DENVER THE MILE HIGH CITY Affordable Housing Fund: FOR CITY SERVICES DenverGov org 311 Framework Overview • Double the Affordable Housing Fund – $15M/year to $30M/year – Create/Preserve at least 6,400 units over five years – Serve at least 31,000 households over five years • Issue bonds to accelerate funding • Leverage partnerships to improve outcomes DRAFT WORK PRODUCT 2 Guiding Principles Simply: More housing opportunity/access, sooner is better to address current needs, invest in a financially responsible way. 1. Align investment strategies to five year housing plan 2. Evaluate bonding 3. Leverage housing partnerships and tools 4. Do not increase costs on the very households we are working to serve DRAFT WORK PRODUCT 3 Additional Funding • Increase RMJ special tax rate by 2% • Dedicate proceeds to the AHF ($8M in 2019) • Increase annual “PAYGO” General Fund transfer to AHF by $7M starting in 2019 • Local funding for AHF would = $30M/year DRAFT WORK PRODUCT 4 Bonding • Contract with DHA to bond current property tax mill, generating approximately $105M: – 50% will be used for investment into immediately ready projects to accelerate DHA unit creation/preservation – 50% will fund land/property acquisition to create a longer-term pipeline of projects serving our most vulnerable residents DRAFT WORK PRODUCT 5 Benefits of DHA Bonding o More housing, faster: - Bond revenue can be immediately deployed into projects and existing land/property holdings to address current housing needs. - DHA is mission driven; permanently affordable projects and reinvestment in projects. o More housing via long-term pipeline: - Invest $50M+ to buy small, scattered sites. Priority for new supportive housing and 0-30% AMI units. - Land control allows more nimble response to market opportunities for all development partners. o Financially Responsible: - Leverages existing partnerships and funding tools. DRAFT WORK PRODUCT 6 Framework Existing Revenue Sources: • Linkage Fee • Property Tax • Current $6.8M General Fund Transfer New Revenue Sources: • 2% Recreational Marijuana Special Sales Tax • $7M Annual General Fund Transfer • New revenue sources double the AHF from an est. $15M to $30M Oversight: • The Office of Economic Development (OED) • Housing Advisory Committee (HAC) Appropriation to Denver Housing Authority (DHA): • Annual appropriation to DHA from AHF • Property Tax Mills 0.442 • Allows DHA to bond $105M, accelerating the Affordable Housing Plan The Five-Year Affordable Housing Plan: • Creates and preserves 6,400 units (an increase of 2,400) • Serves 31,000 residents • Managed by OED and partners • 50% of bond proceeds to go toward land and property acquisition to create pipeline for affordable housing projects DRAFT WORK PRODUCT 7 Total Framework Funding Impact Annual Affordable Housing Fund’s Revenues (Local) Existing: Linkage Fee $1,500,000 Existing: General Fund/DHS Transfer (backfills the linkage fee during initial ramp up) $6,800,000 Existing: 0.442 mills for 20 years $7,500,000 Proposed Annually Starting in 2019: 2% RMJ $8,000,000 Proposed Annually Starting in 2019: General Fund/DHS Transfer $7,000,000 Total $30,800,000 Property Tax Pass Through to DHA for Bonding Existing 0.442 mills for 20 years $7,500,000 Potential bond proceeds over 5 years $105M DRAFT WORK PRODUCT 8 Current Housing Outcomes Housing an Inclusive Denver assumes approximately $15M in local affordable housing funds and approximately $10M in federal/other sources annually to: • Create or preserve at least 3,000 units over five years • Serve at least 30,000 households over five years – 20,000 accessing housing – 10,000 stabilized in existing housing Note: the five year housing plan includes a projection for households served through counseling services, which have a lower cost per household compared to programs that provide direct assistance. DRAFT WORK PRODUCT 9 $7M “PAYGO” Outcomes Current proposal would add $7M annually to these sources to: • Create or preserve at least 750 units over next five years – Focus on preservation and gap financing – Serve residents across range of income levels/housing types – Partnerships: CHFA, development community • Serve at least 1,000 additional households over next five years – Direct assistance to stabilize residents at risk of displacement – Serve residents across range of income levels/housing types – Partnerships: DURA, TRUA, other program partners Benefits of proposal: • Adds additional “pay-as-you-go” funds for flexible investments • Supports gap financing for projects in pipeline as result of land/property acquisition fund Note: the five year housing plan includes a projection for households served through counseling services, which have a lower cost per household compared to programs that provide direct assistance. DRAFT WORK PRODUCT 10 Outcomes from Bond Approach Land Acquisition Fund Land/property acquisition program would provide $50M to: • Create or preserve at least 1,400 units over the next five to ten years - DHA would acquire approximately 25 sites (between 1-3 acres and/or existing buildings) to lease or sell at or below cost to other developers - Properties would be paired with at least 300 project based vouchers, supportive services funding - Joint underwriting with other partners including