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House of Cards 

The future of low-income housing in Colorado Springs doesn't look good. Will the complex house of funding cards that cities rely on to build low-income housing come crashing down?

Back when the Mountain Knolls apartment complex was first built in 1973, the neighborhood around the 200-unit development was little more than a vacant space between the outskirts of Colorado Springs and Fort Carson.

For developers of high-end, or even market-rate, real estate, it was terra non grata.

That was then.

With a King Soopers just across the street, a bird's-eye view of Cheyenne Mountain, and affluent neighborhoods just across Route 115 to the west, Mountain Knolls is now a case study in gentrification, Colorado Springs-style.

A federally-subsidized housing project that has offered relatively spacious apartments to low-income tenants for more than 20 years, Mountain Knolls is now set in one of the fastest-growing parts of town.

And now, the new owners of Mountain Knolls, Apartment Investment and Management Company, or Aimco, which bought the apartment complex in 1997, is cashing in on that change.

One of the largest apartment-rental companies in the country (and owned by former Colorado state Sen. Terry Considine), Aimco has given low-income tenants until the end of November to pack up and move.

The low-income tenants, some of whom have lived at the complex for 15 years with the help of federal housing assistance, are making way for people who can pay upward of $600 and $700 a month -- about $250 a month more than what most low-income tenants were paying.

To Shirley Hanselka, a former Mountain Knolls resident who unsuccessfully tried to organize fellow tenants against the eviction, there's a cruel irony to the complex's gentrification.

"Just when the area's finally desirable, they have to move out," she said of the low-income tenants. "For the elderly, that's tough. Just when there's enough things within walking distance -- a hair salon, a shopping center -- they're told that because the value of the property has gone up, the rents go up."

Under the terms of the tenants' federal Section 8 housing assistance, residents can't pay more 30 percent of their income for housing -- even if they could manage to scrape together extra cash to pay the increased rent. To continue receiving a subsidy, they have to find other low-rent digs.

"It stinks," said 83-year-old Wayne Edmonston, who moved from Mountain Knolls in September to the Acacia Hotel, another public housing complex for seniors near downtown's Acacia Park. "They kicked all the seniors out so they could fix it up and rent it for more money. They're just being greedy."

Local Aimco managers would not comment for this story, referring calls to a public-relations specialist in San Diego, who did not return phone calls from the Independent.

But what Aimco has done is not isolated. It's part of a larger and growing national trend in which private landlords are opting out of a federal program set up in the '70s to build low-rent housing units.

Under that regime, part of the Housing and Urban Development Section 8 housing program, the federal government basically backed low-interest building loans for developers, guaranteeing them a steady stream of subsidized tenants. In exchange, the developers agreed to keep a certain percentage of their housing units for low-income tenants, usually for a period of 20 years.

In the last two years, four local apartment-building owners have notified the Colorado Springs Housing Authority, which administers the federal program locally, that they were opting out of the program.

Though not all landlords who "opted out" of the Section 8 program evicted their low-income tenants -- opting instead to keep some subsidized tenants -- the trend has affected some 20,000 households nationally, and roughly 500 low-income households in Colorado Springs, just in the last year.

No vacancy

But landlord opt-outs are just one symptom of the massive crunch facing affordable and low-income housing in Colorado Springs.

The larger threat to affordable housing, housing officials and advocates agree, is the collision of two forces: a rapid escalation of housing costs and a stagnant pool of funds to pay for affordable housing.

Two reports to be presented to the Colorado Springs City Council next week -- one by a Denver-based consulting firm, the other by a group of local concerned citizens and city officials -- illustrate the point perfectly.

The first study, by BBC Research & Consulting, only confirmed what most in local affordable-housing circles already knew, that housing prices in Colorado Springs have gone through the roof in the last decade, putting a severe squeeze on low-income renters.

And the report was able to attach some hard numbers to the downside of Colorado Springs' housing boom.

In the last nine years, for example, the median-home sale price nearly doubled, from $71,000 in 1990 to $148,000 in 1999. The minimum annual income required to buy homes is now roughly $45,100 -- nearly 60 percent higher than in 1990.

Meanwhile, the total number of low- and moderate-income households grew from 70,990 to 87,529 -- a 19 percent increase, BBC concluded.

And those households are being pinched. Of the 50,250 low- and moderate-income renters in town, roughly 31,000 pay more than one-third of their incomes to rent or home mortgages.

