Imagine you’re a school administrator or a firefighter, making $50k a year in a quiet town – somewhere you can raise your kids closer to beautiful rivers and national forests that makes Colorado so special. After years of renting and watching home prices double while your wages inch up, it’s time to invest in a home to call your own. And yet – even with stable income, every home in your town is either out of reach, in questionable condition, or more than a 30min commute from where you work.
You finally hear that your area won some Prop123 funds for affordable housing development, but you know the applications will be extremely competitive and it could be years before units are move-in ready… Can you wait that long? Or do you have to start looking elsewhere and potentially leave your community?
This isn’t a one-off dilemma for rural communities; it signals a weakness in Prop123 funding.
Background
Homeownership is considered a key tool to boost economic stability and address the wealth gap.
In 2018, “50% of all Colorado renters [were] cost-burdened (paying 30 percent or more of their household income towards rent), with 24% extremely cost-burdened, (50 percent or more).”
So, in 2022, Colorado voters passed Proposition 123 to catalyze access to affordable housing. Its broad swath of funding opportunities address a full spectrum of housing needs – everything from homelessness, to buying land for future use, to building and maintaining affordable units for rental and ownership.
Remember, the program is only barely a year old and is managed between two state-level agencies; in a way, it’s still getting its legs. Cities and Counties must first “opt-in” by committing to build 3% housing stock each year. In its first year, Prop123 was funded with roughly 50% of the expected $300 Million. Not surprisingly, most programs were oversubscribed, receiving far more in requests than they had available to spend.
While there’s been meaningful progress thus far, the Dollars-per-County awards seem to leave rural Colorado behind, with some counties receiving no funding at all.
Why the trouble?
Building in rural areas is slow and complex. In addition to resistance to change in some communities, there are a few key hurdles that could be holding rural development back.
No Way to Incentivize Developers for Rural Builds: Developers are naturally drawn to urban environments – one affordable housing expert who asked to remain anonymous shared that, in the span of a 4 years, a developer could build 200+ urban units and collect $2.5–3M in fees, whereas a 10-unit rural project might yield just $100K in fees — hardly worth the effort for many developers.
High Costs, Low Returns: Whether building on-site or using modular components, rural developments are hard to make profitable due to delays, low density and lower prices, and more. Construction productivity, transportation costs, limited local supply chain, and skilled labor shortages can increase the price tag, too.
Some Criteria Unintentionally Disfavor Rural: Prop 123 funding prioritizes high-density projects, which makes sense in urban centers but leaves rural areas at a disadvantage. Aligning “shovel-ready” projects to be more competitive takes time & relationships and the rural areas that are still building capacity around housing may not yet have upfront or matched dollars confirmed.
What do we do?
Rural communities need a holistic and realistic approach to housing that suits their unique circumstances, otherwise folks won’t be able to afford to stay – crippling small town economies and driving even more metropolitan density.
To ensure Prop 123 delivers intended results for the whole state, legislators must consider several potential options to improve outcomes, including but not limited to: adapting formulas to allow higher developer fees or other incentives; prioritizing coordinated development plans to help rural stakeholders pool resources across jurisdictions to reduce costs; and reconfiguring criteria that favor high-density development to also prioritize equitable development throughout low-density areas.
Undoubtedly, philanthropy has a role to play in this realm, too, especially as grants and contracts shift under the current Federal administration. Donors can help local municipalities or nonprofit developers to offset costs of building homes for the most vulnerable community members through low-interest loans or other grantmaking tools.
Without thoughtful adjustments, Prop 123 risks leaving rural Colorado behind, reinforcing a landscape where affordable homeownership remains out of reach for hard-working neighbors who strive to keep rural communities alive and thriving. To secure tangible solutions sooner than later, policymakers must act quickly to hone Prop123 so that it works for every part of the state — not just the front range.
Written By: Maggie Kinneberg
Maggie Kinneberg is a multi-faceted collaborator and leader, focused on the intersections of learning, food systems, and community health promotion....
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