Colorado Government

Proposition 123: A Fix for Colorado's Affordable Housing Crisis?

Prop 123 seeks to tackle the issue of Colorado's affordable-housing shortage.
Prop 123 seeks to tackle the issue of Colorado's affordable-housing shortage. Getty Images
Colorado has a major affordable-housing crisis, with a shortage of well over 100,000 affordable units. The November ballot proposal to create a Statewide Affordable Housing Fund, known as Proposition 123, is designed to chip away at that issue.

Proposition 123 would earmark 0.1 of 1 percent of the Colorado income tax specifically for affordable housing. Doing so would generate close to $300 million a year, according to backers of the initiative, and this money would be added to the funds currently being spent on affordable housing.

“The current cost of housing is totally unsustainable. Right now, 86 percent of Coloradans think it’s a major issue,” says Mike Johnston, the president and CEO of Gary Community Ventures, the charitable organization that's 123's primary financial backer. “Everywhere, you just see the crisis around this, and I think there’s a dramatic need to do something. The exciting part is this is actually a solvable problem. What we know we need is a steady supply of resources to be able to build affordable units.”

The money sent to the fund, which would be subtracted from annual TABOR refunds that taxpayers receive when there's excess state tax revenue, would be used in a number of ways, with the Colorado Office of Economic Development and International Trade overseeing the program.

For example, the fund will provide grants to local governments and loans to nonprofit organizations to acquire and preserve land for the development of affordable housing.

The housing fund would invest in low- and middle-income multi-family rental developments so that more affordable components could be added; it would provide debt and gap financing for such developments, as well.

First-time homebuyers would also be able to apply for down-payment assistance from the fund. In addition, the program would provide various fixes to help prevent homelessness, such as rental assistance, housing vouchers and eviction-defense assistance.

Local governments would be able to access grants to increase the capacity of their departments responsible for land use, permitting and zoning applications for housing projects. But an important provision of the measure also mandates that local governments applying for funding need to set a goal of delivering a 3 percent expansion of affordable housing units every year. Additionally, these governments must establish an “expedited review process to get affordable housing projects reviewed quickly,” Johnston says.

Michael Fields of Advance Colorado Action, a fiscally conservative advocacy group, suggests that the state loosen certain regulations to enable municipalities to approve permits faster and build more housing rather than adopt this measure.

“Prop 123 would mean less money in people's bank accounts because it would come directly from our TABOR refund checks. When the state government takes and spends more of our money, it's a tax hike. There is nothing 'affordable' about taking $300 million of our TABOR tax refunds for this flawed housing measure,” Fields says.

According to an analysis by the Legislative Council of the Colorado General Assembly, the proposition would reduce TABOR refunds by an estimated $43 per taxpayer in tax year 2023 and $86 per taxpayer in tax year 2024.

“TABOR never said you can’t dedicate money to major state crises. It said voters had to approve that decision,” Johnston responds.

As for years when money is tight and there would be no TABOR refund, the measure's language would allow the Colorado Legislature to reduce the affordable-housing fund to balance a struggling state budget. But that's unlikely, Johnston notes.

“There are no projections from the legislative council where we would not have adequate resources to fund Prop 123 even in a recession," he says. "But, if some totally unforeseen event were to occur, and the state is projected to be below the TABOR cap, the measure allows the legislature to temporarily reduce the funding for this measure in order to balance the budget.”

Another critique of Proposition 123 comes from Peter Lifari, executive director of Maiker Housing Partners in Adams County, and Chris Brown, the vice president of policy and research for the conservative-leaning Common Sense Institute. Lifari and Brown penned an analysis for CSI looking at the measure and highlighted a loophole that allows local governments not to participate.

“Stated bluntly, Proposition 123 is only as successful as the number of cities and counties who decide to opt into the program," Lifari and Brown write. "If the capture rate of jurisdictions is weak, due to any number of reasons, the program will be faced with a multitude of challenges. Thus, setting up an uncomfortable reality where Coloradans who have voted for the successfully adopted measure could be on the outside looking in, unable to benefit from the measures investments due to their local government choosing to not opt-in.”

“Our thinking is, we have yet to meet a local county commissioner or a city councilwoman who says, 'We don’t want to build affordable housing in our community,'” Johnston responds. “You have to have local partners who believe in it, and we think overwhelmingly those communities will opt in.”
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Conor McCormick-Cavanagh is a staff writer at Westword, where he covers a range of beats, including local politics, immigration and homelessness. He previously worked as a journalist in Tunisia and loves to talk New York sports.

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