins has not been determined. A study called the
"Fort Collins Affordable Housing Index" was done for starter homes in July 1996, and for
multifamily housing in February 1997. They researched several components of housing cost,
including land cost, permits and fees, construction costs, and interest rates. Data from several
peer cities in the region was compared. Rerunning this analysis may help determine what affect
the new City Plan and Land Use Code has had on affordable housing construction. If
construction costs have risen in Fort Collins significantly more that they have in other cities, then
the new Land Use Code may be the reason. To be effective, this study should be done no sooner
than spring 2000, because many projects are still being reviewed under the Land Development
Guidance System.
Alternatively, with the cooperation of affordable housing developers, comparing their
experiences under the old and new reviewing systems and looking specifically at their
development budgets may be enough to determine whether the new Land Use Code is having an
adverse effect.
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 Homeownership," which recognizes 63 award-
60
winning housing projects from across the U.S. It also reports & issues guidelines on the design,
construction, and inspection of new construction technologies. The Colorado State Division of
Housing has also recently published "Reducing Housing Costs Through Regulatory Reform: A
Handbook for Colorado Communities."
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Education
Fort Collins has undertaken many different activities to educate its citizens on the need for
affordable housing. This effort is necessary not only to generate and maintain support for
funding affordable housing, but also to combat the effects of NIMBY. The presence of"Not In
My Back Yard" attitudes among neighbors can be a considerable deterrent to affordable housing
developers. The Affordable Housing Board has taken an active role in this effort.
For every new development project, a neighborhood meeting is held to inform residents and give
them the opportunity to comment on proposals. The meetings are attended by City staff from
various departments who are prepared to answer neighbors' questions about site planning, traffic,
density, etc. For affordable housing projects, a staff member who is specifically prepared to
answer NIMBY related concerns is also present.
In an attempt to educate residents on affordable housing issues without the pressure of a specific
proposal "in their backyard," the City has added a section to its web site, under"Community
Planning." A subcommittee of the Affordable Housing Board and City staff developed the site.
It includes pages that describe what affordable housing is, the factors that affect housing
affordability, area median income and affordable housing costs, and why the City needs
affordable housing. It describes programs that assist affordable housing and has pictures of
existing projects in the City. It also describes how interested citizens can get involved to support
affordable housing development. Finally, it contains links to related sites as well as to City staff
who can answer any questions the site may raise.
The City's Cable 27 television station has been active in promoting affordable housing issues. It
produced a video called "The Many Faces of Affordable Housing" that features the real people
who need and who live in affordable housing projects in Fort Collins. On August 31, 1998, it
covered the "Candidates Forum on Affordable Housing," which was co-sponsored by a wide
variety of affordable housing advocacy groups in Fort Collins. It gave candidates for State
government offices an opportunity to air their views on affordable housing. Even more recently,
the Mayor's monthly talk show, "Perspectives," focused on the difficulties faced in trying to
develop affordable housing in Fort Collins. Cable 27 has rebroadcast each of these programs to
reach the maximum possible viewers.
City staff has also actively encouraged the private media to cover affordable housing issues. The
Fort Collins Coloradoan has published numerous articles on the need for affordable housing in
general, on specific projects, and on the people affected. A local AM radio station, KCOL,
recently broadcast an interview with City staff about affordable housing issues.
62
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 administered almost $7 million of
CDBG dollars and$2.6 million from HOME (which began in 1994). In the same time period, it
has invested over$1.3 million of its own general fund dollars into its 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 ease affordable housing projects through the development review process. See
Appendix 3 for a chart summarizing these programs. The following chart shows how Affordable
Housing Fund moneys have been allocated and invested to date:
AFFORDABLE HOUSING FUND
Active History as of September 30, 1998
Year Allocations Expenses Notes
Rebate Other
1993 250,000
1994 233,000
(22,500) LHIP
1995 133,000
(25,860) TRAC, San Cristo
(71,400) CARE, Greenbriar
(106,800) Rose Tree LP, Rose Tree Village
(22,500) LHIP
1996 383,000
(26,280) FCHA, Hillcrest
(1,460) FCHA, 2302 W. Mulberry
(4,244) Habitat for Humanities, 619 N. Briarwood
(22,500) LHIP
(250,000) Funding Partners for Housing Solutions
1997 133,000
(79,200) CARE, 1303 W. Swallow
(3,047) Habitat for Humanities, 618 N. Briarwood
(22,500) LHIP
1998 208,000
(4,244) Habitat for Humanities, 1313 Laporte
(54,020) FCHA, 1403 W. Swallow
(119,720) Kaufman and Broad, The Woodlands
(22,500) LHIP
TOTALS 1,340,000 (496,275) (362,500)
BALANCE $ 481,225
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The CDBG and HOME programs are block grants from the federal government (HUD) to
"Participating Jurisdictions," including the City of Fort Collins. For the 1998 CDBG program
year, the City received $1,162,000. 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, about 60% of the CDBG funds have been used for housing and acquisition (typically of
either sites or existing units for affordable housing), as shown on the following chart:
Activity National City
Average 1997 1996 1995 1994 1993 1992 1991
Acquisition 8% 38% 44% 66% 44% 4% 2% 20%
Housing 35% 25% 17% 8% 18% 41% 59% 45%
Public 21% 12% 15% 7% 15% 33% 13% 1%
Facilities
Public Services 9% 15% 15% 14% 14% 14% 14% 15%
Planning & 14% 10% 9% 5% 9% 8% 13% 19%
Administration
Economic 13% 0% 0% 0% 0% 0% 0% 0%
Development
For the 1998 - 99 HOME program year, the City received $569,000. 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
illustrates the City's use of HOME dollars:
1997—98 1996 - 97 1995 - 96 1994 - 95
Home Buyer 60% 50% 36% 10%
Assistance
Construction 30% 40% 54% 80%
& Acquisition
Administration 10% 10% 10% 10%
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Analysis: Which of the City's Roles Need Additional Resources
Policy and Regulation: All City employees that review development applications should be
encouraged to watch for and be receptive to innovative ways to reduce housing construction costs
without sacrificing quality or safety. HUD and the State have already done research into this
field. Staff in the Advance Planning, Current Planning, and Building Departments should
distribute 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." One
strategy would be to develop a Speaker's Bureau of interested volunteers that could be
advocate/ambassadors for affordable housing. Neighbors of potential affordable housing projects
would probably 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 time to affordable
housing programs, and that effort should continue. It should consider increasing the amount of
general revenues that are allocated to its Affordable Housing Fund. 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 the
first step with the assessment of priority affordable housing needs contained within this report.