OED, state, CHFA - Primarily serve residents experiencing homelessness and those earning 0-30% AMI Benefits of proposal: • Drives long term pipeline of affordable and supportive housing units • Supports geographically dispersed housing throughout city • Addresses priority areas of the five-year housing plan DRAFT WORK PRODUCT 11 Outcomes from Bond Approach Accelerated Pipeline Accelerated units development would leverage approximately $50M to: • Create and preserve an additional 759 units at Sun Valley, Westridge and Shoshone over next five years (549 created, 210 preserved) • Total production at these sites will be approximately 1300 affordable units, including units planned as part of Choice Neighborhood Initiative Grant at Sun Valley • Brings forward units in immediate pipeline to address current housing needs • Investments would serve residents across range of income levels in rental housing Benefits of proposal: • Provides additional units above what was planned in DHA’s pipeline • Accelerates development of units to address immediate needs • Removes DHA from OED’s competitive annual pool, allowing annual “pay-as-yougo” funding for additional projects and developers DRAFT WORK PRODUCT 12 AHF Overall Outcomes Investment Type CCD $15m “Pay-asyou-go” (current housing plan) CCD $7m “Pay-asyou-go” Bond with DHA Total Over Five Year (proposed starting 2019) (proposed starting 2019) Projects ~3,000 units ~750 units 3,750 units Programs 30,000 households 1,000 households 31,000 households Land Acquisition ~1,400 units 1,400 units Accelerated Pipeline ~751 units created (202 previously planned, 549 additional) ~543 units preserved (333 previously planned, 210 additional) 1,294 units Total Overall Across all Resources DRAFT WORK PRODUCT 6,444 units 31,000 households 13 AHF Investment Targets Population Housing Plan Priorities Proposal Priorities Investment Type Homelessness 20-25% of funds ~ 20% of funds • • • Land/property acquisition OED Gap financing Supportive services 0-30% AMI Rental 20-25% of funds ~ 20% of funds • • • • Land/property acquisition DHA accelerate pipeline OED Gap financing Stabilization programs, ex: TRUA 30-80% AMI Rental 20-30% of funds ~ 20% of funds • • DHA accelerate pipeline OED Gap financing Homeownership 20-30% of funds ~ 20% of funds • • OED Gap financing Stabilization programs, ex: DURA Innovation N/A ~ 20% of funds • • Land trusts Rental subsidies DRAFT WORK PRODUCT 14 Proposed Governance • Revenue, program goals flow thru AHF and HAC • Investments align with goals of housing plan • Outcomes reported in annual action plan • Activity, investments and progress reported to HAC and City Council DRAFT WORK PRODUCT 15 DHA Relationship Governance • DHA is a Housing Advisory Committee board member and participated in the development of the five year plan and the annual action plan. • Develop an IGA with DHA that would govern the use of funds consistent with the goals in the Affordable Housing ordinance. • IGA would commit the funds in advancement of the goals in the five year plan and would require routine reporting. DRAFT WORK PRODUCT 16 Governance Considerations • Process by which properties are identified, acquired and disposed of to partner developers and city involvement in selection • Priority location, size, and type of properties acquired with bond revenue • Balance of investment into land acquisition and property acquisition from fund • Threshold of supportive housing and 0-30% AMI units in each development DRAFT WORK PRODUCT 17 Overall Outcomes Current and Proposed Resources By doubling the affordable housing fund and bringing forward property tax resources through a bond with DHA, the City and its partners will: • Build or preserve at least 6,400 units across all resources over the next five years • Serve at least 31,000 households across all resources over the next five years DRAFT WORK PRODUCT 18 Retail Marijuana Revenue • Replaces property tax revenue committed to DHA with new revenue source to deliver the same outcomes. • Requires amending the ordinance to allow for 2% increase to RMJ special tax. • $8M RMJ revenue stream then dedicated to Affordable Housing Fund. • RMJ revenue would backfill the pass through of property tax to DHA. DRAFT WORK PRODUCT 19 Oversight • DHA, as required in the IGA, would report annually on use of funds and programmatic outcomes through the 20-year period. • OED housing transactions over $500K still are approved by City Council • Annual housing action plans are developed by OED with input from Council and the HAC. DRAFT WORK PRODUCT 20 Process • Council action would be required for the following: – Changing the Retail Marijuana Special Rate from 3.5% to 5.5% in 2018. – Approval of the IGA with DHA – 2019 budget will include $7M for approval – Modify the Affordable Housing Fund ordinance to accommodate the property tax being committed for 20 years and adding the RMJ rate increase • Under consideration: addressing the sunset on the current linkage fee DRAFT WORK PRODUCT 21 Next steps • Collect feedback from City Council on April 16th Safehouse Committee • Gather feedback from the Housing Advisory Committee (HAC) • Discuss with public including All in Denver and the marijuana industry • Assuming support, make ordinance changes and IGA. DRAFT WORK PRODUCT 22