- Nat Stein
- Discussing the displacement, stakeholders acknowledged the wider problem.
The events played out like a bad holiday movie — an out-of-state investor, a sympathetic population, and a season conventionally associated with the comforts and security of home. Near unanimous outrage spread through the community. That outrage turned into action as various people and organizations rose to meet the displaced tenants’ needs.
Integral to that was City Council President Richard Skorman, who called an emergency meeting for various agencies to coordinate assistance and fundraising to support it. The Nov. 16 discussion at City Hall drew attendance from service providers, government agencies and the press. Ed Billings, 47, a regular critic of city government, who was himself recently priced out of his longtime apartment, also pulled a seat up to the table.
“It’s not just one building that’s affected,” he told the gathering. “[Displacement] is hurting not only seniors but other honest, hard-working people who just want a place to live.”
Indeed, the mass eviction at Emerald Towers, though possibly unique in its severity, is just the tip of the proverbial iceberg.
In 2014, the region was short just over 24,000 affordably priced units, according to that year’s city-county Housing Needs Assessment, the most recent count. (Housing is considered “affordable” when it costs a third or less of one’s income.) That assessment considered:
- regional demographic trends (growth in the senior and
- millennial populations),
- economic trends (decline in real income due to stagnant wages and rising housing costs)
- and housing trends (subsidized units at risk of becoming market rate, while new development favors high-end product).
Three years later, that scarcity is felt by the tenants of apartment buildings. According to a study of the multifamily market, sponsored in part by the Apartment Association of Southern Colorado, median rent for a two-bedroom/one-bathroom apartment was just over $1,051 in the third quarter of 2017, up from $810 at the same point in 2014. That price is affordable for those whose income sits at or above the county’s average annual income, $49,296, but not for those making less than $38,000 a year.
Aggregated data from the Colorado Department of Labor and Employment show three of the county’s largest employment sectors have average incomes under $38,000 — retail ($27,840), food and hospitality ($17,424) and education ($34,368). Together, that represents nearly a quarter of the county’s total workforce.
It’s hard to say how deep, exactly, the affordable housing deficit goes today. Greccio Housing, a nonprofit affordable housing agency, says it owns and/or manages property that houses about 1,150 residents annually. The Colorado Springs Housing Authority (CSHA), which manages federal housing programs locally, helps 5,300 local households. The majority of those, 2,126, are subsidized units, where low-income renters use a federally funded voucher to pay rent, at least in part. Another 707 are traditional public housing units, meaning their construction was government-funded. The most common type of affordable housing is the hardest to quantify because it’s unsubsidized or naturally occurring. In other words, units that are priced low for whatever reason, be it location, age, condition or an altruistic landlord.
Plenty of apartment buildings are planned or under construction locally, but that doesn’t mean they will be affordable. With 49,220 units currently comprising the local multifamily market, the Apartment Association of Southern Colorado reports that of the 1,857 new units planned for 2018, 163 will be affordable (meaning, financed, at least in part, through tax credits).
Existing units, meanwhile, are hot real estate commodities. The El Paso County Assessor’s property records show 83 apartment buildings with nine or more units have sold from 2015 to present. Most buyers, 72 percent, have mailing addresses listed outside of Colorado Springs. Doug Sperry, a local commercial broker specializing in apartment sales, says that’s normal and encouraging. “After the financial crisis, for a lot of that time, we were pretty flat while other markets gained momentum. Denver’s the best example of that. A lot of sales, appreciation and rent increases,” he says. But Denver has since undergone such a building boom that rents have leveled off.
Now, employment is finally taking off in Colorado Springs. “Other markets got so hot that [buyers] started looking to smaller markets for better deals,” says Carter. “So rents are up a bit and there are some new units.”
“Flips,” like in the Emerald Towers case, were more common right after the crash, Sperry says, but “typically when someone buys a property to renovate they do it gradually, [not] evicting everyone at once.”
Calls to “do something” about all this were mounting for some time, but seemed to coalesce and intensify around the Emerald Towers eviction. Activist groups that are usually uninvolved in housing issues organized a rally outside the building to declare housing a human right and demand solutions to gentrification. Meanwhile, attendees of that emergency meeting say they plan to keep meeting regularly to develop their coordinated response to future displacements. Skorman and El Paso County Commissioner Stan VanderWerf also plan to stay involved.
Another working group, composed of representatives from city and county government, advocacy groups and the Housing and Building Association of Colorado Springs, have been sketching the beginnings of a plan to address affordable housing since spring. City Councilor David Geislinger, who is leading that group, says it is “still evolving” and “still debating,” but that policy recommendations are forthcoming.
CSHA Executive Director Chad Wright says his agency is hard-pressed to build new housing: Capital costs are high enough that revenue off new affordably priced units barely covers their maintenance and management. Then there’s the biggest barrier, financing.
“I’m not going to sugarcoat it,” he says. “[Affordable housing] is complicated, requires resources and [is] highly bureaucratic.”
Low Income Housing Tax Credits, the primary tool for financing affordable housing development, are very competitive. There’s $2.2 billion in credits, enough to support 16,000 units, available nationwide annually. Only one local project, Freedom Springs, 50 units of permanent supportive housing for homeless veterans, to be managed by Rocky Mountain Human Services, received a credit this year.
Worse, the credits that investors buy to lower their tax burden and thereby save money on a project — allowing them to pass those savings on to renters — are losing value, because there’s speculation that Congress will pass tax cuts that will slash the corporate tax rate to 20 percent. If that provision goes through, there will be less incentive for banks or other corporations to invest in affordable housing.
Of our local market, Wright says, “It’s not sexy, but we have to pay attention to our existing stock to make sure conditions don’t deteriorate or that we lose affordability in those units … because they’ll be even more valuable as we move forward.”