Proponents of a ballot measure that would dedicate a portion of state income tax revenue to create a statewide affordable housing fund say it’s the answer to getting more Coloradans into safe housing at a cost that won’t break the bank – and won’t raise taxes.

“This is not just a question about whether or not Coloradans are suffering,” said Mike Johnston, a former state senator and the president and CEO of Gary Community Ventures. The organization supports policy change for the Denver-based philanthropic Gary Community Ventures foundation that provides grants and other support to ensure economic mobility for Colorado families.

Colorado Springs weighs 3,200-acre annexation southeast of town for thousands of homes

“We know they are. It’s a question of, ‘are the fundamental public services you need to sustain civilization beginning to collapse if you can’t provide teachers and nurses and firefighters housing in every community?'”

But opponents say the measure would increase taxes because it would divert tax rebate dollars away from Coloradans who are legally entitled to them through the Taxpayer’s Bill of Rights. The law ties increases in most local government revenues to a formula based on population growth and inflation. Excesses can only be used for voter-approved purposes.

“Prop 123 would mean less money in people’s bank accounts because it would come directly from our TABOR refund checks,” said Michael Fields, president of Advance Colorado Institute, a nonprofit that champions fiscal transparency, limited government, lower taxes and other initiatives. “When the state government takes and spends more of our money, it’s a tax hike. There’s nothing ‘affordable’ about taking $300 million of our TABOR tax refunds for this flawed housing measure.”

On Nov. 8, Coloradans will vote on Proposition 123, which would create the State Affordable Housing Fund and dedicate 0.1% of state income tax revenue to pay for affordable housing projects and programs.

If passed, it would create the Affordable Housing Support fund, which would receive 40% of money from the State Affordable Housing Fund, and the Affordable Housing Financing Fund, which would receive 60% of the funds. It would also authorize the state to keep and spend this money as a voter-approved revenue change above TABOR limits that otherwise must be refunded to taxpayers.

Colorado Legislative Council staff have estimated $135 million would be allocated to the State Affordable Housing Fund for fiscal year 2022-23. In fiscal year 2023-24, the first full fiscal year, staff estimated $270 million would transfer from the state’s general fund to the State Affordable Housing Fund. 

According to Colorado’s voter booklet, or “Blue Book,” if voters approved the measure, it would reduce TABOR refunds by about $86 per person.

But that figure is “based on projections, and projections change all the time,” said Natalie Menten, a TABOR Foundation board member. “At the end of the day, we don’t know what the actual number is. Some years it would reduce your refund. Other years, it may eliminate your refund.”

If Prop 123 passed, dedicated funds would provide grants to local governments and loans to nonprofits who would acquire land to develop affordable housing; create an affordable-housing equity program to make equity investments in multifamily rental units, ensuring rent does not cost more than 30% of the household income; create a concessionary debt program to provide debt financing for low- and middle-income multifamily rental developments and existing affordable housing projects; create a grant program for local governments to expedite land use, permitting and zoning applications for affordable housing projects; and create a program to provide rental assistance, housing vouchers and other case management for people who are homeless.

Fifty percent of the funds in the Affordable Housing Support Fund will also be used to establish an affordable homeownership program to provide down-payment assistance to qualifying first-time homebuyers and provide grants or loans to qualifying nonprofits and community land trusts.

Rising Colorado Springs home prices, rents make it tougher to attract and retain workers

Passing Prop 123 is critical, proponents say, because rising home prices across Colorado are making it harder for businesses to attract and retain workers. Employees can’t find affordable housing, they said.

“Our early childhood workforce is in really short supply” because of local housing prices, said Noreen Landis-Tyson, president and CEO of Colorado Springs-based Community Partnership for Child Development. “… As an employer, we are paying our staff as much as we possibly can, but we cannot keep up with the cost of housing in Colorado Springs.”

The cost of living in Colorado Springs is now “significantly above” the national average, yet wages are around 12% below the national average, The Gazette previously reported. Over the past three years, the average price of a home in the Colorado Springs area has jumped almost 50% – $177,000 – while the average apartment rent rose more than $300, to $1,571, in the same period.

Data from the National Low Income Housing Coalition shows workers would need to make almost $30 an hour, or more than $10 an hour more than the average pay a Colorado Springs renter earns, to afford the average rent.

“Something has to be done,” said Roger Ledbetter, who for 12 years has been a truck driver for the local Habitat for Humanity’s home improvement store and donation center, ReStore. “Driving around town, I see more and more people on the streets than ever who are homeless. There are people out there – they’ve got a job and kids and they’re living in a homeless shelter or in their car because they had to choose whether to put food on the table or pay rent.”

But the measure would also drive up already sky-high home prices for renters and homebuyers who don’t qualify for the proposed government program, opponents say.

“To fix our state’s housing crisis, we need to build more, not tax more,” Fields said. “According to the state, we have 225,000 units fewer than what we need. This creates a supply and demand problem – where costs go up for everyone. We need to approve permits faster, lessen unnecessary regulations that are driving up cost,s and cap property tax increases so people can afford to stay in their homes.”

Colorado Springs demolition companies tear things down to help build up the community

Prop 123 would require local governments to expedite application-review processes and increase their affordable housing supply to access program funds, said Luke Teater, an independent housing economist and policy consultant with Thrive Economics. This incentivizes governments to analyze their laws and regulations to make it easier to build smaller and more affordable homes, he said.

“Everyone benefits when essential community members like teachers, nurses and firefighters can afford to live in the communities they serve. Increasing the housing supply helps reduce housing costs for everyone, not just those who live in the new housing,” Teater said.