Colorado lawmakers hope to up funding for local affordable housing efforts

Colorado ranks No. 9 in the country for having the largest gap between renter’s income and housing cost — a reality buoyed by stagnant wages, rising rents and limited availability of affordable housing.  

The National Low Income Housing Coalition estimates that Colorado faces a statewide shortage of more than 113,000 affordable rentals for extremely low-income households. The Joint Center for Housing Studies at Harvard University estimates that 50.9% of renters in Colorado are cost burdened, meaning they spend more than 30% of their monthly income on housing costs.

“We know that the housing crisis impacts all corners of our state,” state Sen. Julie Gonzales, a Denver Democrat, said during a committee meeting on Tuesday. “We know also that this was an issue that confronted our state prior to the pandemic and one that has been exacerbated, just given the multiple challenges that people in our state are facing.”

State lawmakers this year are pushing forward a handful of bills that aim to advance solutions to address the state’s affordable housing and homelessness crisis. House Bill 21-1271 and Senate Bill 21-242 would establish grant programs to help local governments implement affordable housing strategies and to use properties such as hotels and motels to house people experiencing homelessness or establish affordable housing units. 

Both bills advanced out of the Senate Local Government committee on Tuesday and now head to the Senate Appropriation committee. If passed, here’s what the measures seek to do:

Allow local governments to use state funds to purchase or rent hotels or motels for unhoused people

SB-242 would allow local governments and nonprofits to apply for funding from the state’s housing development grant fund to rent or purchase underutilized spaces such as hotels and motels to house people experiencing homelessness. 

“My experience in the conversations that I’ve had with local and county governments is that there’s exceptional need that far outstrips the availability of these types of properties and so my sense is that this would be a welcome addition to their ability to support people who find themselves in these dire circumstances,” Gonzales said.

The bill, if passed, would transfer $15 million from the general fund to the housing development grant fund to be used for rental assistance and tenancy support programs for people experiencing homelessness or to allow local governments or nonprofits to purchase underutilized properties such as hotels and motels to house people. 

The bill would also require the Department of Local Affairs to update lawmakers and provide a report each year related to how the money was spent. A bipartisan measure, House Bill 21-1028, which also advanced on Tuesday, would require the department to create a yearly report to ensure that stimulus money and other housing grant program funds are being used efficiently. 

Hotels and motels have been used throughout the pandemic as temporary spaces for people experiencing homelessness to recover from COVID-19. This includes six hotel locations in the Denver metro area, according to Cathy Alderman, vice president of communication and public policy for the Colorado Coalition for the Homeless.

The city of Denver announced on May 6 that it plans to purchase and renovate a hotel in the city’s Central Park neighborhood to be used as shelter for people experiencing homelessness. Though the city has leased hotel spaces before, this would be the first time it has purchased one as a permanent space. The goal is to turn the hotel into permanent supportive housing after two years. The plans are pending Denver City Council approval.

The $15 million will only stretch so far in the effort to buy or renovate dilapidated hotels and motels across the state. For example, Denver city officials estimate that it will cost $7.8 million to purchase the 95-unit hotel.

The bill did not warrant support from the two Republican lawmakers on the Senate Local Government Committee. State Sen. Barbara Kirkmeyer from Weld County took issue with DOLA’s request to hire four additional staff members to run the grant program and stated that she doesn’t believe the funds will be equally distributed throughout rural parts of the state. 

“I’d like to know why DOLA can’t absorb this and do this program and why we’re now growing government,” Kirkmeyer said during the committee meeting.

Bruce Eisenhower, DOLA’s legislative liaison, said the additional staff is necessary to operate the program and collaborate with local governments.

“Hotels or motels are generally located within zoning districts that typically only allow for occupancy for 30 days or less,” he explained to lawmakers. “If that’s the case, we’ll have to work with the applicant so that the zoning would be changed so that it would provide for longer-term occupancy.”

Incentivize local governments to increase affordable housing stock, update land use codes

HB-1271, which was already approved by the House and is now moving through the Senate, would direct $13 million in state funds to create three additional grant programs within DOLA that aim to incentivize local governments to increase their affordable housing stock.

The first program, dubbed the Housing Development Incentive Grant Program, would direct $9.3 million from the state’s general fund to local governments that have adopted three or more land use policies that promote the development of affordable housing. 

Examples of such policies include zoning changes to increase the number of housing units allowed on a particular site; promoting mixed-use zoning that allows for housing in a wider range of developments; increasing the permitted household size in single-family homes; and promoting denser housing development near transit or places of employment.

The two other grant programs would help local governments hire consultants to figure out how to promote and remove barriers for affordable housing projects.

“In every community across the state and the work workforce — teachers, firefighters, nurses, restaurant managers, city workers — need a place that is affordable for them to continue to live in the communities that they love,” said Gonzales.

Richard Elsner, a Republican county commissioner in Park County, testified in support of the bill because he said the grant program would allow his county to hire the necessary consultants to create an affordable housing plan.

“Our building department consists of four or five people. We have someone who is somewhat of a planner, but being able to provide grants to encourage affordable housing in our area would be absolutely critical,” Elsner told lawmakers.

“The average school teacher makes enough to afford absolutely nothing that is available in Park County,” he added. “Like all counties across the state, our housing prices have gone up tremendously. All of the short-term rentals have really damaged our ability to be able to move forward.”  HELP US GROW Make a tax-deductible donation.

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