BBC's ultimate conclusion: Colorado Springs needs roughly 37,000 affordable rentals and 27,000 new low-income homes to meet the current backlog in low-rent apartments. The total price tag: $6 billion.

Since Colorado Springs might be able to meet much of that demand with the help of federal, non-profit and private funds and efforts, the local share of that whopping price tag would probably be less than $400 million.

But that's assuming local leaders agree with BBC's findings and, in turn, want to tackle the problem entirely. Next week, on Oct. 11, another local group -- officially dubbed the Affordable Housing Committee -- is slated to make recommendations to city leaders on how best to proceed.

According to a preliminary draft of the citizens' report, the committee is expected to recommend that the city create a Housing Trust Fund that would be used to buy and build new low-income digs.

Currently, the city spends a mere pittance on low-income housing compared to the millions it dispenses annually for the federal government. Each year, the city allocates roughly $230,000 toward housing programs, but the lion's share of that goes toward the salaries of those administering roughly $18 million federal housing grants.

The Housing Trust Fund would change that.

There's some disagreement among committee members on how best to fill the fund with money -- an eighth-of-a-cent sales tax, a real-estate transfer fee, a portion of a general city-tax increase. But there's consensus that the city needs to start forking over some cash to catch up with a problem that's grown out of control in the last decade.

As unbelievable as it may have sounded to Mountain Knolls' first tenants 20 years ago, Colorado Springs is now suffering under the same forces that plague cities such as Denver, Aspen and Boulder. Those more affluent burbs are no longer able to house many of the people who do the work that keep those economies growing.

"That's happening here," said Claudia Deats, director of the non-profit Greccio Housing Unlimited, a local non-profit that offers 97 low-income rental units to 200 people (including 80 children) around the city.

While Deats concedes that the Springs is still far less gentrified than its more affluent counterparts, she points to places such as Denver's Tech Center, which is unable to find housing for workers making between $10 and $20 an hour.

In the case of Deats, whose waiting list for new apartments just topped 300 for the first time ever, she's trying to help working families who are spending anywhere from 40 to 80 percent of their income on rent.

"These people are extremely rent-burdened. They are on the verge of homelessness. If we don't plan, we're going to end up just like [Denver and Aspen], with no housing for the working people.

"We're going to want people to stuff our groceries and flip our burgers, but we're not going to want to pay them what they need to actually live here."

Orange dots

Across from Richard Sullivan's desk at the Colorado Springs Housing Authority, tucked into a small office on the third floor of downtown's City Hall, a map of Colorado Springs leans against the wall.

The map is covered with orange dots, each one representing one of the 700 or so landlords in town who accept rent-payment vouchers from the federal government in lieu of cash.

"The map hasn't been updated in three years," Sullivan said. "But if it were [made current], it would show basically the same picture."

The director of the Colorado Springs Housing Authority -- an independent, state-chartered agency that administers some $18 million a year in federal low-income housing assistance -- Sullivan says most of the dots represent what he calls "mom-and-pop operations."

The overall impression of the picture is somewhat chaotic. As if it was hit by several blasts from a paintball shotgun -- several heavy concentrations of orange surrounded by dozens of tiny day-glo splotches.

Those tiny spots are where most Section 8 tenants are ending up these days, in small duplexes, rental homes or apartment buildings run very often by private individuals or families, Sullivan said.

To Sullivan, there are enough of these orange dots to absorb all the Section 8 tenants displaced by the opt-outs of Mountain Knolls and other apartment complexes that no longer accept subsidized tenants.

While the city's top public-housing boss concedes the elderly and the disabled tenants face hardship when they have to move, he said the opt-outs in the long run may be a good thing.

It's long been the policy of the Housing Authority, Sullivan noted, to scatter low-income renters throughout the community so that there is no concentration of poverty in one area.

An unintended consequence of the opt-outs, he added, is just that kind of scattering, as more and more private landlords open up to Section 8 tenants.

The easing of certain restrictions on landlords and an increase in the amount of security landlords can now ask from Section 8 tenants, has "opened up the market somewhat," Sullivan said.

And there are other reasons the opt-outs may not be as bad as they sound, Sullivan added. Tenants who are displaced by an opt-out, he said, are automatically given a different type of voucher, often dubbed a "portable voucher," that can be used at any apartment nationwide willing to accept Section 8 vouchers.