Knowing the relative need for rental vs. sale housing will help it to redirect its resources.
However, building affordable housing is very expensive, and the City does not have the resources
to fully fund any developments. However 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.
65
Goals and Strategies for Meeting Fort Collins' Priority
Affordable Housing Needs
Introduction
This chapter is intended to set out affordable housing goals, measurable objectives, and strategies
for meeting goals. 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 help leverage funding for affordable housing
projects.
Leveraging funding is an important concept. The City does not, by itself, have enough resources
to make 3,900 housing units affordable, to meet this community's need. 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. The question is 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.
This report estimates that an average of$5,000 per unit is enough City subsidy to achieve that
leverage. This figure is an average 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$5,000 per unit is not
enough, especially as the costs to buy land and build projects increase with time. This figure will
need to be reevaluated periodically.
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. Incentives have
some monetary value to projects, but they are very difficult to predict. Their value is in addition
to the average $5,000 per unit figure.
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.
66
Analysis of Units Needed, Available Funding and Needed Funding
There are a number of assumptions made in this analysis. First, the initial estimate of the number
of affordable housing units needed is for 1997. The Denver office of the Department of Housing
and Urban Development (HUD) provided this estimate. Their numbers are projections based on
the 1990 Census, numbers that are already far out of date. These need numbers should be
reanalyzed after the year 2000 Census numbers are available.
Second, in an attempt to further project how the need for affordable housing will change in the
future, an annual growth factor of 3% has been added. This rate of growth in housing units is
higher than the 2.217c compounded rate used in City Plan. We have included the higher rate for
the following reasons:
• The timeframe for this affordable housing need projection is shorter than City Plan's
timeframe — 10 years vs. 20 years. City Plan anticipates growth rates higher than 2.2% in the
early years of its 20-year planning period, with growth rates tapering off over that period.
• The actual compounded growth rate from 1995 to 1998 was 3.36%. Staff believes that this is
related to Northern Colorado's "spike" in growth rates in the late 1990's. The region
experienced similar spikes in growth in the mid-1980's and late 1970's.
• Taking these factors into account, it seems reasonable, for this analysis, to assume a housing
growth rate higher than City Plan's 2.2%. However, it should not be assumed to be as high
as the growth rate of a short-term spike in development. It must also be noted that the last
Census numbers are 9 years old. These growth rates should be reanalyzed after the year 2000
Census numbers are available.
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 1997 in the absolute number of low-income households living in Fort Collins and
paying too much for rent. That's because in 1990, the proportion of households that rented their
homes was much higher than in 1997. As the proportion of renters decreased, so did the
proportion of low-income renters. Therefore their absolute numbers did not grow significantly.
On the other hand, it could be argued that those renters 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 would be needed to determine if that is true. Such a study
probably would conclude that the City needs many more units of affordable housing than the
HUD figures indicate. Depending on how quickly the City's low-income jobsupply is growing,
it may also indicate that the need for affordable housing is growing faster than the overall growth
rate.
Third, it assumes a constant amount of CDBG and HOME dollars each year, equal to our 1999-
2000 allocation. There is in fact no way of knowing whether this will happen — the allocation
67
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 no way to estimate exactly when
loans from these programs will be paid back, since none of them have specific repayment time
limits.
The fourth major assumption is that in 1999, an average subsidy of$5,000 per dwelling unit
would be enough to leverage the balance of funding needed to build an affordable housing
project. 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.
Fifth, factors for construction cost and sale price inflation have been incorporated into the
average subsidy per unit. Over the past 25 years, Engineering News-Record's Building Cost
Index for Denver has increased by 4.1% (compounded) each year. For the past 20 years, average
home sale prices have increased by 5.7% (compounded) each year. Therefore the average
subsidy needed per unit has increased by 4.1% for rental housing or 5.7% for sale housing each
year from 1999— 2008. By 2008, the average subsidy becomes either $7,200 or $8,200,
respectively.
Finally, it 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 $1,743,950 annually to invest in new affordable housing units.
