The Colorado Legislature passed two measures this session that will provide millions of dollars each year to help ease the state’s affordable housing crisis.
In 2020, the two bills could set aside $38 million, which could increase annually. After the legislative session ended last week, the bills are headed to Gov. Jared Polis for a signature.
“Together, they are the biggest new source of very badly needed funding for affordable housing we have seen in many, many years,” said state Rep. Mike Weissman, D-Aurora, who sponsored one of the bills.
The funding could help build housing units for residents whose income qualifies for down-payment assistance and other housing programs.
This year, the state set aside $15 million to fund affordable housing projects, so the new funding will more than double what the state can grant to housing projects, said Elena Wilken, executive director of Housing Colorado, the state’s affordable housing association. It is possible the first affordable homes funded by the new revenue will be finished in 2022.
Thousands of affordable housing units are needed in Southwest Colorado as the cost of renting or owning a home continues to rise.
The median price of a home in Durango last year was $399,000 – a price out of reach for 52% of households in town, according to a report released this week by Region 9 Economic Development District of Southwest Colorado. In Bayfield, the median home price was $315,000, which is out of reach to more than 41% of families in the community.
The staff at Housing Solutions for the Southwest continues to see demand for affordable housing rise each year, said Executive Director Elizabeth Salkind.
“I’m not seeing any leveling off,” she said.
She is supportive of the measures because in the past, state funding for affordable housing has been inconsistent.
“I think just to have a long-term, set funding source is a huge step for Colorado,” Salkind said.
In the short term, House Bill 1322 will provide the most funding. It will set aside $30 million annually from the Unclaimed Property Trust Fund for three fiscal years until 2023 for affordable housing.
The fund holds lost or forgotten property or assets owned by individuals or businesses in perpetuity or until they are claimed.
The new revenue from HB 1322 could be used for a variety of projects, such as down-payment assistance; grants and loans to purchase land; and to repair, replace and dispose of mobile homes, among other purposes.
Another measure, House Bill 1245, will provide $8 million for affordable housing in 2020 and $9 million in 2021. In later years, the bill could provide the full amount of the revenue it will generate, between $45 to $50 million annually to housing.
The bill will generate revenue by decreasing the amount of money retail businesses are allowed to hold back to cover the administrative costs of paying taxes.
HB 1245 was originally intended to dedicate all the revenue it will generate to housing. However, in the final days of the Legislature, Polis requested lawmakers to redirect a large portion of the money to the state’s new reinsurance program for two years, Wilken said. The reinsurance program is designed to help cut costs for those who purchase insurance through Connect for Health Colorado because they are not insured through their employer.
The revenue source for reinsurance and housing will come from some of the largest retailers in the state, by reducing how much they can hold back to cover costs associated with paying taxes, such as staff time.
Businesses are currently allowed to hold back 3.33% of sales taxes they collect to pay for the administration required to collect and pay sales taxes. The bill would increase the amount businesses could hold back to 4%. But it would introduce a new $1,000 cap, according to the approved legislation.
Giant retailers would no longer be able to hold back hundreds of thousands of dollars to cover administrative costs, and that would generate new revenue.