Previously, tenants at federally subsidized apartments such as Mountain Knolls received vouchers that could only be used at that particular housing project. If those tenants wanted to leave -- to be closer to a particular job or school, for example -- they had to give up that voucher and apply for the portable voucher.

But because there's a huge waiting list for portable vouchers, HUD tenants hoping to move from a federally-subsidized housing project usually go to the bottom of the list for the portable vouchers. "So they're basically stuck where they are if they want to continue getting public assistance," said Sullivan.

And typically, when landlords opt out of federal programs, HUD has helped tenants facing jacked-up rents with yet another type of voucher, called a preservation voucher.

These are given to tenants whose income make them eligible for assistance, but who in the past have been able to pay their entire rent bill themselves.

"As a result, the community has more assisted housing than before [the opt-outs]," Sullivan said.

The problem, however, is that Congress has only allocated money for the preservation vouchers for one year, and their future is uncertain.

One solution, said Sullivan, is more congressional funding for vouchers that help qualified tenants find homes. Then, the Housing Authority can work on another challenge facing public housing: "The perception among landlords is still that [Section 8 tenants] are bad-quality tenants, and that the program has a lot of paperwork," Sullivan said.

"In a hot rental market where a landlord can be picky-choosy, as far as who he or she is going to rent to, why would anybody get involved in a program that they think involves a lot of paperwork and has the chance of getting a bad tenant?"

Orange stickers

All around Patrice Sharkey's cream-walled apartment at Mountain Knolls, small items -- picture frames, nightstands, books -- are tagged with small day-glo orange stickers.

A small round sticker on a fish tank: $2.

A gold-based lamp: $3.

Nearly the entire apartment is pockmarked with orange dots since Sharkey (who has since moved to Phoenix to be near family) organized a clearance sale for everything she doesn't want to pack into a U-Haul and take to Arizona.

Sitting among boxes and unpacked clothes, Sharkey says she's glad she now has a new portable voucher to use in another state, where family can help her deal with a neurological disease that keeps her from driving and working.

Still, the entire experience has been hard on the former telecommunications worker, because finding a new apartment in the Springs within the price range she could afford was near impossible.

"Basically, all the places are out by Academy, but that's not a safe place to walk," said Sharkey, who has to walk everywhere she goes. "There's too much traffic, and the roads are wide, and they're usually very far from things like supermarkets."

Tenants at Mountain Knolls and local housing advocates say Sharkey's is the kind of story that gets lost in the statistics thrown about by housing administrators.

"Most of the people here are disabled and elderly," said Mary Lyn Ballard, a Mountain Knolls resident still searching for a new home. "Landlords think we're all a bunch of, ya know, low-lifes or something. It's really humiliating to continually get rejected as soon as they learn you're on Section 8."

In the case of Ballard, a single woman with severe degenerative arthritis in both her knees, the search for a new home is both physically and emotionally painful.

"Emotionally, the trauma has been overwhelming," said Ballard. "Waking up everyday and not knowing if you have a place to live. I've had eight friends leave already. I'm losing friends that I've had for years. I thought I'd live my life out here."

Indeed, many residents say the worst part of the Mountain Knolls opt-out is the breakup of a community built over many years, as well as the loss of an affordable housing complex where elderly people felt comfortable taking a walk at night or leaving their doors unlocked.

"I appreciate having the vouchers," Ballard said. "I don't want to just complain. I just want to live in a safe place that we can afford, and it's very hard to find that."

Most Section 8 tenants are not as physically challenged as Ballard, who requires first-floor housing because of her arthritis. Still, interviews with former Mountain Knolls tenants show that for them, the opt-out experience was far from the "good thing" described by Housing Authority director Sullivan.

"I looked at about 30 apartments, and in my case, I just saw a lot of places that were dirty and didn't seem safe," said Kate Brunz, a former Mountain Knolls resident who ultimately found a place in the Summit Apartment complex on Reeve Circle, in southwest Colorado Springs.

Now, Brunz said she's happy with her new apartment at Summit, where five former Mountain Knolls tenants have also found new homes.

"They're finding beautiful homes," added the Housing Authority's Bonnie Schrader, who helped some of the Mountain Knolls tenants find new accommodations and refutes the claim that Aimco's opt-out has put undue stress on the city's low-income renters.

Indeed, some other tenants say they're not too upset now that they've found new homes.