About 85% of those dollars are from the Federal government, and 15% are from the City. It
includes 6517o of the City's 1999-2000 CDBG allocation (approximately 25% is used for public
services or facilities, and 10% is used for administration), 90°Io of its 1999-2000 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 ($283,000 in 1999), less
funds to support the Latimer Home Improvement Program (LHIP receives $22,500 annually). 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 (2,230 units)
and first time homebuyers (960 units), about 70% of these sources should be spent on rental
housing that is affordable to families earning less than 50% of AML The balance, 30% of our
resources, should be used for downpayment assistance for low-income first time homebuyers. In
1999, the Affordable Housing Fund should be set aside to pay Impact Fee Rebates to projects
that already have Preliminary approvals from the Planning and Zoning Board. With the
remaining funds available in 1999-2000 from CDBG, HOME, and program income, $1,040,000
would be available as grants or very low interest loans for about 208 units of very low-income
rental housing. About 89 first time homebuyers could get zero interest loans worth a total of
$445,000. This assistance affects production indirectlN,_ by increasing the number of households
68
that are able to purchase a starter home or condo. It is also a significant reduction from the
number of first time homebuyers that the City has been funding (140 in 1998-99).
In 2000, a small portion of the Affordable Housing Fund should be set aside to close out the
Impact Fee Rebate program. Of the $283,000 current annual allocation to that fund, at least
$77,900 will be needed for Rebates and $22,500 should be used to support the Larimer Home
Improvement Program. That leaves $182,600 of the Affordable Housing Fund available for new
production.
The following chart illustrates these and other calculations made to create goals for new unit
production. The "Units Needed" box demonstrates the effect of a 3% annual compounded
growth rate — in 10 years, the City should fund just over 4,400 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. By increasing the number of units
to be funded by 9% each year, the City could potentially fund just over 4,500 units by 2008. 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. To meet its funding goals,
the City would need to add about $12,000 to the 2000-2001 funding round, and an additional
$172,800 in 2001-02. Each year thereafter, it would need to increase its allocation by an
additional $222,000 to $559,000.
69
NEW UNIT PRODUCTION GOALS:
Number of Affordable Housing Units Needed & Calculation of Funding Required to Meet That Need
Using 65% of CDBG Funding (instead of 60%)
Annual growth in#units needed= 3% (based on estimated growth in housing units)
Annual growth in cost of new construction= 4.1% (based on the Building Cost Index for Denver, 1973-1997,from
Engineering News-Record First Quarterly Cost Report 1998)
Annual growth in sale prices= 5.7% (based on average sale prices in Fort Collins, 1978-1997,from
UNITS NEEDED Multiple Listing Service,courtesy of The Group Inc.)
YEAR RENTAL SALE TOTAL
1997 2,230 960 3,190
1998 2,297 989 3,286
1999 2,366 1.018 3,384 = Implementation of Goals and Strategies Begins
2000 2,437 1.049 3,486
2001 2,510 1,080 3,590
2002 2,585 1,113 3,698
2003 2.663 1,146 3,809
2004 2,743 1.181 3.923
2005 2,825 1,216 4,041
2006 2,910 1,253 4,162
2007 2.997 1,290 4,287
2008 3,087 1,329 4,416 = 10 YEAR GOAL
FUNDING NEEDED Annual growth in#units to be funded= 9%
1999 GOAL (for funding awards) % 1999 SOURCE OF FUNDING Additional
Rental Sale Total Increase CDBG(actual) 659c 759.850 $ Needed
#units 208 89 297 HOME(actual) 90% 553,500
$!unit 5,000 5.000 Program Income 170,100
$/year 1.038.415 445.035 1,483,450 n/a AHFund(1999)°k _
% of$ 70% 30% 100% TOTAL $ 1,483,450
2000 GOAL (for funding awards) 2001)SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 226 97 323 HOME(1999) 90% 553,500
S/unit 5,205 5,285 Protyram Income 90% 183,000
$/year 1,178,279 512,738 1,691,017 14% AHFund(1999)* 182,673 1I,995
%of$ 70% 30% 100% TOTAL $ 1,679,023
2001 GOAL(for funding awards) 2001 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG(1999) 65% 759,850 $Needed
#units 247 106 352 HOME(1999) 90% 553,500
$/unit 5,418 5,586 Program Income 90% 169,100
$/year 1,336,982 590,741 1,927,723 14% AHFund(2000) 272,495 172,779
of$ 69% 31Tc 100% TOTAL $ 1,754,944
2002 GOAL (for funding awards) 2002 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 269 115 384 HOME(1999) 90% 553.500
$/unit 51641 5.905 Program Income 90% 217,000
S/year 1,517,060 680.611 2,197,670 14% AHFund(2001) 445.273 _ _222,047
% of S 69% 31% 100% TOTAL $ 1,975,623
*All AHFund balance, 1999 allocation,and at least$100,400 of the 2000 allocation is needed for the Impact Fee Rebates and LHIP.
