Department of Community Development
Reference: Affordable Housing Coordinator Updates
To: Mayor Gregory Mills and Members of the City Council
Through: Michael P. Martinez, City Manager
Prepared By: Shawn Weiman, Affordable Housing Coordinator
Date Prepared: January 14, 2025
PURPOSE
1) Provide an update on affordable housing initiatives, including an overview of housing affordability, increasing housing supply, adding affordable housing units, and other in-process and future initiatives.
2) Introduce a proposed revision to the Brighton Municipal Code (B.M.C.) definition of affordable housing and a proposed revision to the Attainable Housing Matrix (AHM) of fee reductions for affordable housing.
BACKGROUND
1) The cost of housing, both new construction and existing stock, has outpaced household income, creating a housing affordability gap. Housing affordability in Brighton is stressed at and below 60% Area Median Income (AMI) for renters. One half of below-median income renters are “cost burdened,” spending more than 30% of income on housing.
The Housing Needs Assessment (HNA) approved by the City Council on October 24, 2023, identifies two main goals to alleviate these conditions: (1) increase housing supply at all price points, and (2) encourage and facilitate the supply of affordable housing units mainly at and below 60% AMI.
Strategies to achieve those goals were identified in the HNA and were further developed after conversations with planning staff, Brighton Housing Authority staff, and affordable housing developers. The initial strategies are to ease the process and requirements for adding accessory dwelling units, welcome lower-cost housing types, redefine “affordable housing,” and revise the guidelines for affordable housing fee reductions.
Other in-process and future affordable housing initiatives include:
• Establish an affordable housing development review process (required by Prop. 123),
• Explore City-owned and infill lots for affordable housing and other development project opportunities,
• Examine market-to-affordable conversion programs,
• Identify grant funds available for affordable housing programs,
• Conduct site plan reviews of affordable housing projects to understand challenges and opportunities,
• Revise design-related incentives for new affordable housing including lot coverage, parking, and architectural requirements,
• Update the city website with progress made, and
• Close out the IHOP grant that contributed to paying for the HNA.
2) Upon examination of affordable housing in the B.M.C., the AHM, and the HNA produced these conclusions:
1. B.M.C. § 3-5-10 and Land Use Development Code (LUDC) § 11.03 contain different definitions of affordable housing.
a. The current AMI qualification thresholds of 80% for owner housing & 60% for rental housing (B.M.C.) and 50% in general (LUDC) are below the levels recommended by the HNA and Proposition 123.
b. The B.M.C. is unclear regarding the basis for determining AMI amounts. Both HUD and the Colorado Housing and Finance Authority (CFHA) publish income limit qualification tables based on AMI. The HUD version is organized by metropolitan statistical area (MSA), with Brighton included in the Denver-Aurora-Lakewood MSA. CHFA’s version improves upon HUD’s by separating the figures by county.
2. The AHM was adopted by resolution in 2001 and has been a guideline for providing fee reductions for affordable housing projects. It provides reductions based on three levels of AMI: 50% or less, 60% or less, and 80% or less. The AHM is unspecific in areas and open to interpretation in others. Also, the current fee reductions are not organized such that an average AMI limit can be utilized for multiple units, which is a disconnect with the HUD criteria for Low Income Housing Tax Credits (LIHTC). The HUD tax credits are the means by which most affordable housing construction projects are capitalized and can account for up to 70% of the project’s construction costs. City fee reductions demonstrate to the Colorado Housing and Finance Authority (CHFA), who awards LIHTCs, that the City supports and is committed to the affordable housing project.
3. Affordable housing developers rely on cost reductions, including waived fees, donated land, and tax credits, that make the project possible. Since net operating income is significantly decreased by the limited rent rates, the amount of financing secured to build the project is correspondingly decreased.
4. The HNA found that the 10-year housing need projection is 3100 homes, with a third of those needed at 60% and below AMI. Incentivizing the addition of affordable units at this level will help reach that goal.
5. For reference when understanding how AMI levels equate to housing costs, using the 2024 CHFA Adams County 3-Person Household Income Limit table produces these amounts:
Rent+Utilities Household Income
Affordable Rental Housing = 50% AMI $1,467 / month $58,700 / year
60% AMI $1,761 / month $70,440 / year
70% AMI $2,054 / month $82,180 / year
80% AMI $2,348 / month $93,920 / year
An affordable Owner Housing calculation assumes many variables and is estimated at
100% AMI = $307,900* ($327,600 purchase price w/ 6% down pmt.)
