Colorado Springs City Council approves one of two new incentives to encourage affordable housing projects

COLORADO SPRINGS, Colo. (KRDO) -- Local leaders agree that more affordable housing projects are needed amid record home prices and rents, but there are challenges that limit the number of projects.

Developers and builders can’t make much, if any, profit on affordable housing projects and existing homeowners often don’t want such projects built near them.

As an incentive to build more affordable housing, the Colorado Springs City Council voted Tuesday to offer developers and builders a rebate on a certain percentage of land use fees.

The resolution passed by a 7-1 vote, with Councilman Mike O'Malley opposed; Councilwoman Yolanda Avila was absent.

Steve Posey, the city's community development manager, said that developers and builders generally pay the city between $100,000 to $1 million in land use fees for projects; the resolution allows those parties to receive between 20% and 100% of fees in rebates, depending on the type of affordable housing project.

"It's all part of a 50-point scale," Posey explained. "Forty percent of that scale is based on where the project is -- is it an infill project where utility hookups are already present? How affordable are the units, how many of them will there be and how long will they be affordable?

One such project currently under construction is near the corner of Academy Boulevard and Uintah Street -- the site of a January 2009 fire that destroyed the Castle West Apartments.

O'Malley opposed the resolution because he believes it doesn't go far enough in making units more energy-efficient and reducing utility bills for residents; later on Tuesday he was part of a unanimous Council vote to raise natural gas and electric rates at the request of Colorado Springs Utilities.

"It's a good idea but I think it's half-baked and needs to go back to the drawing board," he said. "It's not ready for prime time."

Other Council members disagreed and rejected O'Malley's request to delay the vote, saying that energy efficiency requirements for affordable housing projects already exist.

"Delaying it doesn't help," said Councilman Wayne Williams. "People need housing. It's the thing we hear most often. If we can do something that works with the market, that encourages nonprofits and private industry to be building things, then I think we ought to be helping them."

Posey told the Council that delaying the vote would have sent the wrong message to the state financing entity which provides tax credits for affordable housing projects.

The council also was to consider an amendment Tuesday that would refund a certain percentage of sales tax revenue from construction materials for affordable housing; however, discussion and a vote on that matter were taken off the agenda and will be considered at the Council’s first meeting in July.

Posey said that the city is exceeding a challenge set by Mayor John Suthers several years ago, to build at least 1,000 new affordable housing units every year.

"Around 5,000 new affordable apartment units have opened since the mayor issued his challenge," he said. "Forty percent of them are affordable. But we're still several thousand units short of where we need to be."

In fact, Posey estimates that the city needs another 14,000 to 16,000 affordable housing units to meet the demand.

Still in the works, Posey revealed, are similar projects to provide more affordable single-family homes; he said that he didn't know how many new condominiums and townhomes are being built.