70
FUNDING NEEDED,con't
2003 GOAL (for funding awards) 2003 SOURCE OF FUNDING Additional
Rental Sale 'total % Inc. CDBG(1999) 65% 759,850 $Needed
#units 293 126 419 HOME(1999) 90% 553,500
$/unit 5,872 6.241 Program Income 90% 252,400
$/year 1,721,392 784,152 2,505,544 14% AHFund(2002) 667,320 272,474
%of$ 69% 31°a 100% TOTAL $ 2.233,070
2004 GOAL(for funding awards: 2004 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 320 117 456 HOME(1999) 90% 553,500
$/unit 6,113 6,597 Pro,-ram Income 9017c 287,800
$/year 1,953,247 903,445 2,856,692 14% AHFund(2003) 939,794 315,748
% of$ 68% 32O7c 100% TOTAL $ 2.540,944
2005 GOAL (for funding awards) 2005 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 348 149 498 HOME(1999) 90% 553.500
$/unit 6,363 6,973 Program Income 90% 323300
$/year 2,216.330 1,040.886 3,257,215 14% AHFund(2004) L255,542 365,024
% of 5 68% -3 c 100% TOTAL $ 2,892,192
2006 GOAL (for funding awards) 2006 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 380 163 542 HOME (1999) 90% 553.500
S/unit 6.624 7,370 Program Income 90% 158,700
S/year 2.514.847 1,199 236 3,714,083 14% AHFund(2005) L620,565 421,467
of$ 68% 325'b 100% TOTAL $ 3.292,616
2007 GOAL (for funding awards) 2007 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG (1999) 65% 759,850 $Needed
#units 414 177 591 HOME (1999) 90% 553.500
S/unit 6.596 7,791 Program Income 9067c, 394.200
S/vear 2,853,572 1,381.676 4,235,247 14% AfiFund(2006) 2,042,032 485,665
%of$ 67% 33% 100670 TOTAL$ 3,749,582
2008 GOAL (for funding awards) 2008 SOURCE OF FUNDING Additional
Rental Sale Total % Inc. CDBG(1999) 65% 759,850 $Needed
#units 451 193 644 HOME(1999) 90% 553,500
$/unit T178 8.235 Program Income 90% 429,700
$/year 3,237,919 1,591.870 4,829,789 14% AHFund(2007) 2.527,698 559,042
% of S 67% 33% 100% TOTAL$ 4,270,748
SUMMARY OF 10-YEAR GOAL SUMMARY OF 10-YEAR FUNDING SOURCES
Rental Sale Total CDBG 65% 7,598,500 26%
#units 3.155 1.352 4,508 HOME 90% 5,535,000 19%
$ total 19,568,042 9,130,388 28,698.431 Program Income 90% 2,785,300 10%
of$ 68% 3267o 100% AHFund -12,779,631 45%
UNITS NEEDED 4,416 TOTAL $ 28,698,431 100%
SURPLUS 92
71
Production of New Rental Units
Goal: To assist very low-income renters (below 50% AMI)
Objectives:
• The City should actively solicit the development of 2,230 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 of$5,000 per unit,
Fort Collins would have to commit $11,150,000 to meet this need today.
• The City should solicit the development of those units over 10 years.
• Assuming a 3% population growth factor, Fort Collins will need 3,087 rental units for very
low-income households by 2008. Given a 4.1% construction cost growth factor, the average
cost of subsidy per unit will increase to $7,178 by that year. If 70% of the City's 1999
funding resources go to very low-income rentals, approximately 200 units could be funded an
average of$5,000 per unit. To meet the need for 3,087 units by 2008, the City would have to
increase the number of units funded by 10% each year from 2000 until 2008.
Five Year Strategies:
• The City of Fort Collins should contribute an average of$5,000 per dwelling unit towards
affordable housing for very low income renters, in the form of either grants or very low
interest loans. That is about 7% of total project costs for a typical rental development in Fort
Collins. Most of CDBG, HOME, or the Affordable Housing Fund should be used for this
population. With 70% of 1999 resources, 200 units could be funded.
• $5,000 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 4.1% 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.
72
Goal: To assist low-income renters (50 to 80% AMI)
Objectives:
• The City should actively solicit the development of 710 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. There are already 389 units in development that will
be affordable and restricted to households earning 60% AMI.
• The City should solicit the development of those units ie 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 $5 to 6 million of PAB financing is
needed to make a typical 100-unit project happen. With 1998's allocation of$2.6 million of
PAB, Fort Collins could fund less than half a project. The City could also combined two
years of allocations for one project. With just the City's allocations, approximately one 100-
unit project could be built every other year.
• Fort Collins should give preference to affordable rental housing projects when allocating its
Private Activity Bonds (PAB). 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% of AMI, and may work for projects serving a mix of
incomes (ex. most units at 60% AMI, some at 50% AMI and a few below 50% AMI). For
projects serving between 60% and 80% of AMI, no grant or loan financing can or should be
awarded. Instead, they may access incentive programs such as Priority Processing, the
Development Review Fee Waiver, Impact Fee Delay, and other forms of non-monetary
support. The City should actively solicit affordable housing developments to fully utilize its
annual PAB allocations. The City should create and implement a competitive process for
allocating PAB's, and coordinate it with its other funding processes:
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.
• Projects that leverage other sources of PABs should be given preference in any
competitive allocation of PABs.
• 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. However, some should be saved in a reserve fund for potential
mid-year funding awards to very low-income projects.
73
Assistance for First-Time Homebuyers
Goal: To assist low-income first time homebuyers (below 80% AMI)
Objectives:
• The City should assist 960 low-income families to become first-time homebuyers. There are
currently about 960 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 downpayment assistance were available. To
offer $5,000 per unit for downpayment assistance, Fort Collins would have to commit
$4,800,000 to meet this need today. A four-person family earning 80% of the AMI in 1998
($40,700), under ideal circumstances (good credit, no other debt) can afford a sale price of
approximately $138,000.
• The City should assist those families over 10 years.