$117,400 Annual Income
*Using HNA assumptions
The estimated 2024 Brighton average detached home sales price is $584,000; townhouse/condo is $425,000; and rental rate is $2,000/mo. (HNA). The median sales price of all Brighton homes is $525,000 (Realtor.com) and median rental rate is $2,070/mo. (Zillow.com).
6. Sources of funding for fee reductions and subsidies may be as follows:
a. Water Impact Fee - As an enterprise fund, a subsidy is required and may come from the general fund, the capital improvement fund, and/or any applicable/available grant funds.
b. Fee in lieu of Water Dedication, Wastewater Impact Fee, Use Tax and Plan Review & Permit Fee - May be reimbursed from the general fund and/or any applicable/available grant funds.
c. Impact fee fund that includes traffic, parks, stormwater, and general services - No replacement funds necessary; grant funds will be pursued.
STAFF RECOMMENDATIONS
To more effectively accommodate and encourage affordable housing development, staff recommends the following:
1. Revise the definition of affordable housing.
a. Use a single definition and move it to a central location in the B.M.C. and cross-reference to this definition (possibly in Sec. 1-4-10).
b. Raise the AMI qualifications to 100% AMI for owner housing and 80% for rental housing. Market-rate rental homes are available above 80% AMI, and a fraction of homes are needed between 60% and 80% AMI, making 80% worthy of some reduction. Owner housing is dependent on many variables including product type and sales price, leading to a more flexible approach of granting incentives.
c. Use CHFA’s Adams County income limit table as the basis for AMI amounts. HUD’s MSA approach is too broad; Brighton-specific data is not available from an authoritative and published source; and Weld County income limits will be fully captured by using Adams County amounts.
d. Proposed definition:
Affordable housing means a dwelling unit or group of dwelling units of either owner housing or rental housing whose sale or rental rate is regulated by a deed restriction and for which minimum qualifications for City fee reductions or other incentives and considerations are defined in Subsections (i) and (ii) below.
(i) Affordable owner housing shall be restricted by deed for a minimum of fifteen years to occupancy by an owner whose household income at the time of purchase is not more than the income limit indicated for 100% Area Median Income or less as shown on the current Colorado Housing and Finance Authority Income Limit and Maximum Rent Table for Adams County, for the applicable size household.
(ii) Affordable rental housing shall be restricted by deed for a minimum of fifteen years to occupancy by a tenant whose household income is not more than the income limit indicated for 80% Area Median Income or less as shown on the current Colorado Housing and Finance Authority Income Limit and Maximum Rent Table for Adams County, for the applicable size household, and for which the rental rate is not more than the maximum rents for the applicable bedroom count. Affordable rental housing may be a multi-unit building in which units are a mix of deed restricted and market rental rates.
2. Revise the Attainable Housing Matrix.
a. Add a fourth rental AMI level of 70% to the fee reduction table that creates an incentive level between 60% and 80% AMI, accommodating an average calculation of total building AMI that may otherwise fall in the 80% level.
b. Structure fee reductions to increase as the %AMI restriction decreases and offer the bulk of reductions starting at 60% AMI to incentivize affordable housing at that level.
c. Add thresholds by which varying AMI levels qualify for reductions via an average and a pro rata threshold. This aligns with qualification methods for LIHTCs and accounts for buildings with a lower number of affordable units that are still worthy of reductions.
d. Indicate that the %AMI restriction level for owner housing is subject to approval and may affect the amounts of incentives given.
e. Update the fee reduction table to reflect recent combining, renaming, and addition of impact fees.
f. Retitle the fee reduction matrix as Affordable Housing Fee & Dedication Reduction Table to represent its function more accurately.
3. Consider fee reductions for merited projects in addition to what the revised table provides, including the fee in lieu of water dedication, the wastewater connection fee, use tax for non-exempt developers, plan review and permit fees, as well as subsidizing the wastewater impact fee. Evaluation of a project should be based on its specific AMI limits and number of units, and how the project aligns with the HNA recommendations and overall benefits to the city.
REQUESTS OF CITY COUNCIL
The City Council’s feedback and direction is requested regarding:
1. The proposed definition of affordable housing,
2. The Affordable Housing Fee & Dedication Reduction Table, and
3. Consideration of additional incentives and making them, as well as incentives for affordable owner housing, subject to individual review and awarded based on merit.
ATTACHMENTS
• Municipal Code & LUDC Definitions of Affordable Housing
• (Draft) Affordable Housing Fee & Dedication Reduction Table
• (Original) Attainable Housing Matrix
• 2024 Colorado Housing and Finance Authority Adams County Income Limit & Maximum Rent Table
• 2025 Impact Fee Amounts
• Memorandum Regarding Affordable Owner Housing