Presentation by Heidi Aggeler, BBC Managing Director, at Tom Ragonetti's 21st Annual Land Use Conference on December 4, 2015.

1. Affordable Housing
Have we made a dent?
Presented by
Heidi Aggeler, Managing Director
BBC Research & Consulting
December 4, 2015

3. What is
affordable
housing?
Federal definition of affordability:
1). Housing costs are “affordable” if
they do not exceed 30% of
household’s gross monthly income
2).“Costs” include basic utilities,
mortgage insurance, HOA fees and
property taxes
Households paying >30% for
housing are “cost burdened”
>30%
>50%
Households paying >50% for housing
are “severely cost burdened”

4. Evolution of Affordable Housing
Policies and Programs
1934
1937
Public
Housing
1938
Federal
National
Mortgage
Association
National Housing
Act and Federal
Housing
Administration
1949
Urban Renewal
1965
HUD
1968
Fair Housing Act
1974
Section 8
1974
Community
Development
Block Grant
1986
Low Income
Housing Tax
Credit
1987
McKinney
Homeless Act
1990
Housing
Investment
Partnerships
Program
1992
Housing
Opportunities
for Persons with
AIDS
2008
Neighborhood
Stabilization
Program
2009
American
Recovery and
Reinvestment
Act
2010
Dodd-Frank
Consumer
Financial Reform
2013
Disparate
Impact Rule

5. Primary Programs
Rental Programs Homeownership Programs
Provide direct subsidies to renters:
 Housing choice voucher/Section 8
 Other types of tenant based rental
assistance (TBRA)
Create affordable rental housing:
 Low Income HousingTax Credit (LIHTC)
 Home Investment Partnerships
 Private activity (tax exempt) bonds
 Local revenue streams
Provide direct subsidies to owners:
 Home mortgage interest tax deduction
 Federally subsidized mortgage insurance
 Downpayment/low interest rate
purchase assistance
Create affordable ownership housing:
 Inclusionary zoning
 Home Investment Partnership
 Private activity (tax exempt) bonds
 Local revenue streams

6. 80-85%
Rental Units
95-98%
Homes
It is critical that the private sector is part of
affordable housing strategiesRole of
the Private
Sector in
Providing
Housing

7. Eligibility levels usually based on
Median Family Income (MFI)
$79,900
$99,400
MFI for a family of 4
(Denver-Aurora-Broomfield)
Who is
Eligible for
Affordable
Housing
Programs?
MFI for a family of 4
(Boulder)

8. Income Thresholds & Target Housing
< 30% MFI
“extremely” low income
=< $24,000 per year, poverty level
30-50% MFI
“very” low income
$24,000-$40,000 per year
50-80% MFI
“low” income
$40,000-$65,000 per year
80-120% MFI
“median” to “moderate” income
$65,000-$95,000 per year
Public housing, Section 8, tenant-based rental
assistance, transitional housing, other deeply
subsidized rentals.
Public housing, Section 8, rental tax credit
developments, other rental products. Shared
equity and land trust for homeownership.
Generally live in privately provided rental
housing. Ownership with shared equity, land
trust, other deed-restricted products,
attached homes, homes in affordable areas.
Privately provided rental housing. General
target for homeownership programs, can buy
without assistance in affordable areas.

9. 1). Physical development of housing lags
behind the factors that create
demand (direct assistance more
flexible)
2.) Inconsistent philosophies if/how the
government should address housing
needs and poverty
3). Housing initiatives often driven by
other policy goals
4). Housing is very dynamic, closely tied
to many aspects of the economy:
interest rates, tax incentives, returns on
capital, employment levels, demographic
shifts, in-migration
Why do
we have
affordable
housing
needs?

