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Feb 1, 2017

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Senate Bill 98 is a win for landowners, communities and affordable housing

by | Feb 1, 2017

Family Economic Security

It’s no secret that there is a shortage of affordable housing across Colorado. While there appears to be some appetite for compromise at the state capitol this year, previous attempts to address the shortage fell short because of concerns about costs and the government’s role in “subsidizing” affordable housing. But what if there was a way that Colorado could preserve affordable-housing communities and promote home ownership while fostering wealth accumulation for its low- and moderate-income residents, at no direct costs to the taxpayers?

Manufactured homes — or, homes that are built in a factory and then transported to a plot of land —offer Coloradans an opportunity to accomplish these goals on a limited scope. Comprising roughly 4 percent of Colorado’s current housing supply, manufactured homes offer a quality, affordable-housing alternative that could help many low- and moderate-income Coloradans realize the elusive dream of home ownership. Case in point: In 2014, the average price of a new manufactured home in Colorado was a mere $65,300, compared to $345,800 for a traditional site-built home.

The vast majority of manufactured homes in Colorado are located on privately owned plots of land. However, a quarter of these homes are placed in “land-lease communities” (more commonly known as “mobile home parks”) where individuals own their homes but rent the land from a “community owner.” These communities differ little from typical suburban neighborhoods. Homeowners form associations and hold community gatherings. Many of these communities offer amenities such as playgrounds, swimming pools and activities for kids.

Unfortunately, homeowners in these communities risk being displaced (or increased rents) if the community owner decides to sell the land to an outside developer or another community owner. Because of the appeal and increased demand for Colorado real estate, land-lease communities across the state are shutting down as community landowners weigh lucrative offers from developers interested in building apartments, townhomes, traditional housing or shopping centers that could force the tenants to relocate to another community, or lose their homes altogether.

To be clear, community owners in Colorado are entitled to buy, sell, or develop their land as zoning codes allow – sometimes at the tenants’ expense. But the cost of relocating a manufactured home can range from $3,000 to $10,000. Displaced tenants — many of them low-income families or seniors —might not have enough cash to relocate. While a small handful of manufactured homeowners in these communities have been able to move into other communities, the recent displacement of hundreds of families and the disruption of affordable housing communities across Colorado warrants closer examination.

Senate Bill 98, sponsored by Sen. John Kefalas, D-Fort Collins, and Rep. Joann Ginal, D-Fort Collins, attempts to promote and incentivize the conversion of land-lease communities into resident-owned communities. A resident-owned community is formed when the residents of a land-lease community work with various nonprofits and financial institutions to obtain the financing necessary to offer a competitive price for the land. When these collaborative efforts are successful, and they often are, the community remains intact while the landowner gets a fair price for the property. Once the sale of the land to the community members has been finalized they work collaboratively through a governing body (such as a homeowner’s association) to maintain the infrastructure of the community, improve their homes and ensure that the community is a desirable place to live. While a handful of resident-owned communities already exist in Colorado today, there are no incentives for landowners to consider an offer from residents who want to buy the land.

SB 98 not only provides such incentives to community owners, it also places responsibility on the residents of these communities to organize and educate themselves on the complexities of offering a competitive offer for a piece of real estate. Under Colorado law, community owners must provide only 10 days notice to their residents if they decide to sell their land. SB 98 would extend the notice provisions to tenants to not less than 30 days and not more than one year, but only if the community owner has been notified well in advance by a homeowners’ association or cooperative of their interest to purchase the land.

If the residents fail to make their interests in acquiring the property known, the community owner must only provide 10 days notice of their intention to sell. If the land is sold from the community owner to the residents, as opposed to another private owner or developer, the community owner will receive a state tax deduction of up to 100 percent of the recognized gain from the sale — providing a strong incentive to keep the community intact.

Previous legislation to promote the creation of resident-owned communities in Colorado failed because lawmakers sympathized with community owners who felt the measures dictated what they could do with their land. SB 98 changes course from the previous similar bills by making it explicitly clear that landowners can reject an offer from residents as long as negotiations are conducted in good faith.

