School is finally out for the summer.  With that comes less traffic, more out of office messages, and possibly some much-deserved time off.  Last year, I visited Park City, Utah and kept saying, “wow, I understand why people want to live here!”  That’s when my real estate agent friends pointed out that even as a partner at a law firm, I still might not be able to afford to live in Park City or the surrounding areas.  That blew my mind!  It also got me thinking about how if I couldn’t afford to live there, teachers, firefighters, and ski instructors certainly could not either. 

The nation faces a critical shortage of not only affordable housing, but workforce housing as well.  Nowhere is that shortfall more pronounced than in America’s top vacation destinations, such as Park City, Miami, California, and Colorado. Often playgrounds of the ultra-rich, these locations endured an ever-worsening paucity of housing for the people who work in the hotels and restaurants, as well as the folks who staff police, fire and EMT departments, hospitals, schools, and libraries.  As a solution, developers and governments are partnering to construct workforce housing projects for the “missing-middle.”  At the U.S. Housing and Community Development Conference and Expo developers emphasized that that in order for these projects to cash flow in this interest rate environment, developers need governments to contribute more than just land in a public-private partnership for a workforce housing project.

Governments like the City of Miami Beach, Florida have been praised for understanding this need for workforce housing projects like the Collins Park workforce housing project.  The Collins Park workforce housing project will include 80 residential units that will be prioritized for income-eligible artists, educators, first responders, veterans and other Miami Beach employees with households that earn 120% of the area median income for Miami-Dade County or less.  This project, which was structured as a public-private partnership between Servitas LLC and the City of Miami Beach was partially funded through a $4 million grant to the Miami City Ballet from the city’s 2022-voter led Arts and Culture General Obligation Bond program, “aimed to kill the City’s Spring Break image.” The Collins Park workforce housing project will also include dormitory housing serving Miami City Ballet’s student dance education program and feature ground floor space for potential public, cultural or performing arts activations through not-for-profit partners.

But now, the State of Colorado is finding ways to “remove artificial barriers to housing, making living in Colorado more affordable for all” – especially the “missing middle.”  Two weeks ago, Governor Jared Polis made history by signing House Bill 24-1316 into law.  Dubbed the Middle-Income Housing Tax Bill, HB24-1316 is the first law of its kind to leverage private sector investment to support the missing-middle (defined as households earning between 80% and 120% of Area Medium Income (AMI), or up to 140% in rural resort counties).  The Colorado Housing and Finance Authority will determine the amount of the credit for each property and rent cannot exceed 30% of the imputed income limitation applicable to a unit.   Through this program Colorado is promoting the provision for housing for the missing-middle by providing tax credit awards in the amount of $5 million per year in 2025-2026 and up to $10 million per year in 2027-2029 to developers who provide a “qualified development” for housing these individuals.[1]  The pilot program will run initially for a period of five years.  Providing this tax credit builds upon the Affordable Housing Tax Credit program and the Colorado Housing and Finance Authority’s Middle-Income Access Loan Program and allows allocations of tax credits to for-profit affordable housing developers, nonprofit affordable housing developers, and governmental and quasi-governmental entities. 

This is a major accomplishment for the state that faces a short fall of 100,000 homes and apartments, the second worst housing deficit in the country, other than California. It shows how governments, like the State of Colorado, can find ways to work with developers in order to help address and ameliorate the extreme lack of affordability for housing, which has long been a problem in the mountains and is now “skiing” its way down to a town near you.

[1] The Colorado Housing and Finance Authority also may allocate any unallocated credits from the preceding calendar years to the current year.