Longtime Mountain Knolls resident Tony Atencio says he's happy with his new, though much smaller, apartment at the Acacia Hotel, which is run by the Colorado Springs Housing Authority. "I was never that upset about [the move]," said Atencio. "And I've always like the Acacia, so I thought about moving here right away."

Still others didn't have as much luck, only finding places that already contain a high concentration of low-income tenants, which sport conditions far below the norm at Mountain Knolls, or are located in areas of high crime compared to Mountain Knolls. Still others ended up in homes for seniors.

And the experience of some housing advocates challenges the Housing Authority's position that losing federally-supported housing is no big deal.

In the battle to locate new low-income apartments, it's a huge blow to lose low-income units by the hundreds, they say. Greccio's Claudia Deats said her organization felt the blow of Mountain Knolls' loss right away.

"Oh, definitely," said Deats, whose waiting list already includes 380 adults and 340 children. "People were coming to us with Section 8 vouchers. It was hard, because they're mostly elderly and disabled people.

"But with our waiting list, all we can do is refer elsewhere. And now, with the loss of some of the Section 8 projects, there are just fewer places to refer people to."

Cyndi Kulp, an activist with the grassroots Housing Advocacy Coalition, which helped many of those elderly people find new homes and move, is known for being a bit more blunt. Kulp would like city housing leaders including Sullivan to take a more aggressive role in trying to preserve housing projects.

"We need new units," she said, "not the loss of good-quality existing ones."

HUD's own Joe Garcia, a project specialist who's lived in Colorado Springs for 20 years, agrees that, to his agency, the opt-outs are a great loss.

"It's the less-than-desirable projects that tend to want to renew their contracts with HUD," he said. "The ones in the best shape, in the best neighborhoods, they're the ones that want to opt out and begin renting at the higher rates. So what's happening is that we're losing the best and getting stuck with the worst."

Crowded house

Colorado Springs is not the only city in America stuck in the downward spiral of federal housing.

Nationally, there are roughly 3 million people living in projects that HUD helped build or finance. During the next five years, two-thirds of HUD's contracts with those landlords will expire, meaning that almost 14,000 properties -- roughly 1 million subsidized housing units -- could be lost if landlords decide not to renew their contracts, according to HUD statistics.

In the last year alone, more than 17,000 subsidized units, or about 300 properties, did in fact opt out of the program, HUD has reported.

The future doesn't look much better.

Forty-four states in the country have more than half of their apartments expiring in the next five years. That doesn't necessarily mean all those units will opt out, since some landlords renew their contracts on a year-to-year basis or continue housing HUD tenants without a contract.

"Fortunately, relatively few are opting out," said HUD's Garcia. "So nationally, we're losing a very small percentage of the units."

But with landlords' contracts with HUD renewed only on a yearly basis, tenants face an uncertain future.

"Colorado Springs is one place where we've lost proportionally more [federally subsidized, low-income units] than in other places," noted Garcia, adding that the market rate that many landlords can demand is now above what HUD pays landlords.

In Colorado as a whole, there are more than 18,000 tenants living in federally subsidized projects, according to HUD stats. Roughly 75 percent of those units, some 13,000 apartments, will be available for opt out by 2004.

Since 1997, some 690 apartments in Colorado have opted out, making it one of the worst opt-out states by percentage in the country. A good chunk of Colorado's opt-outs have occurred in Colorado Springs.

HUD is trying, Garcia said, to keep more projects from leaving the program, but the problem is money. A bill now before Congress would provide money so that HUD can pay landlords closer to market rate.

"The idea is to raise the value of vouchers to be more like market rate so that the landlords are not adversely affected financially," said Julio Barreto, director of legislation and program development for the National Association of Housing Redevelopment Officials, which supports the bill.

Currently, HUD's "market rate" reimbursement to landlords is actually 40 percent of the median apartment price -- well below market rate.

The bill, which would up that percentage, has yet to be approved by Congress or the White House as the brawl over tax cuts and Social Security has led to emergency funding measures.

But Garcia said some housing advocates, including HAC's Kulp and Hanselka, are exaggerating the problem to make a point. "That just scares people," he said. "People are not ending up on the street."

Some national advocacy groups, however, bristle at such claims.

The opt-out question, they say, is one of the greatest threats to America's poor. Michael Caine, director of the Boston-based National Alliance of HUD Tenants, said HUD tenants are being dispersed nicely and evenly into America's suburbs and cities.

"They get dispersed, sure, but to where?" Caine retorted. "To relatives' houses and the streets. ... If rents increase and no more affordable housing is built, then the people who used to live there have nowhere to go. It's simple. People are getting squeezed out."