• Assuming a 3% population growth factor, Fort Collins will need to assist 1,329 low-income
households to become first-time homebuyers by 2008. Given a 5.7% annual increase in sale
prices, the average cost of subsidy per unit will increase to $8,235 by that year. If 30% of the
City's 1999 funding resources go to first-time homebuyers, approximately 85 families could
be funded an average of$5,000 per unit. To meet the need for 1,329 families by 2008, the
City would have to increase the number of units funded by 10% each year from 2000 until
2008.
• The City should support innovative programs such as EQ2 investments, which provide
downpayment 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 an average of$5,000 per dwelling
unit to first time homebuyers. 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
1999 from CDBG, HOME, or the Affordable Housing Fund ($425,000), 85 units could be
funded.
• $5,000 per unit should be considered an average subsidy. More funding should be available
to homebuyers who earn less than 60% of AMI.
• The City's total funding for affordable housing production should increase annually. Home
prices are increasing in Fort Collins at an average rate of 5.7% per year. To provide a
74
realistic level of assistance, the average per unit subsidy should be increased at the same rate
each year.
• 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 60% of AMI, CDBG or
HOME funding could be used as additional homebuyers' assistance or as development
subsidy to for-sale projects that can assure ongoing affordability.
75
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:
• In the next City budget cycle (starting in 2000), and for the next few years, Council should
budget for affordable housing production according to a 10-year goal. That means increasing
its current funding ($283,000) to the Affordable Housing Fund by $144,800 in 2001, and
increasing its allocation to new production by about $236,000—624,000 each year thereafter,
depending on actual CDBG/HOME allocations and program income. Those funds should
come either from the General Fund or from other, new sources. While it would be better to
strive to meet the entire need in less time, there are probably not enough developers in Fort
Collins with the capacity to take on that challenge at this time.
• In 2001, affordable housing needs should be reevaluated based on the 2000 Census. At that
time, the City should also reevaluate the Housing Affordability Index model. 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 continual reevaluation of need.
• Change from an administrative funding mechanism (the Impact Fee Offset Program) to a
competitive application process for the Affordable Housing Fund. Plan to implement
beginning in the year 2000 budget.
• Target the use of the City's Affordable Housing Fund, CDBG, HOME and Private Activity
Bond financing to projects that meet priority needs, especially those that serve the lowest
incomes. Most of this financing should be awarded as loans.
76
• Make this financing available as grants only to not-for-profit developers of projects that are
targeted to people earning below 60% of AMI and that intend to stay permanently affordable.
To receive a grant, the applicant must also demonstrate why their project needs a grant
instead of a loan.
• Revise all existing City incentive programs (Priority Processing, Development Review Fee
Waiver, Impact Fee Delay) so they share common definitions of qualifying projects and so
they can be most effective at leveraging other funding sources. 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, taken individually. 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.
• Use the City's contract for banking services 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: web site, encourage media attention, staff attendance at neighborhood
meetings, etc.
• Develop a speaker's bureau to make presentations and answer questions at neighborhood
meetings, or at meetings of civic or community organizations.
• 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.
77
• Consider 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.
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:
• The City should try to increase production capacity at local not for profit corporations, and try
to encourage a second Community Housing Development Organization (CHoDO). HOME
could fund some capacity-building activities for the first 2 years of a new CHoDO's
existence. HUD also offers technical assistance for CHoDOs.
• The City should 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.
• The City should 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.
• The City should 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.
78
Strategies that need additional investigation:
• 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.
• A GIS program to help developers find vacant, developable sites.
• A Land Bank to hold vacant, developable sites and reduce acquisition costs for affordable
housing developers.
• 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.
• Seeding development of infill parcels by making infrastructure improvements to them.
• The jobs/housing balance to compare job growth with affordable housing production.
• Employer-assisted 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.
• A Limited Partnership/Shared Equity ownership structure to make for-sale units affordable
for lower-income first time homebuyers (approximately 50 to 65% of AMl). It would also
maintain the affordability of those units for future buyers. Possibly make this a component of
the City's Homebuyers' Assistance Program.
• Requiring sites that are annexed to the City to set aside a percent of their land area or
potential units for affordable housing.
• Tax Increment bond financing for affordable housing development.
• The City of Loveland and other jurisdictions' use of CDBG funding for affordable housing
development.
79
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.
Five Year Strategies:
• CDBG, HOME, or Affordable Housing Fund dollars could be used 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.
• In the absence of feasible projects that would produce new units or protect existing affordable
projects, some CDBG, HOME, or Affordable Housing Fund dollars could be used to partially
finance the acquisition and conversion of existing, market-rate rental units to affordable
housing.
• 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.
• Investigate a"First Right of Refusal' ordinance that would require owners of affordable
housing complexes to give their tenants a chance to organize a cooperative to purchase the
building. It might also be known as a"Condo Conversion" ordinance.
• Investigate a rental-rehabilitation program for private owners of rental properties that would
require an affordability commitment.
80
Goal: To preserve existing owner-occupied housing stock
According to HUD, there are 3,500 owners (14 percent of all owners) with incomes less than 80
percent of the median that pay over 30 percent 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 with Affordable Housing Fund
dollars.
• Continue to support housing and/or budget counseling programs with public service funding
from the CDBG program and HOME administration dollars.
• Also support housing and/or budget counseling programs by advertising them on the City's
affordable housing web page and by other outlets that may be available.
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 review applications to its CDBG and HOME program competitively.