11. 0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1980 1990 2000 2010 2012
Denver Region Population Growth
1980–2012
Housing units developed
to accommodate growth:
550,000
(or 48% of the region’s
housing units)

12. Number of New Residents by
Decade (Denver Region)
230,798
576,378
377,081
1980s
1990s
2000s
1,184,257
new residents
Total
+
+
+

13. Why do we gain or lose residents?
Because of net migration
-40,000
-20,000
0
20,000
40,000
60,000
80,000
Natural Increase
Net Migration
Creates challenges in addressing needs because needs,
characteristics and preferences of in-migrants are unknown

14. Housing Affordability
Overall changes in costs v. changes in incomes
Homeownership affordability
Rental affordability

15. Changes inValues v. Incomes
 Nationally, largest price jumps occurred in the 1970s and 1990s (rents only)
 Regionally, price jumps occurred in the late 1990s
 The “purchasing power” of renters has declined more than that of owners
United States 1970 1980 1990 2000 2014
1990-2014
Change
Median HomeValue $17,100 $51,300 $79,831 $123,887 $160,000 100%
Median Owner Income $9,700 $19,800 $35,589 $50,505 $60,000 69%
Median Rent $108 $241 $256 $646 $850 232%
Median Renter Income $6,300 $10,500 $20,295 $26,848 $30,000 48%
Denver Region 1990 2000 2014
1990-2014
Change
Median HomeValue $86,800 $189,000 $259,000 198%
Median Rent $429 $750 $1,124 162%

16. Homeownership Affordability
 Recent increase in home prices is steeper than in the past
 Percent who can buy median-priced homes on downward trend since 2012
$0
$100
$200
$300
$400
Q1
91
Q1
92
Q1
93
Q1
94
Q1
95
Q1
96
Q1
97
Q1
98
Q1
99
Q1
00
Q1
01
Q1
02
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Q3
13
Q3
14
($inthousands)
Median Price
0%
20%
40%
60%
80%
100%
Q1
91
Q1
92
Q1
93
Q1
94
Q1
95
Q1
96
Q1
97
Q1
98
Q1
99
Q1
00
Q1
01
Q1
02
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Q3
13
Q3
14
Percent of Buyers who can Afford Median Home

17. How Denver Region Ranks in
Home Purchase Affordability
0
50
100
150
200
Q1
91
Q1
92
Q1
93
Q1
94
Q1
95
Q1
96
Q1
97
Q1
98
Q1
99
Q1
00
Q1
01
Q1
02
Q3
04
Q3
05
Q3
06
Q3
07
Q3
08
Q3
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Q3
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Q3
11
Q3
12
Q3
13
Q3
14
National Rank, 2015
Regional Rank, 2015
Denver has never made “least” or “most” list produced by the National
Association of Home Builders (NAHB)
Note: Lower numbers indicate
higher levels of affordability

18. Homeownership Affordability
Indicators are Confused by…
 Influx of higher income (>$100,000) buyers into region
 Low interest rates
‒ Played a bigger factor in keeping homes affordable than any other
single policy
23% v. 40%nowin 1999

19. Rental Affordability
$0
$400
$800
$1,200
$1,600
Q1
98
Q4
98
Q3
99
Q2
00
Q1
01
Q4
01
Q3
02
Q2
03
Q1
04
Q4
04
Q3
05
Q2
06
Q1
07
Q4
07
Q3
08
Q2
09
Q1
10
Q4
10
Q3
11
Q2
12
Q1
13
Q4
13
Q3
14
Q2
15
Average Rents, Denver Region
Very low levels of post-
recession development
rapid influx
of renters
highest
rents in
history
+ =
0
2,000
4,000
6,000
8,000
10,000
New Apartment Units Added in Metro Area by Year

20. Rental Affordability
89,000
renters earning
<$20,000
(28% of all renters)
1999 Now
110,000
renters earning
<$20,000
(26% of all renters)
57,000
units affordable to renters
earning <$20,000
(18% of all units)
26,000
units affordable to renters
earning <$20,000
(7% of all units)

22. We are Growing Quickly, Again
480,718
618,821
313,333
62,138
663,862
314,638
558,503
Adams County
Arapahoe County
Boulder County
Broomfield County
Denver County
Douglas County
Jefferson County
Population, 2014
3 million peopleTotal