House of cards

Housing officials and advocates do seem to agree on one thing: The squeeze is only going to get worse if current trends prevail.

Six years ago, HUD itself opted out of the business of building new affordable housing projects. Instead, it began focusing on grants to cities and local housing groups to build projects and on giving people vouchers with which they can pay for housing.

To many, that was a positive move. The problem is that allocations by Congress, though they have increased dramatically in some areas, have not kept pace with the rapid increase in housing costs in booming areas like Colorado Springs.

And it seems that Congress is in little mood to fund HUD's huge and complex bureaucracy, which has proved itself less than efficient at keeping track of its own finances.

Just last year, for example, Congress authorized spending for 50,000 additional vouchers for people in welfare-to-work programs. The only problem, the vouchers were not distributed until last week after HUD sat on the funds for almost a year.

And in the meantime, the overall demand for vouchers has skyrocketed. This year, housing Secretary Andrew Cuomo asked for an additional 100,000 portable vouchers, a request that was quickly squashed by a Congress skeptical that HUD can manage the vouchers it already has.

Like other government departments, HUD is operating under spending caps adopted by Congress in 1997. Because HUD's voucher program is growing much faster than the spending caps allow -- by as much as 15 to 20 percent a year -- other programs that help cities like Colorado Springs build low-income homes are facing the budget ax.

And as if to illustrate just how desperate HUD is getting, the huge federal agency actually proposed meeting some of its increased costs by borrowing $4.2 billion from its year 2001 budget -- which, of course, has not been drawn up.

Eventually, housing officials and advocates fear, the flimsy house of cards that makes up the federal government's affordable-housing framework will cave.

Because local governments and non-profits rely heavily on other HUD funds to leverage the purchase and buildup of low-income homes, the loss of any federal dollars will only set back cities like Colorado Springs even further.

(The House and Senate have proposed expenditures of $10.5 billion and $11 billion respectively for HUD's voucher program -- roughly $1 billion more than last year's $9.6 billion allocation. Meanwhile, much smaller funds that help cities build new homes with block grants are set to be cut by Congress).

The problem, said the Housing Authority's Sullivan, is that the funding increases for vouchers won't help more people find homes -- they simply meet the demands of rising rent.

With rents in Colorado Springs doubling over seven years, HUD is simply doling out more federal housing assistance to landlords. Meanwhile, tenants are also paying more, he said.

As for building, the budget cuts to HUD's home-building and purchasing grants could have a huge effect on the Pikes Peak region.

"The cost of each new unit is going up every day, so if the amount of funding is level to the previous year, through inflation alone you've lost buying power. So it means that eventually, the inventory will, in fact, shrink."

Stacked deck

But not all roadblocks to low-income housing have to do with money. One of the biggest pitfalls affecting low-rent projects in this moving-on-up little city is the public perception of the low-income renter.

"People think of HUD tenants as the state's rejects," said HAC's Hanselka. "I say, 'No, it's elderly citizens, disabled people, whose income you can count on.' "

Their income can be counted on, because it comes directly from Uncle Sam. Getting that message out to landlords is not easy. And it's hard to convince those who live near proposed low-income apartment complexes.

Just last year, one affordable housing project in the Briargate area was quashed by neighborhood opposition, based in part on fear that low-income apartment units and their economically-challenged inhabitants would do damage to property values.

City councilors say they voted down the projects based on building standards, the company behind one of those projects is suing Colorado Springs under the Fair Housing Act.

Meanwhile, another "not-in-my-back-yard" battle is brewing in the Rockrimmon area, where Greccio housing has proposed a development for 82 seniors and 72 low-income families.

Still another project in only the conceptual stages for the Upper Shooks Run area of downtown has already faced opposition from a small pocket of residents.

Though some neighborhood groups support these proposals, the NIMBY sentiment is one of the major concerns of the local Affordable Housing Committee, which is recommending an aggressive education campaign to combat the problem.

That NIMBYism, though not new to the Springs, is just another of many signs that the Front Range is no longer a place where poor working families can easily find a cheap place to call home.

Meanwhile, another sign of the times is now flying outside the apartment building formerly known as Mountain Knolls. This month, Aimco Property Management took down the sign that's defined the property for roughly 20 years.

The new name emblazoned alongside Westmeadow Drive?

Broadmoor Ridge.

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