Those federal funds do carry a minimum 20-year affordability period. Applicants that offer to
extend that period could be considered more favorably than others.
The City's Homeowners' Assistance Program does not restrict the future sale price of the home it
is used to buy, nor is it feasible to do so. Instead, it requires that whenever the home is sold, the
81
recipient must pay back the assistance (with no interest). Therefore the funding will recycle and
be available to help additional buyers.
Objective:
• The City should develop and implement policies that encourage commitments to long-term
affordability.
Five Year Strategies:
• 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.
• The highest priority should be given to units committing to permanent affordability. Only
units that make such a commitment should be awarded grant financing.
• Investigate a Limited Partnership/Shared Equity ownership structure to maintain the
affordability of for-sale units. Possibly make this a component of the City's Homebuyers'
Assistance Program.
82
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Affordable Housing Project Locations
+ Richards Lake
North Heights Apts.
Olde Town North
• No Name Bull Run Water len
= Via LO ez Dry Creek Mobile
i Home Park
Willow Wood at
Saddle Ride
Ponderosa Park Buffalo Run
-.
-- ------
hadeland Townh ,
Some
Appaloosa at Lory _ -
Ann Estate •
813 E Prospec
Wind *1 Park
Habitat For Humanity
JFK Senior Apartments
Coun Ranch
Provincetowne P.U.D.
------------ ------ 4
• Conceptual
IF Development Review
* Under Construction N
1\1Streets 1 0 1 2 Miles A
City Limits
Appendix 3
City of Fort Collins Affordable Housing Program Summary
Program Program Descriptions Target for Target for Affordable minimum
Name Affordable Home Ownership % of units.
Rental affordable
Development Applies to Development Review Fees max. gross pays no more than 30% of 51%
Review Fee authorized in Section 2.2.3(E) of the rent is 30% 80% AMI for PTTI&
Waiver Land Use Code. (paid at time of of 80% utilities
project submittal to Current Planning) AMI
Ordinance
#27, 1994
Partial (1/2) Applies to fees described above. max. gross pays no more than 30% of 51%
Development rent is 30% 80% to 95% AMI for
Review Fee of 80% to PITI&utilities
Waiver 95% AMI
Priority Expedited development review,utility max. gross pays no more than 30% of 30%
Processing plan review, development agreement, rent is 30% 80% AMI for PITI&
building permit approval, and building of 80% utilities
Directive of inspections. AMI
the City
Manager
Impact Fee Delays payment of fees until CO or max. gross pays no more than 38% of 50%
Delay 12/1 of the year building permit issued. rent is 30% 80% AMI for PTTI&
$50 administration fee due with of 80% utilities
Ordinances building permit. No letter of credit or AMI
#66 of 1994 & other security required. Applies to:
#147 of 1996 Water Plant Investment
Water Rights Acquisition
Sewer Plant Investment
Storm Drainage
Street Oversizing
Neighborhood Parkland
Impact Fee Fees must be paid in full prior to CO max. gross pays no more than 38% of n/a
Rebate issuance. Once unit is bought or rent is 30% 80% AMI for PTTI& (calculated
occupied by a qualifying family, of 60% utilities per unit)
Ordinance developer can apply for rebate. Applies AMI
#145 of 1994, to:
etc. Water Plant Investment,
Water Rights Acquisition,
Sewer Plant Investment,
Storm Drainage,
Street Oversizing,
Neighborhood Parkland,
Community Parkland Capital Exp.,
Library Capital Exp.,
General Government Capital Exp.,
Police Capital Exp., Fire Capital Exp.,
School Fee in lieu of Land Dedication,
&Special Water& Sewer District fees.
Appendix 4
Summary of Public Comments and
Responses from the Affordable Housing Board
Sister Mary Alice Murphy, CARE Housing
Phone conversation on 12/17/98
Comments: Sister Mary Alice Murphy expressed general support for the document. She has
three concerns:
• The report needs to emphasize that $5,000 per unit is an average. CARE has received more
than that for their projects. More than $5,000 per unit is needed to reach very-low income
renters. Therefore it is very important to keep the amount of funding than can be awarded
flexible.
• CARE has come to depend on rebates, and so is very concerned about the possibility of
changing over to a competitive process. Affordable housing professionals would understand
the value of a competitive process. However, the "man on the street" probably would not—
therefore there is a great deal of political value to the Impact Fee Rebate program. She
suggested some kind of compromise program of Rebates that developers would apply and
compete for.
• The report needs to emphasize the importance of preserving existing, good quality affordable
housing stock for very low-income renters.
Response: Points I and 3 are adequately covered in the document. Staff and the Affordable
Housing Board have discussed the issue of rebates vs. a competitive process at length. They
both support a competitive process over rebates largely because it would commit funds to
projects at the start of their development process, when they are more likely to leverage other
funding sources. A competitive process would be simply a different way to deliver the same
money to developers.
Lou Stizel, TRAC
Comments made at the 1/7/99 Affordable Housing Board meeting
Comments: The value of the Impact Fee Rebate program is that it does not take as much time
or effort to get it as a competitive process would.
Response: Most users of the Impact Fee Rebate program also apply for City CDBG/HOME
funding. To the extent that a competitive process for allocating Affordable Housing Fund dollars
would be coordinated with that process, it should not be an additional burden.
