Littleton staff recommend formal policy for inclusionary housing funds; council hears preservation and partnership requests

City staff presented an update on Littleton’s Inclusionary Housing Ordinance (IHO) and a proposed Affordable Housing Fund disbursement policy at the Sept. 23 study session, outlining how the ordinance has been applied since it passed unanimously in November 2022 and describing two current funding requests from local affordable‑housing partners.

The IHO framework and early results Julie Lakeham, the city’s housing policy analyst, summarized the IHO design: a 5% on‑site set‑aside for developments of five or more units, graduated fee‑in‑lieu calculations tied to development cost, and affordability targets set at roughly 60% of area median income (AMI) for rentals and 80% AMI for most for‑sale situations (with some higher allowances for small multi‑unit for‑sale types). Staff said the fee‑in‑lieu schedule is indexed to the Denver CPI and will rise with the published rate; the 2025 adjustment was 5.22% and a 2026 CPI adjustment was expected at about 2.3%.

Staff emphasized that the ordinance works within a 2021 state law that allows inclusionary requirements provided alternatives for compliance exist; staff described the IHO as a tool to generate integrated affordable units while preserving development viability.

What staff and council discussed Staff said that pipeline activity so far has produced mostly rental projects; for‑sale affordable units have been harder to achieve because of land costs, financing and scale. Several council members and staff discussed incentives that have helped projects proceed, including expedited review and parking reductions. Staff noted early success with Montview Flats and Powers Place, both of which used incentives and funding partnerships to reach feasibility.

Affordable Housing Fund requests Staff described two funding requests they plan to vet and bring to council: - A request from a nonprofit that used bridge loan financing while waiting for state Prop 123 funds and is seeking city assistance to cover about $90,920 in interest costs so it does not raise rents on restricted units. - A request from Grovewood Community Development for renovation and rehabilitation of three existing properties (total ~67 units across three sites) that would extend deed restrictions for about 40 years. Staff said Grovewood’s renovation program is roughly a $25 million set of projects, with the organization contributing about $10 million and seeking roughly $800,000 of city support alongside county and other funding partners.

Preservation vs. new production Councilmembers asked whether the fund should prioritize preservation of existing deed‑restricted units (which staff said is an eligible use of the fund when a formal deed restriction is in place) versus new construction, and how to be strategic about limited fund balance. Staff said the fund is intended to be flexible and that preservation projects that extend affordability terms can be an efficient use of dollars; they also noted that part of the city’s strategy is to use IHO revenues to meet Prop 123 unit targets and leverage larger state funding.

Next steps and implementation items Staff said several implementation pieces remain: a compliance monitoring program, a for‑sale resale policy and templates, and a disbursement policy for the Affordable Housing Fund. Staff asked council for direction that the draft disbursement policy fits council priorities; council members gave general support while asking for additional conservations about strategic prioritization and the possibility of targeted energy‑efficiency provisions.

Quotes from the meeting Julie Lakeham, Housing Policy Analyst: “The IHO calls for us to look at CHAPA’s schedule of what is affordable for each… and that 30% threshold for housing cost burden.”

Kathleen Osher, Deputy Manager: “We want to make sure we’re using these funds to catalyze the city into the affordable housing space and be strategic about capturing other funding like Prop 123.”

Ending Council did not take formal votes. Staff said it will continue vetting funding requests and return to council with formal disbursement recommendations, templates for compliance, and options for prioritizing preservation and new construction.