Colorado Housing Accelerator Initiative

Approach

Strategy

The Colorado Housing Accelerator Initiative (“CHAI”) was launched in 2021 to speed the delivery of mission-driven capital to affordable housing projects across Colorado. 

CHAI supplements important existing programs – such as the Low Income Housing Tax Credit – by focusing on “missing middle” households and helping renters build wealth through an innovative Tenant Equity Vehicle (TEV).

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The Challenge

  • Housing costs have outpaced income growth in Colorado by more than 20% in the last decade.
  • According to a report released by the Colorado Affordable Housing Transformational Task Force in January 2022, “middle income families can no longer afford to buy or rent a home” in Colorado and “people are pushed further and further away from their place of work due to high prices and limited inventory.”
  • While low-income households face the greatest difficulty securing affordable housing, moderate-income households who earn too much to qualify for publicly-subsidized housing options are increasingly unable to find affordable housing in the open market.
  • This “missing middle” population is generally defined as households earning between 60 and 120 percent of the area median income, and accounts for approximately one-third of households nationally.

Our Approach

  • CHAI is an “impact first” social enterprise that pools mission-driven capital and efficiently deploys it to middle income housing projects statewide through both debt and equity.
  • CHAI builds seeks to provide renters with wealth-building opportunities through our Tenant Equity Vehicle (TEV) Program.

What We Fund:

  • Project Type: Preservation, New Construction, and Adaptive Re-use/Conversion
  • Geography: Colorado (statewide)
  • Loan / Investment Size: Current maximum of $2 million
  • Security: Senior, Subordinate, Mezzanine, and Equity
  • Term: Bridge, Construction, Mini-Perm

Tennant Equity Vehicle

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The Challenge

Low- and moderate income renters – who are disproportionately BIPOC households and workers in many critical service occupations – lack equitable access to homeownership and employer retirement savings accounts, which are the core wealth-building mechanisms for many Americans. As of 2021:

  • Fewer than half of Black households (44 percent) and Latinx households (49 percent) owned a home, compared with approximately 74 percent of white households.
  • The median total wealth of homeowners was $98,500, approximately 15 times the total wealth of the typical renter.
  • The median wealth of White households is 7x that of Black households and 5x that of Hispanic households.[ix]
  • About 60 percent of White households participate in a retirement plan, compared to 45 percent of Black households and 34 percent of Hispanic households.
  • Part-time workers and those in retail, trades, arts, entertainment, recreation, accommodation, and food services are much less likely to have access to workplace retirement plans.[x]

While homeownership and employer retirement accounts are a common mechanism for wealth building, families must also be able to weather unexpected expenses in order to move along the continuum toward financial well-being and homeownership.

“Tenant Equity” as a Part of the Solution

CHAI is offering a shared-prosperity “Tenant Equity Vehicle” Program in line with its impact-first mandate.

TEV Program Purpose:

  • Provide residents of the CHAI Funds’ portfolio properties with the opportunity for wealth building.
  • Address wealth disparities & advance equity for renters and low- and moderate income households.
  • Increase financial resilience and support tenants’ path to financial well-being & homeownership.
  • Demonstrate a model of shared prosperity in real estate investment.

Financial Milestones for TEV Program Residents

FAQs

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What do you mean by “middle income”?

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Can impact investment replace traditional funding sources for affordable housing?

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What will it take to solve the housing affordability crisis?

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How does the Tenant Equity Vehicle work?

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Why isn’t CHAI a non-profit?

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