Betty Maloney
Comments made at the 1/7/99 Affordable Housing Board meeting
Comments:
It is helpful to view the affordable housing problem as a continuum of need—from the need for
homeless shelters, SRO's, low-cost rentals, through the needs of low-income homebuyers. The
free market is not solving the problem. Even though area developers have created new
affordable units, the problem is still growing. Students compound the problem by competing in
the affordable housing market. The City has initiated helpful measures that should continue.
Some new ideas to consider:
• If everyone had a living wage, the problem would diminish. Do not try to attract businesses
that rely heavily on minimum wage workers.
• Land Bank sites for affordable housing
• Create a sales tax for affordable housing
• Create a tax on expensive houses to fund affordable housing
• Find some way for business and industry to buy into affordable housing, based on the
number of minimum wage workers they hire
• Work with CSU so it will provide more student housing
• Help preserve existing affordable neighborhoods for families, so they do not turn into student
housing.
Response:
• Unfortunately, every new high-income job creates demand for 2 low-income service or retail
jobs.
• A feasibility study of Land Banking should be performed in the near future.
• Investigating a sales tax or impact fee to raise funds for affordable housing is listed as a
strategy in the report.
• Investigating employer-assisted housing is listed as a strategy in the report.
• CSU is moving forward with plans to build more student housing.
• Staff and the Affordable Housing Board do not support targeting affordable housing
assistance to specific neighborhoods, because distribution of affordable housing throughout
the City is desired. However, the possibility of a rental-rehabilitation program is listed as a
strategy in the report. Also, a substantial portion of the units purchased with the existing
Homebuyer's Assistance Program are in neighborhoods near CSU.
2
Rusty Collins, Neighbor to Neighbor
Phone conversation on 12/16/98
Comments made at the 1/7/99 Affordable Housing Board meeting
Comments: Acquisition and conversion of existing unsubsidized units is an important method
for providing affordable rental housing. It avoids the lengthy design and planning approval
processes for new development, as well as potential neighborhood opposition (hence the
nickname "stealth" affordable housing). It is also more cost effective than new construction, and
can result in units that rent for lower incomes. He is concerned that such projects continue to be
an allowable use of funds.
Response: These types of projects are recognized as a valid use of City subsidies, although they
are given a lower priority than either new construction or preservation of existing affordable
housing projects.
Susan Katz, Larimer County Mental Health
Voice mail message left on 12/16/98
Comments: Susan Katz indicated her support of the document, especially the following points:
• Fund projects early in their planning process to help leverage other funding sources.
• Give the most preference to housing for households with the lowest incomes.
• Grant funding only to housing that will be permanently affordable.
• Decrease public opposition to affordable housing— CHAT has a speakers program we
could tap into for public presentations.
• Encourage Section 811 housing for people with disabilities, including chronic mental illness.
Her program could use 50 more Section 8 Rental Assistance certificates.
• Study the jobs/housing balance.
• Use the annexation process to require that some proportion of sites be used for affordable
housing.
• Look at how other jurisdictions manage their funding resources.
• Help not-for-profits to purchase existing affordable housing.
• Actively encourage for-profit owners of existing affordable housing to sell it to the Fort
Collins Housing Corporation.
• Investigate a "First Right of Refusal" ordinance to help tenants become owners.
• Minimum 20-year affordability period required for City funding, preference for longer
commitments.
Response: Thank you for your support.
3
John Kefalas, Northern Colorado Social Legislation Network
Ernest F. Giron, Catholic Charities Northern, Archdiocese of Denver
Letter dated 12/14/98
Comments: The report does not emphasis the necessity to develop affordable housing for very
low-income single adults or families without children. The need for more Single Room
Occupancy (SRO) units and single bedroom or efficiency apartments should be included. Many
single adults or families without children who are homeless also have special needs such as
mental or physical disabilities, and their solutions are more complex for getting off the streets.
Many of them are finding employment at low wages, but limited living options.
Response: Page 27 of the report states that "Non-related households include people living alone
or people sharing a home with someone they are not related to by blood, marriage, or adoption."
"Families" are intended to include any household of 2 or more people who are related—this
Census definition does not require that children be present. A married couple, or 2 adult siblings
sharing a home would be considered a family. Non-related households were excluded from the
number of units needed in an attempt to remove student households from those numbers. The
report acknowledges that, unfortunately, not all non-related households are students. These
definitions were only used to narrow down the Census numbers. Their use was never intended to
mean that every unit funded by the City would have to be occupied by a family or elderly
household. That would be a violation of the Federal Fair Housing Law, which makes it illegal to
discriminate in housing based on familial status, among other things.
One strategy included in the report is to actively solicit affordable housing developments using
HUD's Supportive Housing programs. These programs produce units for the elderly or for
people with physical disabilities, developmental disabilities, or chronic mental illness. They also
come with Section 8-type rental assistance, so they can house people with extremely low
incomes.
As a result of this comment, staff and the Affordable Housing Board agreed to change the first
objective on page 72 to read as follows: "The City should actively solicit the development of
2,230 units of affordable rental housing for very low-income family, elderly, or other
households with special needs who currently pay over 30% of their income for rent...." Since
there is no equivalent data to determine the number of units needed by "households with special
needs," the base need number of"2,230" was not increased.
Mary Cosgrove, Project Self-Sufficiency
Email dated 12/10/98
Comments: Mary Cosgrove indicated her support of the priority placed on affordable rental
housing for those under 50% AMI. She also indicated support for the Land Banking concept.
For the Project Self-Sufficiency program, continued access to public service grants from the
CDBG program is critical to its ability to assist very low-income families.
