Defined: Local Government Affordable Housing Baseline
The baseline number of affordable housing units within municipalities and counties is a major component of local government affordable housing commitments. These commitments must be filed for affordable housing projects and programs to receive funding made available through Proposition 123.
Proposition 123 requires the governing body of a local government (municipality or county) to first determine its own baseline number of affordable housing units by referencing one of the following:
- The 2017-2021 American Community Survey (ACS) published by the U.S. Census Bureau.
- The current version of the Comprehensive Housing Affordability Strategies (CHAS) estimates published by the U.S. Department of Housing and Urban Development.
Scope of housing units included in baselines
Housing units are considered as affordable if:
- Rental units:
- Costs less than 30% of the monthly income for a household at or below 60% of the median income.
- For-sale units:
- The mortgage payment costs less than 30% of the monthly income for a household at or below 100% of the median income.
- The unit could be purchased by a household at or below 100% of the median income.
Income limits applied in baselines
The following types of income limits may be used to determine if a housing unit is affordable for the purposes of a baseline calculation:
- The Area Median Income of the county that jurisdiction is within.
- The Area Median Income of a county adjacent to the jurisdiction.
- The state median household income.
Flexibilities allowed in baseline development
Proposition 123 is unspecific about how some of these requirements are and applied by local governments. We are currently aware of the following implied flexibilities in baseline calculation at:
- Area Median Income Limits may be selected from past years. For example, income limits from Federal Fiscal Year 2021 may be selected instead of the most recently available limits from Federal Fiscal Year 2022.
- For municipalities that choose an income limit of an adjacent jurisdiction, they could choose an income limit for a county that the municipality is not directly adjacent to, but is adjacent to a county that their municipality resides within. The boundaries of municipalities are not necessarily coterminous with the boundaries of one or more counties; so this interpretation affords both municipalities and counties similar levels of flexibility in selecting income limits.
- Area Median Income Limits can be selected based on various household sizes. Household size is calculated by counting the number of people in a housing unit. Income limits are available for household sizes ranging from one to eight persons. The Median Family Income across households of all sizes may also be used as an alternative.
- The median household income for Colorado could be selected instead of an Area Median Income. This may be especially applicable for municipalities and counties where median family income and median household income differ, for example in areas with large portions of college students that have low to no earnings, resulting in a median household income that is much lower than a median family income.
- All affordable for-sale units do not have to be included in the baseline amount of affordable for-sale units. This amount can be prorated to only the units that are available.
- The amount of housing units at each rent or value level can be adjusted to bring the data closer in line with current housing market conditions. For example, a home price to income ratio can be chosen based on current market conditions instead of those in 2019.