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Creative Affordable Housing Solutions

We’ve written about the downsides of rent-control in recent articles, and how the more sustainable solution to our present-day housing crisis would be an increase in the supply of affordable housing. However, creating affordable housing in the second-smallest (by land area) county in the state is not an easy task.


One proposed solution in Santa Cruz City involves rezoning the main corridors to allow for higher-density housing in Santa Cruz city. Unfortunately, affordable housing in this area is often restricted by a lack of funds, buildable land, and timely legislation to remove barriers to development.


While particularly acute in this part of the country, affordable housing is an issue around the nation. What are other cities and counties doing about it? In this article, we explore interesting proposed and implemented solutions to increase affordable housing in Denver, CO and Berkeley, CA.


Denver, CO Creates Local Fund for Affordable Housing


In 2015, it was found that nearly 53% of renters in Santa Cruz County pay more than 30% on housing. In Denver, 61% of renters face the same issue.


To reduce the pressure felt by renters and low-income buyers, Denver has created a local fund to generate an estimated $150 million over 10 years to support affordable housing development and preservation. Additionally, an affordable housing fund was created to support people experiencing homelessness and risks of homelessness.


Where do these funds come from?  There is a 50-50% split between two sources, property taxes and development fees. According to the Denver Office for Economic Development,

  • The impact on a typical homeowner in Denver will be $12 per year on a median home priced at $300,000
  • The impact on a commercial property owner will be $145 per year for every $1M of value

The initiative has had so much success bringing new projects online that the city expanded support for affordable housing last fall, approving plans to preserve or build thousands of units.


At a land area of only 155 square miles, Denver is a particularly good example of a small city making big strides towards increasing the supply of affordable housing.


Berkeley, CA Considers an ICO Affordable Housing


Berkeley’s median rent averages over $3,000 and there are more than 1,000 homeless people on the street. With large cuts in federal funding for section 8 vouchers and corporate tax cuts which disincentivized the creation of affordable housing, this progressive city has gotten creative.


Berkley is exploring the possibility of launching an initial coin offering (ICO) and using raised funds to creating affordable housing, especially for the most vulnerable in the community.


While some ICO’s have been speculative, and others downright fraudulent, this initiative is unique. These coins will represent a real security, municipal bonds, issued for a specific purpose. Additionally, the city will be able to create a public ledger, which provides transparency as funds are spent. Councilman Ben Bartlett, one of the legislators behind this idea, explains “it’s like a non-profit, special purpose vehicle, meant to fund social good”.


One of the benefits of using a cryptocurrency over traditional paper municipal bonds is that it will make bond-issuance more effective and affordable. According to this study, municipal bond issuers across the nation faced upwards of $4 billion of issuance costs annually (up to 2012). The report states “this money represents taxpayer and ratepayer money diverted from infrastructure development and service provision to a variety of financial industry interests. More-over, the burden falls most heavily on smaller-often less financially capable-bond issuers”.


If this initiative is successful, it would be the first U.S. city to launch its own currency. In the spirit of Silicon Valley, this small city is poised to embraced new technology and leverage it for good.


Do you want to learn how other cities are addressing affordable housing issues in creative ways? Take a look at this article.

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