There’s also been some resistance on this issue because the “quality” of manufactured housing has been unfairly stigmatized. Fortunately, manufactured housing has come a long way in recent years. In fact, for over 40 years manufactured homes have been built in compliance with regulations set forth by the federal Department of Housing and Urban Development. These regulations have not only drastically improved the quality of these homes, but have also significantly reduced their production costs and made them affordable homeownership options.

Manufactured homes aren’t necessarily less expensive than site-built homes because they are “low-quality” homes, they are just built in a more efficient and cost-effective manner. These days, the only real significant difference between a manufactured and site-built home is that the former is built in a factory and the latter is built on-site.

Another upside to resident-owned communities: Studies have shown that manufactured homes become appreciating assets and a worthwhile investment when individuals own both their homes and the land. Considering that Colorado’s income inequality has been growing over time it is important now more than ever to implement policies that would foster wealth accumulation among low-income Coloradans.

Many affordable-housing initiatives try to ensure that low- and moderate-income individuals can live in rental units without paying more than 30 percent of their income on rent. We at CCLP would be remiss, however, to ignore the fact that low-income manufactured home owners have been more satisfied with the quality of their homes and pay less on housing costs than low-income renters. Plus, it has been shown that when manufactured home owners can buy their communities they thrive like never before.

CCLP hopes that SB 98 will lead to the formation of more resident-owned communities and, as a result, preserve and expand affordable-housing communities. SB 98 seeks to capitalize on these advantages and we are proud to offer our support for its passage. To learn more, click here.

–Kristopher Grant

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

Health First Colorado is the name given to Colorado’s Medicaid program. Medicaid provides public, low-cost health insurance to qualifying adults and children. It is an entitlement program funded by the federal, state, and county governments and is administered by counties in Colorado. Those who are required to pay must pay a small co-pay when receiving certain health care services.

State Department: Department of Health Care Policy and Financing

Eligibility: Most adults 18 to 64 are eligible for Medicaid in Colorado if their household income is at or below 133% of the federal poverty limit (FPL). Pregnant women are eligible with incomes of up to 195% FPL, while children under 18 may be eligible if the live in a household with income at or below 142% FPL. Some adults over 65 may also be eligible for Medicaid.

Program Benefits: Through Medicaid, low-income Coloradans are eligible for a range of health care services at little to not cost. Services provided include doctors visits, prescription drugs, mental health services, and dental care. Co-pays for certain individuals may be needed for certain services.

Program Funding and Access: Colorado funds our Medicaid program through state and federal dollars. Medicaid is an entitlement program, which means that all who are eligible for Medicaid can access the program, regardless of the funding level in a given year. This does not mean that it is always easy to access Medicaid, even when eligible. And since the program is administered by counties, funding levels for county staff and other administrative roles can make it easier or harder for Coloradans to access the program. On top of this, not all medical providers accept Medicaid which limits the ability of Coloradans to seek health services even if enrolled, such as if the nearest provider is a 2+ hour drive away.

Note: This data is from before the pandemic and does not reflect changes in enrollment rules during the COVID-19 pandemic and public health emergency.

Statewide Program Access 2015-19: Over the study period of this report, an average of 89.0% of the population at or below 133% of FPL (i.e., the population who is likely to be eligible for Medicaid) were enrolled in Medicaid in Colorado.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

The Supplemental Nutrition Assistance Program or SNAP helps low-income Coloradans purchase food by providing individuals and families with a monthly cash benefit that can be used to buy certain foods. SNAP is an entitlement program that is funded by the federal and state governments and administered by counties in Colorado.

State Department: Department of Human Services

Eligibility: Currently, Coloradans qualify for SNAP if they have incomes below 200% FPL, are unemployed or work part-time or receive other forms of assistance such as TANF, among other eligibility criteria. Income eligibility for SNAP was different during the study period of this report than today—it was 130% FPL back in 2019 for example. The US Department of Agriculture uses the population at or below 125% FPL when calculating the Program Access Index (or PAI) for SNAP. We follow this practice in our analysis despite Colorado currently having a higher income eligibility threshold.

Program Benefits: SNAP participants receive a monthly SNAP benefit that is determined by the number of people in their household and their income. Benefit amounts decrease as income increases, helping households avoid a sudden loss of SNAP when their incomes increase, even by a minor amount. Benefits are provided to an Electronic Benefit Transfer (EBT) card that can be used to purchase eligible food items, such as fruits and vegetables; meat, poultry, and fish; dairy products; and breads and cereals. Other items, such as foods that are hot at their point of sale, are not allowable purchases under current SNAP rules.

