Don't have a lot of dough? Good luck finding an apartment locally.
The preliminary results from a new Colorado Springs and El Paso County Affordable Housing Needs Assessment (the last study of its kind was done in 1998), performed by Mullin and Lonergan Associates in Pittsburg, found that nearly half of El Paso County renters were spending 30 percent or more of their income on rent. That's despite the fact that "affordable" rent shouldn't exceed more than 30 percent of income.
The city has a shortage of affordable apartments. The study authors, who will issue a full report with suggested solutions in August, found that there was a shortage of 12,666 rentals in the city and 5,740 rentals in the county for low- and moderate-income people. And the Apartment Association of Southern Colorado found that there was only a 6.7 percent apartment vacancy rate in Colorado Springs in the first quarter of the year, and a median rent of $793.10. Local affordable rent for low-income families should not exceed $719, or $431 for very-low-income families, according to the needs assessment.
The situation is not expected to get better. Though the Pikes Peak Regional Building Department has issued permits to build 3,314 apartments since 2004, not many of those have been affordable. According to the Apartment Association report, the average rent for a Colorado Springs apartment built between 2005 and 2011 is $1,168.76. And the needs assessment study found that the gap between those who need affordable apartments and the number of available affordable units is expected to grow in future years.
So why isn't supply keeping up with demand? Richard Sullivan, the former director of Colorado Springs Housing Authority and a board member of the El Paso County Housing Authority Board, offers a simple answer.
"[Building] housing is a capital-intensive event and there's a lack of capital for affordable housing," he says. "Period. End of subject."
In other words, affordable housing is too expensive to build without subsidies, which also holds true nationwide. And there aren't many subsidies left.
Squeezing out the money
As the executive director of the local nonprofit Greccio Housing, Lee Patke's mission is to create affordable housing, and he hopes to grow his operation 15 percent over the next several years.
Greccio is overcoming the odds by renovating old buildings — for the cost of building 25 new units, Greccio can create 100 to 150 units in existing buildings — and by pursuing every grant and subsidy available.
There are two main subsidies for local affordable housing projects: Low Income Housing Tax Credits and the El Paso County Multifamily Mortgage Bond Program.
Jerilynn Martinez, spokesperson for the Colorado Housing and Finance Authority, which administers the federal tax credit, says states are allotted the money based on population. Colorado gets about $12 million a year. Developers have to meet strict requirements to qualify, but even if they do, only one in four applicants gets the credits. Thirteen developments got them last year.
Credits aren't a big help to developers directly — rather they're sold and the profits are used to get projects off the ground.
Lee Wolf, a local who calls himself "the apartment guy" because he's developed, managed, and acted as a receiver for apartment projects, as well as done market studies for around 15,000 apartments, says of the program, "It's a very complicated thing, but it works and there aren't enough [tax credits]; I mean, the country needs five times more."
The other option is the county program, but there's only about $2 million in the rolling fund, Sullivan says, so the money is really there to fill small gaps, and it too comes with restrictions.
Local developer Kevin Walker has been trying for a couple of years now to develop affordable apartments for seniors near Venetucci Farm. He says he's about to give up.
Even if he can get enough subsidies to get the project off the ground, he says, he can't guarantee he'll be able to get enough renters. Due to costs, he says, his apartments would be on the high side of the "affordable" scale, and many potential renters will simply lease whatever is cheapest, even if it's a unit that's old and falling apart.
That's a common problem, says Wolf, who explains that the difference in construction costs between "cheap" and "expensive" apartments is at most 20 percent. Asked why anyone would even try to build affordable units given the cost, he says, "Some of us have good hearts, some of us want to help with a national problem, and, as a developer, you can make some money."
But you need subsidies to make money he adds, saying that "only a fool" would build affordable units without them.
In the past, for-profit developers weren't expected to build cheap units, Sullivan says. The government did that. Large-scale public housing projects, he says, stopped being funded in the 1990s. Since then, much of the existing public housing has fallen into disrepair and there have been few new projects to replace or add more affordable housing. There are a few federal programs left, most notably the Section 8 program, which subsidizes rent at apartments for qualified people. But those programs have thousands of people on wait lists.
"Addressing the problem takes money," Sullivan says.
Specifically — and Wolf agrees on this one — federal money. But given that funding for housing has been scarce for decades, no one is counting on that to happen any time soon.