Briefline

Cost to build an affordable home can exceed sales price. Bennet-sponsored bill could help cover the gap.

By: - March 31, 2022 2:09 pm

(Getty Images)

Democratic Sen. Michael Bennet signed on this week to co-sponsor legislation that would make it easier to build and renovate housing in economically distressed neighborhoods across the country.

“Lack of affordable housing is affecting every part of our state, from Denver to our mountain towns,” Bennet said in a statement. “Our legislation would invest in our communities to help address this crisis and boost the supply of affordable housing, reinvigorating neighborhoods across Colorado and ensuring families can stay in their homes.”

GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX

The Neighborhood Homes Investment Act, introduced by Maryland Democratic Sen. Ben Cardin, would create a federal tax credit to cover the gap between construction or renovation costs and a home’s actual sales price. It would target neighborhoods with poverty rates 130% greater than the local rate, where residents have incomes that are 80% or less than the area median income and where home values are below the median.

It’s an effort to address a national affordable housing crisis, one Colorado has acutely felt over the past few years with a population boom and increasing cost of living.

The credits would be awarded to developers, lenders or local governments only after rehabilitation or construction is completed and the home is occupied by an eligible person.

“It is imperative that we deploy a wide range of resources to make affordable homeownership available to essential workers in our communities,” Heather Lafferty, CEO of Habitat for Humanity of Metro Denver, said in a statement. “Habitat for Humanity applauds Sen. Bennet for supporting the bipartisan Neighborhood Homes Investment Act, an important tool which will enable community revitalization and help more families achieve homeownership.”

It is imperative that we deploy a wide range of resources to make affordable homeownership available to essential workers in our communities.

– Heather Lafferty, CEO of Habitat for Humanity of Metro Denver

A 2021 housing study conducted by the San Luis Valley Housing Coalition found that a 1,500 square foot home costs $285,000 to construct, according to a local builder. That doesn’t consider land, tap fees, design costs and infrastructure. Median home prices vary across the valley, but Costilla County saw a median price of $212,000 in 2020. That’s potentially a minimum loss of $68,000 for builders.

A lot of times, building in those types of areas is not financially viable.

“The cost to build exceeds what buyers and renters can afford, as well as median home prices and rents for existing housing. Residential development is time consuming, risky, and currently presents limited or no opportunity for profit,” the report reads.

That report “showed that two common threads in this area are lack of new construction at affordable sale prices for the low-moderate income households and the need to rehabilitate abandoned or uninhabitable homes that are being lived in by households in generational poverty,” SLVHC executive director Dawn Melgares said in a statement.

She said the legislation could help fill the gap of 1,800 housing units needed over the next five years.

Nationwide, Bennet’s office said the bill could help revitalize 500,000 homes and create $100 billion in development revenue over the next 10 years.

A map of Colorado communities that would qualify for credits under the bill includes a large portion of the San Luis Valley, parts of the Eastern Plains, the northwest corner of the state and various Denver metro area neighborhoods.

The bill is currently stalled in the Senate but has 20 bipartisan co-sponsors.

SUPPORT NEWS YOU TRUST.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Sara Wilson
Sara Wilson

Sara Wilson covers state government, Colorado's congressional delegation, energy and other stories for Newsline. She formerly was a reporter for The Pueblo Chieftain, where she covered politics and government in southern Colorado. Wilson earned a master's degree in journalism from Northwestern University, and as a student she reported on Congress and other federal beats in Washington, D.C.

MORE FROM AUTHOR