News » Local News

Reports: Housing Crunch has a high price tag



The housing picture for people of limited income has gotten dramatically worse in the last nine years and it will cost roughly $6 billion to fix the problem, according to a study of housing needs to be presented to City council in October.But if the city commits more money each year, it could begin slowly chipping away at the whopping cost of low-income housing, according to some members of the committee.

With an additional $4 million per year toward affordable housing, for example, the city could leverage another $56 million annually from federal and private sources, according to another report also to be presented to Council next month.

That, in turn, would help create another 750 low-income rentals, and another 85 affordable home purchases per year, the report concludes.

The basic conclusions of the two reports don't come as news to most in the affordable housing community, who've long known that the area's growing, low-wage service sector, along with a booming real estate market, is pinching low-income renters.

But the reports do finally attach some fixed -- and somewhat staggering -- numbers to what most have known is a huge and growing problem.

"It's pretty overwhelming," Dick Sullivan, director of the Colorado Springs Housing Authority, said of one of the studies, conducted by Denver-based firm BBC Research & Consulting. "It validates most of what we thought was going on."

BBC was hired in January by another local committee, appointed by Council to make recommendations about how to tackle the city's low-income housing crisis. Relying partly on BBC's report, that committee is expected to make its recommendations to Council on Oct. 11.

BBC's job was to help that committee quantify how much low income and affordable housing the city really needs. The company was paid $25,000 in funds from a Community Development Block Grant via the federal Housing and Urban Development Department.

Among other things, the BBC report found that:

Colorado Springs needs roughly 37,000 affordable housing units to meet current backlog in low-rent apartments.

In the last nine years, the number of households in Colorado Springs that earn less than 30 percent of the median household income has increased from roughly 19,000 to roughly 24,400.

In the same time period, the total number of low and moderate income households grew from 70,990 to 87,529 -- a 19 percent increase.

Median home sale price increased from $71,000 in 1990 to $148,000 in 1999. The minimum income required would be $45,100 -- nearly 60 percent higher than in 1990.

Of the 50,250 low- and moderate-income renters in town, roughly 31,000 pay more than 30 percent of their incomes to rent or home mortgages.

In this day and age, some of these statistics may not seem too startling. For example, it's hardly a shocker to learn that people pay more than 30 percent of their income for rent or a home mortgage.

But Debi Kuhn, a member of the city subcommittee studying the housing issue, noted that the stats alone don't show how high rents have a disproportionately bad effect on people working low-wage service jobs.

"When you're making $20,000 a year, that's really hard," Kuhn said of those who pay more than a third of their income to rent. "The people who work in the grocery store, for example, if they are having to pay $600-$700 a month in rent, that does not leave a whole lot for other basics like phone, utilities, food and rent.

"It's a big chunk," she added.

Rent due

No one's proposing that the city pay the full $6 billion price tag ($3.2 billion to help people buy homes and $2.8 billion to help people pay for rental apartments) that BBC contends would fix the problem.

But the whopping cost could at least be partially covered by a mixture of private, non-profit and federal dollars that would be leveraged with city funds.

Currently, the city spends roughly $230,000 a year through the Colorado Springs Housing Authority in new construction and salaries, and the authority administers other federal housing grants that help build and pay for low-income apartments.

But members of a City Council appointed committee that's also been studying the issue has proposed dramatically upping the city's yearly allotment to affordable housing by creating a Housing Trust Fund.

The committee has not made a specific recommendation on how much the city should fund, but it originally recommended a mechanism for how to pay for such a fund. In short, earlier proposals suggested that trust coffers be built up via a real estate transfer fee on people who purchase homes, or a one-eighth-of-a-cent sales tax on the April 2001 ballot.

But proposals for dedicated fees or taxes for housing were nixed by City Manager Jim Mullen, who told committee members that they would be more successful raising housing funds if they were lumped with other city services when the city considers a general tax increase.

That didn't sit well with some members of the affordable housing subcommittee, who said they would have preferred to let members of the City Council make the call on whether or not to consider the sales tax idea.

"My concern is that if it's lumped in with the rest of city services, it won't be a priority, just like it hasn't been a priority for the city in the past," said Cyndi Kulp, an activist with the Housing Advocacy Coalition and a member of the housing subcommittee.

Fellow committee member Kuhn agreed that she'd prefer a dedicated revenue stream, but she said she's not too worried that housing money will be cut by city staff.

"There's been a big push to force developers to do so much and it's not just their responsibility," Kuhn said. "Which is why I was in favor of [the transfer fee] because everybody who bought property would contribute.

"But I think now there are a number of people on council who are aware of the housing issue and see the need. So I don't think it's going to be kind of pushed under the mat [if affordable housing doesn't get its own funding source]."

With current level of funds from HUD, the city's Community Development Unit is already able to add roughly 200 low income and affordable units per year by working with the private and non-profit sectors, according to the report.

The committee didn't just talk about money, however.

The committee also suggested that the city take steps to combat another significant barrier to low-income housing projects: the "not-in-my-backyard" or NIMBY sentiments that have killed several such projects in recent years.

Though the report is not specific about how NIMBYism should be handled, it concludes that City Council should "support ongoing community education and promote a better understanding of persons in need of affordable housing, as Council weighs neighborhood opposition."

The committee also recommends that the city create an "inter-group" affordable housing team, made up of staff from various city departments that would try to tackle some of these problems.

The committee also raised several issues that were not adopted as final recommendations by the full committee: Make city planning processes easier and cheaper for developers of affordable housing; make low-income housing a mandatory part of all new development master plans, among other ideas.

No vacancy

Whether any of this becomes policy or not, the recommendations come as low income tenants and their allies face a potentially dreary future.

Already, the citywide vacancy rate for rentals is less than 3 percent, and there are 2,416 households currently on the waiting list for housing assistance from the Colorado Springs Housing Authority.

With federal government spending dwindling or remaining flat in a time of high building inflation, it's likely that the Housing Authority's waiting list will only grow in coming years. Already, some local officials are planning on a 15-percent reduction in some HUD subsidies next year.

Meanwhile, the pool of federally subsidized affordable housing apartments that does exist in town is shrinking. Just this month, another federally subsidized apartment complex, Eastborough Village Apartments, on Coleridge Avenue, opted out of a program that had required the complex's landlords to rent to low-income tenants.

That means that roughly 111 low income tenants who were receiving subsidies from HUD will likely have to find new homes in coming years as the apartment complex begin renting those units at market rate.

In just the past year, the city has similarly lost 475 low-income units as privately owned apartment complexes opted out of the federal housing assistance program.

Under that program, landlords received mortgage subsidies in exchange for the promise that they would rent to low-income tenants for a fixed period of time -- usually 20 years. Many of those contracts are now expiring.

While housing authority officials say those tenants are finding apartments in the local market, critics say the opt-outs are putting even more pressure on an already pinched low-end housing market and heightening the need for city action on the housing issue.

Add a comment

Clicky Quantcast