Colorado Takes Bold Steps to Address Affordable Housing Crisis: Proposition 123
Facing a pressing housing crisis, Colorado residents have taken a decisive step by approving Proposition 123, a groundbreaking measure that aims to address the state’s housing affordability issues. Colorado becomes the first state in the nation to allocate a significant portion of its taxable income, estimated at $300 million annually, to fund affordable housing projects. This article explores the details of the new bill and its implications for housing affordability in the state.
Colorado Affordable Housing Initiatives
Proposition 123, which passed with 52 percent of the vote, establishes a permanent stream of funding for affordable housing and homelessness programs. Under this initiative, 0.1 percent of Colorado’s taxable income will be directed toward programs that assist essential workers, including teachers and nurses, in purchasing homes. The measure also provides financial support to local governments, aiming to increase the housing stock by 3 percent each year. With these measures in place, Colorado sets a national example for effectively addressing the affordable housing crisis.
Creating Affordable Housing Stock
Proponents of Proposition 123 estimate that over two decades, the initiative will result in the creation of approximately 170,000 new houses and rental units. This substantial increase in housing stock will help alleviate the current shortage of around 225,000 homes in Colorado, as reported by the U.S. Census Bureau. By prioritizing the construction of low- and middle-income multi-family housing, the goal of the initiative is to ensure that individuals from all walks of life can access suitable housing options.
Protecting Taxpayer Refunds and Opposition
While the measure didn’t face organized opposition, some concerns were raised regarding its impact on taxpayers. Proposition 123 is expected to reduce tax refunds guaranteed to residents under the Taxpayer’s Bill of Rights (TABOR), which imposes caps on government spending and mandates refunds for surplus revenue. Critics argue that reducing TABOR checks might not align with voters’ preferences, potentially posing a challenge to the initiative’s success. However, the lack of organized opposition and the overall support for addressing the housing crisis suggest a positive outlook for the implementation of the measure.
Empowering Local Communities
Governor Polis has signed two additional bills aimed at empowering local communities and ensuring effective oversight of short-term rentals. House Bill 23-1304 and House Bill 23-1287 provide flexibility in housing programs and enhance regulation of the short-term rental market. These measures grant towns and cities the necessary tools to implement affordable housing programs and safeguard residents’ rights, while also mitigating the adverse effects of short-term rentals on rental markets and housing costs.
Extending Relief to Rural Mountain Towns
Recognizing the unique challenges faced by rural mountain towns, the new bills offer flexibility to establish housing solutions tailored to these communities. The legislation strengthens transparency and ensures compliance with local regulations for short-term rentals, protecting year-round residents in rural resort communities. By extending relief beyond the Front Range and Western Slope, Colorado aims to alleviate the high cost of housing statewide.
Multifaceted Commitment to Housing Affordability
Proposition 123’s comprehensive approach includes various initiatives, such as financing for low- and middle-income multi-family housing, support for renters, debt financing for housing tax credit projects, and grants and loans for nonprofits to aid home purchases. The allocation of approximately $300 million in surplus state income tax revenue demonstrates Colorado’s commitment to addressing housing affordability from multiple angles. These initiatives aim to ensure that Coloradans across the state can find suitable and affordable housing options.
Filing Commitments for Funding
Local governments interested in accessing funding made available by Proposition 123 must file their affordable housing commitments with the Division of Housing. Municipalities file commitments on behalf of their entire jurisdiction, while counties are responsible for unincorporated areas. Entities will only be eligible for funding if their projects or programs are in compliance with their commitment. Commitments must outline a plan to increase the baseline number of affordable housing units by 3% annually for a three-year period, ending on December 31, 2026.
Compliance and Deadlines
Failure to file a commitment by November 1, 2023, renders a local government and any development projects in its jurisdiction ineligible for funding in the following calendar year. However, a commitment may be filed by November 1, 2024, for a two-year commitment to increase affordable housing stock by 6% by December 31, 2026. If the 9% total commitment is not met by December 31, 2026, eligibility for funding in 2027 is revoked. A new commitment can be filed by November 1, 2027, for a two-year commitment to increase affordable housing stock by 6% by December 31, 2029.
The passage of Proposition 123 and the accompanying legislation marks a significant turning point in Colorado’s housing landscape. By prioritizing affordable housing as a critical issue and dedicating substantial funding to address it, the state showcases its commitment to creating sustainable and inclusive communities. The true test lies in the effective implementation of these measures and their ability to make a tangible difference in the lives of Coloradans.
What are your thoughts? Will the measures outlined in Proposition 123 deliver on their promises of building units, driving down costs, and helping homeless individuals? Will this bill strike a good balance between economic growth and the need for affordable housing?
Join the conversation and share your thoughts on my recent social media post. I invite you to leave a comment, ask questions, or provide insights into housing challenges in your own community. And use the link below to sign up for my newsletter. My newsletters are sent out once a month and will help keep you informed about all things housing in Colorado, including the latest developments and initiatives addressing the affordable housing crisis!