4
Response: The report set funding goals based on using 60% of CDBG funds for affordable
housing. That still leaves 15% of those funds available for public services, as has always been
the case under this program.
David Lauer
Letter dated 6/9/98
Note dated 12/9/98
Comments (from the letter): Many new residents of outlying communities [Bellvue, LaPorte,
Wellington, Timnath, Windsor] are low and moderate income families working in service and
retail sectors in Fort Collins that make less than 50% of AMI. They are there because the cost of
housing is lower, but it results in higher transportation costs as well as more pollution and less
quality time spent with family, etc.
CSU students impact the market, but they are as much a part of the community as the rest of us.
CSU must be a player in finding solutions.
To little attention has been given to the role and responsibility of landlords, the real estate
industry, and, to some extent, employers who do not pay a living wage. More should be
expected of the private sector. The City should, in partnership with the private sector, establish a
system of rent control based on cost of living and income measures.
Comments (from the note): I would like to see the City of Fort Collins take a position on
getting the State of Colorado constitution changed as regards rent control. I think it is important
that some form of private/public agreement be reached to reverse the statewide prohibition on
rent control.
Response: The report discusses the issues of people who work in Fort Collins but cannot afford
to live there. As a "strategy that needs further investigation," it calls for a study of the
job/housing balance in the City.
Although CSU students certainly are an important part of this community, many of them may
appear in Census data as very low-income even though they have other resources for paying rent.
Removing non-related households from the need numbers removes such students. Unfortunatly,
it also results in an admittedly low estimate of this community's need for affordable housing.
Rent control is currently prohibited by the Colorado State Constitution. State legislative issues
are beyond the scope of this report.
5
Karen Gerard, Funding Partners
Faxed memo, dated 11/5/98
Comments:
1. The plan proposes to meet the need for units as assessed in 1997, but does not take into
account increased demand for affordable units due to:
a. The loss of units from sales to new for-profit owners or from redevelopment of low-cost
property or mobile home parks
b. The ongoing disproportionate increase in housing costs over wage rates
c. Changes in demographics that will create demand for certain types of units, especially
senior housing.
2. Housing costs have been increasing faster than the rate of inflation, so that the purchasing
power of allocated program dollars will dwindle over time.
3. $5,000 per unit may or may not be enough funding to achieve the plans goals, because:
a. The percent of grant subsidy needed on new rental construction to serve families in the
35 —45% of AMI income range is approximately 50%. At a typical cost of
approximately $80,000 per unit, those rents can support debt of only $40,000. The
assumption that Fort Collins' $5,000 will leverage $35,000 in equity (not debt) is highly
ambitious. It is unlikely without tax credits, but the competition for tax credits is getting
stiffer each year.
b. Funding Partners is working on a plan to help a local non-profit to acquire existing rental
units and convert them to affordable units. To serve families earning 30—40% of AMI,
30—40% of the project cost needs to come in the form of a grant. At an estimated cost of
$65,000 per unit, $19,500 - $26,000 of grants would be needed. If Fort Collins provided
one quarter of that equity, then its contribution would equal $3,900 - $5,200.
C. $5,000/unit is a good figure for current down payment assistance programs. However, as
sale prices escalate, so should the amount of assistance.
4. The plan assumes that the only way to create affordable housing units is to build them. In the
experience of Funding Partners, existing units can be obtained for 2/3 —3/4 the cost of new
construction, and in a fraction of the time.
Response:
1. The plan does not take into account these issues because:
a. The number of affordable units that are currently threatened roughly equals the number
of units that are currently in production. Therefore neither of those numbers are
incorporated.
b. The ongoing disproportionate increase in housing costs over wage rates is mentioned, but
not analyzed in detail because it is beyond the scope of this study. It should be included
in a future study of the jobs/housing balance, which is called for by the report.
6
c. The current need for senior housing is included. The report does not make any
recommendations for specific unit sizes or designs because it is beyond the scope of this
study.
2. As a result of this comment, factors for increases in construction costs and for increases in
sale prices have been incorporated.
3. $5,000 per unit may or may not be enough funding to achieve the plans goals:
a. This figure is intended as an average only. Units that serve incomes below 50% of AMI
can and should receive more. This average figure should be reevaluated when the report
is next updated (after 2000 Census numbers are available). Any development of
affordable housing is unlikely to occur without tax credits.
b. This comment seems to support the feasibility of an average of$5,000 per unit for
acquisition projects.
c. Factors for escalating assistance for both homeownership and rental housing have been
included.
4. It is true that existing units can be obtained for less than the cost of new construction, and in
less time. However, due to CDBG/HOME regulations, such projects incur considerable
expenses for relocation of existing tenants (regardless of their income) unless those tenants
are allowed to stay in place for as long as they would like. The new landlord cannot even
refuse to renew their leases without paying relocation. Therefore there is no guarantee that
the units will be rented to qualified low-income tenants in any set amount of time. In
addition, those units may have been affordable before their purchase with subsidy dollars, so
these projects do not necessarily add units to the affordable housing stock. They do generally
renovate those units and always protect them from future rent increases to unaffordable
levels. For these reasons, the report gives higher priority to either funding new units or
preserving existing affordable units than it gives to acquisition of existing, private units.
However, these acquisition projects are still eligible for funding, especially from the City's
Affordable Housing Fund, which is not constrained by the federal relocation regulations.
7