Program Funding and Access: SNAP, like Medicaid, is a federal entitlement program. This means that Colorado must serve any Coloradan who is eligible for the program. As such, funding should not be a limit to how many Coloradans can be served by the program. However, funding for administration of SNAP at the state and county level can limit the ability of county human service departments to enroll those who are eligible. Other program rules and administrative barriers can make it difficult for Coloradans to receive the benefits they are legally entitled to receive.

Statewide Program Access 2015-19: Over the study period of this report, an average of 61.1% of the population at or below 125% of FPL (i.e., the population who is likely to be eligible for SNAP) were enrolled.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

The Special Supplemental Nutrition Program for Women, Infants, and Children, also know as WIC, provides healthcare and nutritional support to low-income Coloradans who are pregnant, recently pregnant, breastfeeding, and to children under 5 who are nutritionally at risk based on a nutrition assessment.

State Department: Department of Public Health and Environment

Eligibility: To participate in WIC you must be pregnant, pregnant in the last six months, breastfeeding a baby under 1 year of age, or a child under the age of 5. Coloradans do not need to be U.S. citizens to be eligible for WIC. In terms of income, households cannot have incomes that exceed 185% FPL. Families who are enrolled in SNAP, TANF, Food Distribution Program on Indian Reservations (FDPIR), or Medicaid are automatically eligible for WIC. Regardless of gender, any parents, foster parents, or caregivers are able to apply for and use WIC services for eligible children.

Program Benefits: WIC provides a range of services to young children and their parents. These include funds to purchase healthy, fresh foods; breastfeeding support; personalized nutrition education and shopping tips; and referrals to health care and other services participants may be eligible for.

Program Funding and Access: WIC is funded by the US Department of Agriculture. The state uses these federal funds to contract with local providers, known as WIC Clinics. In most cases, these are county public health agencies, but that is not the case in all Colorado counties. Some WIC Clinics cover multiple counties, while others are served by multiple clinics. Private non-profit providers are also eligible to be selected as a WIC Clinic.

Statewide Program Access 2015-17: Between 2015 and 2017, an average of 52.2% of the population eligible for WIC were enrolled in the program in Colorado.

Financial Security:
Colorado Works

Colorado Works is the name given to Colorado’s program for Temporary Assistance to Needy Families or TANF. It is an employment program that supports families with dependent children on their path to self-sufficiency. Participants can receive cash assistance, schooling, workforce development and skills training depending on the services available in their county.

State Department: Department of Human Services

Eligibility: In general, Coloradans are eligible to enroll in TANF if they are a resident of Colorado, have one or more children under the age of 18 or pregnant, and have very low or no income. For example, to be eligible to receive a basic cash assistance grant through TANF, a single-parent of one child could not earn more than $331 per month, with some exclusions—and would only receive $440 per month (as of 2022). That said, there are other services provided by counties through TANF that those with incomes as high as $75,000 may be eligible for. In addition to these, participants in TANF are required to work or be pursuing an eligible “work activity” or work-related activity. Any eligible individual can only receive assistance if they have not previously been enrolled in TANF for a cumulative amount of time of more than 60 months—this is a lifetime limit that does not reset. Counties may have additional requirements and offer benefits that are not available in other counties in Colorado.

Program Benefits:  While the exact benefits that one is eligible for under TANF can vary, all qualified participants are eligible to receive a monthly cash payment, call basic cash assistance. Other than cash assistance, counties are have a lot of choice in how to use their TANF funding; generally a use of TANF funds is appropriate so long as it advances one or more of the four purposes of the program: (1) provide assistance to needy families so that children can be cared for in their own homes or in the homes of their relatives; (2) end the dependence of needy families on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies; and (4) encourage the formation and maintenance of two-parent families.

It is important to note that those eligible for TANF are also eligible for many of the other programs we’ve included in this report, such as SNAP, Medicaid, and CCCAP.

