Role of ‘taxpayer dollars’ in plan for apartments is complicated

BY ELLIS ARNOLD EARNOLD@COLORADOCOMMUNITYMEDIA.COM

As news spread about a proposed a ordable housing development near Parker — yet another ashpoint in the ongoing battle against new apartment complexes in the Denver suburbs — many area residents expressed concern about its funding.

“70% of the development cost will be absorbed by Douglas County taxpayers,” one resident wrote to the county. at’s just one complaint in a long list of comments the county compiled that objected to the development’s funding. Said another: “We do not appreciate subsidizing 60 to 70% of the cost of that development after we have paid over 800,000 for our home.”

“Please hear the voices of the existing residents and not the developers who want to use our money to nancially bene t only themselves,” another read.

But there would be no need to increase local taxes solely as a result of the development, according to a county spokesperson.

And the funding the developer could receive runs through a process that di ers from what may be the usual connotation of “subsidized” housing. e bottom line appears to be that Douglas County residents need not worry about a large or even notable portion of their taxes going toward the proposed apartment complex.

Here’s an examination of con- ment.

Not a local tax grab

Douglas County’s elected leaders recently allowed a development to move forward that would put about 200 housing units just south of the Town of Parker near state Highway 83.

Residents of e Pinery, an area that sits between Parker and Castle Rock’s northeast edge, have argued the proposed development does not meet the county’s approval requirements and that it is “incompatible with the existing character” of the area. e Pinery, a relatively remote set of neighborhoods along a major be applying for an allocation of federal Low-Income Housing Tax Credit in connection with the development, according to Connor Larr, a partner at the company. e Low-Income Housing Tax Credit was created by President Ronald Reagan and Congress in the Tax Reform Act of 1986, designed to encourage private sector investment in the new construction, acquisition and rehabilitation of rental housing a ordable to low-income households, according to the National Council of State Housing Agencies. e Low-Income Housing Tax Credit program “is not funded by local or federal appropriations,” said Jerilynn Francis, spokesperson for the Colorado Housing and Finance Authority. ere is no government entity that would need to consider raising tax rates on Douglas County residents as a result of an apartment complex like this being built with LowIncome Housing Tax Credit funding, Francis con rmed.

Road signs mark the intersection of state Highway 83 (noted by the sign as Parker Road) and Scott Avenue, where a proposed apartment complex may be built.

“It is a federal tax credit. Not a Douglas County tax credit,” Larr wrote in a statement.

As a tax credit, it’s technically not funded by tax revenue. A credit is somewhat similar to a tax deduction: It can lower an individual’s or business’ tax bill and results in a person paying less in taxes. e government takes in less revenue than it would without the tax credit, but taxpayers aren’t technically funding an individual tax credit.

Based on how the county rezoned the land, if a developer builds any “multifamily” residences — such as apartments — they will have to comply with certain rules about the income of their tenants, said Wendy Holmes, Douglas County spokesperson.

A development “would be entitled to any incentives the state or federal authorities o er for that type of construction,” Holmes said. “ e county o ers no such incentives.”

How the tax credit stacks up

Another complication: Investors are involved, and the exact value of the tax credit can be di cult to pin down.

“ e developer will recoup 9% of the development cost every year for 10 years. at’s a full 90%,” one comment to the county claimed. But that’s much higher than the amount turns out to be. ere are two types of federal housing tax credits: the 9% credit and the 4% credit, according to the Colorado Housing and Finance Authority. Credits are redeemable every year for 10 years and calculated as 4% or 9% of the project’s “quali ed basis,” a gure calculated from the gross construction costs of the project’s a ordable units. at’s according to the conservative-leaning Tax Foundation, a tax policy nonpro t.

“Interestingly, the 4 percent and 9 percent credits rarely end up being precisely 4 and 9 percent each year but a 10-year stream of credits equal to 30 percent and 70 percent of the quali ed basis,” the nonpro t says on its website. “As interest rates uctuate with the economy, the yearly value of the tax credits uctuates around 4 percent and 9 percent.”

Ulysses is anticipating utilizing the 4% tax credit, Larr said.

“It should be understood that the tax credits are sold to investors who purchase the tax credits. e proceeds of that sale are used as equity (or funding) in the development” of