23. -4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0 10 20 30 40 50 60 70 80
Age inYears
Growth Today is
Different from
1990–2000
Slower in pace
Similar in numbers
Different in housing preferences
Huge migration of
24-35 year olds
(their housing decisions will
heavily influence growth)
Net Migration by Age, Denver Region, 2000-2010

24. Deeply Affordable Rental Housing
Remains Concentrated in Denver
Units Affordable at <$25,000/year Units Affordable at <$50,000/year
Broomfield
1%
Douglas
1%
Boulder
6%
Jefferson
12%
Adams
13%
Arapahoe
16%
Denver
49%
Broomfield
1%
Douglas
3%
Boulder
10%
Adams
13%
Jefferson
16%
Arapahoe
21%
Denver
35%

25. Denver is also the 2nd worst city behind NewYork
for the percentage of low income households living in low income areas
AND has the 3rd largest increase in segregation between 1980 and 2010
Top Income Segregated Cities in the Nation
We areVery Income
Segregated
Lower is better!
Residential Income
Segregation Index
(RISI) = 55 in 2010
v. 34 in 1980
NewYork City
San Antonio
Philadelphia
Denver
1st
2nd
3rd
4th

26. Homeownership Less Affordable
Out of 68 metro areas, Denver is the 34th most affordable region in the
Western U.S. for home purchases v. Portland (41st), Santa Fe (43rd), and San
Francisco (68th)
61% of homes affordable to median income buyer in 2015
60% in 1990
64% today
25% in 1990
31% today
Homeownership Cost Burden
31%

27. 20,000 more poor renters than in 1999 v. 50,000 more rich renters
(earning <$75,000)
 New development priced to accommodate new high
income renters. Low rent units moved up to accommodate
middle income renters.
54% of renters today are cost burdened v. 39% in 1999
 Shortage of 84,000 units renting at <$500/month
 The region lacks reliable, effective means to address low income renters’
needs
 City of Denver still disproportionate provider of region’s rentals, but:
‒ Now has some of the highest rents
‒ Lack of larger units + rising rents = families seeking units in
suburbs, where rental development remains very minimal.
Critical Needs: Low Income
Renters
54%

28. Low Income Renters
 Grown dramatically in numbers
 Number experiencing cost burden much higher
 Few resources to address—no federal budget increases, few local solutions
 Growth in suburban poverty has not been met with housing alternatives
Would-be Owners
 Benefitted from historically low interest rates
 Lack of homes to buy in desirable areas, close to work a major challenge
Current Owners
 Region still affordable if coming from manyWestern metro areas
 Long time residents have trouble “buying their home now”
 Lack of diverse product types to accommodate aging residents
 Transit, availability of services in suburban areas a challenge in future
SUMMARY: Have We Made a Dent?

30. Two largest age cohorts with economic power—
Millennials and Baby Boomers—will determine
housing demand
Short Term
Millennials
will start
families
and move
to…?
Their
parents
may
relocate
to…?

31. Long Term
Increase of 1.22 million people by 2040 to 4 million
276,000Adams
County
277,000Arapahoe
County
192,000
Douglas County
256,000
Denver County 85% of
growth
will occur
in these 4
counties
More seniors

32. new
homes
new
homes
1980-2010 2010-2040
Long Term Home Construction
48%
100% By 2040, we will need:
400,000
more housing units

33. Long Term Services
We will also need expanded social services and transit for:
Population of residents with disabilities, increase of 250,000
Persons living in poverty, increase of 140,000
Seniors, the vast majority of whom will age in place. Suburban
counties will age the fastest.
1 in 5
(or 800,000)
1 in 10
now
residents will be seniors v.

34. Equalize the geographic distribution of
amenities Millennials and in-migrants
demand
Distribute a variety of housing products
to accommodate workers closer to
areas of employment. Focus on micro-
economies within region.
Continue to expand transit options
Reduce economic inequality
How Can We Grow Smarter?
$ / ¢