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A housing development sits under construction off Reese Street, located on the southern end of the town of Silverton on Oct. 1, 2021. (William Woody, Special to The Colorado Sun)

A 401(k)-type savings program for homeownership, more funding for federal housing support and a national incentive program modeled after a Colorado policy are among the proposals by a group focused on easing the state’s housing crisis. 

The “Housing Affordability Strategy Group,” convened by Colorado’s U.S. Sens. Michael Bennet and John Hickenlooper, both Democrats, has been meeting since August to come up with potential solutions to the housing affordability crunch facing Coloradans and the country.

“Our housing supply and affordability crisis in Colorado is affecting everyone,” the group said in a report to be released on Monday, “from those experiencing homeless, to the nurses, firefighters and teachers who keep our communities running, to the small businesses that serve as the backbone of our state’s local economies and the large corporations that anchor many industries.”

The report observes “symptoms of the crisis everywhere,” noting that 1 in 4 Coloradans are paying more than 30% of their income for housing costs, as mountain towns and rural areas struggle to fill job openings because housing for workers is short. The lack of worker housing triggers a domino effect that can create gaps in important services like child care, making it even harder to attract workers.

The new proposals come as state lawmakers are also debating how to spend nearly $2.6 billion in unspent American Rescue Plan Act dollars for coronavirus recovery and relief, about $400 million which has been set aside for affordable housing initiatives. 

A legislative task force recently finalized recommendations for how that money should be divvied up, with a focus on creating flexible grant and loan programs that local governments, nonprofits and other groups could leverage alongside their own dollars. 

Gov. Jared Polis has also submitted his own budget proposal that calls for spending $200 million toward projects to tackle homelessness and $50 million toward a new recovery campus in Denver for unhoused people. 

One idea for making home buying more affordable is to create a 401(k)-type employee savings plan that provides a tax incentive for companies to match employee contributions toward the purchase of a home. Under a 401(k) plan, workers can stash away money for retirement before having to pay taxes on it.

The report also suggests using modular housing, low-cost financing and other incentives to speed development and lower construction costs.

Better support for people who are homeless and improved emergency housing and support for families before they’re on the brink of losing their homes also are key to tackling the country’s housing crisis, the report said. 

The group is pushing for a national strategy to curb unnecessary evictions by collecting better data on the problem, providing incentives for landlords who partner with local service providers in a way that prevents evictions, and expanding funding for legal counsel and diversion programs. 

Jenn Lopez, who heads up affordable housing consulting firm Project Moxie and is a co-chair of the advisory group, said the group is pushing for “simple things” — more money for federal programs they see as working well.

She highlighted the Housing Choice Voucher Program, often referred to as Section 8, which provides a rent subsidy paid directly to landlords that low-income families, the elderly and disabled can use for a wide range of housing of their choice, not just subsidized housing projects.

“It works really well. We just need a lot more money and a little bit of flexibility,” Lopez said. “An increase in Section 8 would decrease homelessness significantly.”

She also wants to see more flexibility in how these federal programs are administered. Lopez said that in her more than two-decade career working in the affordable housing arena, “this is the first time … at this scale that federal funds state funds have come with not as many strings attached. 

“And so what do you see? You see innovation right now. So one of the big messages from the group was, can we keep going with this idea of less strings, so that we can continue with this creativity and really be able to pivot and provide solutions more quickly to those in need?”

The report also recommended creating federal incentives modeled after Colorado programs launched by House Bill 1271, which passed last year. That measure set up three new programs aimed at offering grant money and other state assistance to local governments to promote more development of affordable housing.

“The federal government alone can’t solve this, the nonprofits can’t address this alone,” said Kelly Brough, the chief strategy officer at Metro State University and former head of the Denver Metro Chamber of Commerce who is also a co-chair of the group. “We need all levels of government, we need for-profit partners as we work on this.”

Members of the group – made up of more than three dozen local government leaders, housing officials, advocates, developers and others — are holding a video conference Monday afternoon to present their recommendations to Bennet and Hickenlooper.

Daniel Ducassi

Daniel Ducassi is a former Colorado Sun staff writer.