Prop 123: Real Solutions for our Housing Crisis
We’re just a few days away from election day, and closer than ever to potentially passing a measure that will improve the lives of thousands of Coloradans.
If you’re interested in real estate in Colorado, you’ve probably already heard of Proposition 123, the first proposition that puts affordable housing on the ballot statewide in Colorado. If you haven’t voted YES yet, or you have friends or family that are on the fence about voting yes on Prop 123, we’ve busted some myths and discussed Prop 123’s solutions to help you decide.
Across the political spectrum, there’s no debate that Colorado is in a housing crisis. Of course, opinions on what to do about it range from nothing, the market will fix itself, to banning panhandling, to addressing root causes like the housing shortage. We at Urban Land Conservancy align ourselves with solutions that are proven to improve people’s lives, which is why we’re proud to support Proposition 123.
The Colorado 2022 Ballot Information Book cites two arguments against Proposition 123:
1) Many of these programs do not address the underlying causes of high housing costs. Pumping money into the market may distort it further, and the real beneficiaries will be landlords and housing developers. This is neither the role of government nor the best use of public resources.
2) The measure is unnecessary and will reduce Coloradans’ future TABOR refunds. The state already provides resources to support affordable housing, including over $1 billion in federal stimulus funds allocated in recent years. This measure diverts money away from the state’s budgeting process—money that goes toward priorities as determined by the legislature through deliberation and consultation with stakeholders and constituents—and instead sets aside money in a fund with fixed uses.
The few opinion pieces published that were against 123 cited similar concerns. Luckily, Proposition 123 was written with a deep understanding of the housing market and the challenges of the housing crisis, and many of these arguments are addressed by provisions in the measure. Let’s deconstruct the concerns here.
- Many of these programs do not address the underlying causes of high housing costs.
The main cause of our housing crisis is a shortage of housing combined with an increased demand to live in Colorado. Of course, there’s very little we can do about people moving to Colorado. But we can increase our housing supply, which is the main goal of Proposition 123. In order to make use of any of the funding, local governments must increase affordable housing in their communities by 3% each year. To help them achieve this, the measure creates a fast-track approval process for affordable housing projects and sets aside grant money to support the planning departments of local governments. Prop 123 does not only address the root cause of the housing crisis, but is our best chance to increase our housing supply as soon as possible.
- Pumping money into the market may distort it further, and the real beneficiaries will be landlords and housing developers.
This concern has been expressed in a few opinion pieces in local Colorado news, with no extra context on how the money may distort the market or how the funding would end up in the hands of landlords and for-profit developers. Proposition 123 has very clear stipulations about who the funds can go to (primarily local governments and non-profit organizations with a demonstrated history of providing affordable housing) and how the money can be used. For instance, any existing or new affordable housing that receives money from the measure must remain permanently affordable. The measure also funds an Affordable Housing Equity program to ensure that existing housing remains affordable, and this program includes a tenant equity vehicle that takes any money made by the affordable housing development and gives a share back to tenants. Prop 123 is designed to put money back into the pockets of the people.
- This is neither the role of government nor the best use of public resources.
Unfortunately, new research from Colorado Futures Center has shown that we can’t trust the market to “correct” itself on this issue. It’s going to take intervention to solve this crisis that 86% of Coloradans identify as a “very serious issue”. If it is not the role of government to serve its citizens when they are in crisis, then what purpose does government have?
- The measure is unnecessary and will reduce Coloradans’ future TABOR refunds.
The measure may reduce Coloradan’s TABOR refunds in some years–by about $43-$86. The households that would be most affected by that reduction are also the ones who will qualify for the programs provided by the measure, and will be able to take advantage of lower housing costs, grants, and loans. It’s also possible our legislators would have used the money being reprioritized for this measure for other purposes, therefore there are many scenarios that exist in which Prop 123 would not impact TABOR returns at all. As for the necessity of the measure, once again, there is no debate on the seriousness of the housing crisis, and the fact that it will not solve itself.
- The state already provides resources to support affordable housing, including over $1 billion in federal stimulus funds allocated in recent years.
If the current state funding for affordable housing was enough, we wouldn’t be seeing this crisis continue to worsen. It’s true that Colorado received $1 billion in one-time pandemic relief funding, but one-time funding is not a long-term solution to what is primarily a systemic real estate issue. Affordable housing developments take years to plan, build, and permit, and nonprofits and local governments have to compete with wealthy for-profit developers in an incredibly competitive market. Funding instability is a huge problem for not-for-profit entities as they try to plan real estate developments years into the future. Prop 123 will create a reliable source of funding that will not only allow us to help Coloradans in the short term, but also plan for a long-term affordable future.
- This measure diverts money away from the state’s budgeting process—money that goes toward priorities as determined by the legislature through deliberation and consultation with stakeholders and constituents—and instead sets aside money in a fund with fixed uses.
Some folks have indeed been concerned that the programs in Prop 123 would take away funding from other important programs like education or healthcare in years when Colorado doesn’t collect more taxes than the TABOR Limit. Currently, all available forecasts project large enough TABOR surpluses to fully fund Prop 123 without any impact on the general fund, which funds education and healthcare. However, in case of years when taxes collected DON’T exceed the TABOR limit, the measure’s writers understood there would be a need for flexibility, and included a provision so that money can be reallocated from the affordable housing fund and used to balance the state budget according to the legislature’s priorities. Even in the case of a severe economic recession, the state also has $3 billion dollars in reserves allowing it to offset revenue losses and continue funding Prop 123 and other priorities without any cuts to the general fund. This means that those important programs won’t suffer, and leaves freedom for the legislature to decide what priorities will work best for Coloradans in any given year.
Again, let’s all get out to vote this year and bring our friends, family, and neighbors with us! We have a chance to make real change in the lives of Coloradans, and it’s time to seize it. Join ULC in voting Yes on Prop 123!
For more information about voting in Colorado, click here.
For more information about Prop 123, click here.
To read the full text of the measure, click here.