Program Funding and Access: Colorado funds its TANF program through funds received from the federal government through the Temporary Assistance for Needy Families block grant. Most of the federal funds are allocated by the state to counties, which are required to provide a 20% match of state funding. Federal and state rules allow the state and counties to retain a portion of unspent funds in a TANF reserve.

Statewide Program Access 2015-19: Over the study period of this report, an average of 50.7% of the population at or below 100% of FPL (i.e., the population who is likely to be eligible for TANF) were enrolled in TANF in Colorado.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

The Colorado Child Care Assistance Program provides child care assistance to low-income families and caregivers living in Colorado in the form of reduced payments for child care. It is a program funded by the federal, state, and county governments and is administered by counties in Colorado. The share owed by parents/caregivers is determined on a sliding scale based on the family’s income.

State Department: Department of Early Childhood Education

Eligibility: Counties set eligibility for families separately, but must serve families with incomes at or below 185% of the Federal Poverty Limit. Families accepted to the program are no longer eligible once their income exceeds 85% of the state median income. Parents or caregivers must be employed, searching for work, or engaged in another approved activity to be eligible for CCCAP. Parents and caregivers enrolled in Colorado Works (Temporary Assistance to Needy Families or TANF) or in the child welfare system are also eligible to participate in CCCAP. Generally, CCCAP serves families with children under 13, although children as old as 19 may be eligible under certain circumstances.

Program Benefits: If a family is eligible for CCCAP and has income, they may likely have to pay a portion of their child’s or children’s child care costs each month. The amount that families owe is based on their gross income, number of household members, and the number of children in child care in the household. As such, households tend not to experience a benefit cliff with CCCAP when they see their incomes increase

Program Funding and Access: Colorado funds the CCCAP program using federal dollars it receives from the Child Care and Development Block Grant program. The state allocates federal and state funds to counties using a formula that takes into account factors like current caseloads and the number of eligible residents. Assistance is available until the county’s funds are spent, so the number of families that can be served is often a function of how much funding is available and the income and composition of the household that applies. It is not uncommon for counties to overspend or underspend their allocations of funds. The state reallocates unspent funds from counties who underspent to those who overspent. While underspending could indicate a problem with the way a county administers its CCCAP program, it could just as likely be a sign that there are few providers in the county who participate in CCCAP—or a lack of providers generally.

Statewide Program Access 2015-19: Over the study period of this report, an average of 10.8% of the population at or below 165% of FPL and younger than age 13 (i.e., the population who is likely to be eligible for CCCAP) were enrolled in CCCAP.

Housing:
HUD rental assistance programs

The US Department of Housing and Urban Development (HUD) has three housing assistance programs that we look at together: Housing Choice Vouchers (Section 8), Project-based Section 8, and Public Housing. In Colorado, these programs provided assistance to over 90% of the households who received federal housing assistance from all HUD programs. Through federally funded, local or regional public housing agencies (PHAs) are the agencies that administer these programs, through not all are available in all counties. These are not the only programs available in Colorado that assist households afford the cost of housing, such as units funded through federal and state tax credit programs.

State Department: Department of Local Affairs

Eligibility: Generally, households with incomes under 50% of the area median income (AMI) of the county they live in are eligible for these rental assistance programs, although PHAs have discretion to select households with incomes at higher percentages of AMI. That said, HUD requires that 75% of new vouchers issued through the Housing Choice Voucher/Section 8 program in a given year are targeted to households with incomes at or below 30% of AMI. PHAs are also able to create criteria that give priority to certain types of households who are on waiting lists for these programs.

Program Benefits: These rental assistance programs help households afford the cost of housing by reducing their housing costs to around 30% of their household income. In the case of the Housing Choice Voucher program, the PHA pays the voucher holder’s landlord the remaining portion of the rent.

Program Funding and Access: Funding and access are both challenges for these rental assistance programs. In addition to limitations on the number of public housing units or housing vouchers a PHA can manage or issue, lack of funding compared to the need constrains the ability of PHAs to assist low-income households. In 2020, Coloradans were on waitlists for Housing Choice Vouchers for an average of 17 months. Waitlists also exist for the other rental assistance programs.

Statewide Program Access 2015-19: Over the study period of this report, an average of 21.1% of renter households with incomes at or below 50% AMI (i.e., the population who is likely to be eligible for HUD rental assistance programs) were living in subsidized housing.