Affordable Housing, Rural Colorado, and the Reality Behind the Crisis

Housing is one of the most talked-about issues in Colorado, but the reality on the ground is far more complex than most people realize. In this episode, Ross Izard sits down with Tony Lewis of the Donnell Kay Foundation to unpack what’s actually driving the affordable housing crisis, especially in rural communities.

The conversation goes beyond headlines and legislation to explore the real bottlenecks slowing housing development, from financing gaps and workforce constraints to the limits of government-driven solutions. It also highlights an often overlooked truth: building new housing is only part of the solution. Preserving existing affordable housing may be just as critical.

Because when it comes to housing, there isn’t a single fix, only a series of interconnected challenges that require new ways of thinking.

What we cover:
 • Why affordable housing is so difficult to build, especially in rural areas
 • The gap between state funding and real-world project timelines
 • Why developers, not governments, ultimately build housing
 • The role of nonprofit developers and philanthropic capital
 • The limitations of policies like Proposition 123
 • Why preserving existing affordable housing is just as important as building new

About the guest:
Tony Lewis is a longtime leader at the Donnell Kay Foundation, where he works at the intersection of policy, philanthropy, and systems change. With more than two decades of experience, he focuses on practical solutions across issue areas including housing, food systems, and education, with a particular emphasis on underserved and rural communities.

Resources:
• Donnell Kay Foundation: https://dkfoundation.org
• Rural Homes Colorado: https://ruralhomescolorado.com/

Leave a review and stay in touch:
If you enjoyed the episode, please rate and review the show. It helps more listeners find us. Have feedback or questions? Reach out to the team at straightup30@xiphosstrategies.com

Straight facts. Straight talk. Straight to the point.

Transcript

SPEAKER_00 0:08

Welcome to the Straight Up 30, where we make policy make sense in 30 minutes or less. I'm your host, Ross Izzard. And today we're here to talk about a policy issue that I know almost nothing about, if I'm being perfectly honest, which is housing and affordable housing, specifically in Colorado. And we have Tony Lewis from the Don L. K. Foundation here to join us. Uh I actually asked Tony what his title was before the show, and Don L. K. doesn't have titles anymore. So he's he said worker. And so he is a worker. He also happens to be the leader over there who has been doing it for a really long time. I've had the pleasure of working with you for more years than I would like to probably say on camera. So thanks for thanks for coming.

SPEAKER_01 0:47

Thanks for having me. It has been a number of years. I think I'm on year 26 now at the foundation.

SPEAKER_00 0:53

That's a lot of years. But you look so young. Yeah. Thanks.

SPEAKER_01 0:57

That's why I love this podcast. Right.

SPEAKER_00 1:00

Um, okay. So why don't you tell us a little bit about sort of your background and how you came into this world can and then specifically about Don LK, which occupies, I think, uh a sort of interesting slot between policy development and thought leadership and funding, which is fairly unique, I think.

SPEAKER_01 1:16

It is. It is unique. You know, I got to this in a really uh interesting, non-logical way. Uh I was a development director at the Outward Bound School. So I was raising money. Six years into that, doing a capital campaign, doing the annual campaign, one of my trustees said, Hey, would you like to run a foundation? And as a development director, the best thing you can ever think about is stopping asking for money and beginning to give away money. So you're flipping the sides of the table. And I was blessed to get the job. And yet being a development director is what helped me create the foundation and the value set behind it. Because when you're a development director and you're asking for investment in your nonprofit, how you get treated by foundation directors is a fascinating uh spectrum, let's say. Uh dramatic way to say it, I think. Yeah, some good, some bad, right? And I vowed if I ever changed sides of the table, that I would treat people with as much respect as I possibly could, and I'd be responsive to people. So I tell my staff, if you don't return a phone call or an email, it doesn't matter from whom, you'll likely be fired. Because that's what drives me crazy with foundations. So they feel like they don't have to respond to people. And we need to. So that helped me in the creation of the foundation. And you're right, we occupy an interesting space. We work on state level policy and we give money away. But I'd say we work more on policy than give money away. And we're a small foundation, right? Our budget's 1.6 million a year, all in grants, salaries, contracts, policy work. So relatively small.

unknown 3:18

Yeah.

SPEAKER_00 3:18

So talk to me a little bit about the policy side. I mean, the foundation world we could probably talk about all day, right? And to your point, I mean, I've uh having grown up in the nonprofit space, have had some, let's say, mixed interactions with various foundations.

SPEAKER_01 3:33

We should do a straight up 30 on on foundations. We should.

SPEAKER_00 3:36

I I probably would never get founded ever again, so we might have to be careful about it. But um it is a that's a whole different ball of wax. I think you know, one of the things that I've appreciated over the years is getting to know the folks at Don LK who are working on these various policy issues. And there are quite a few of them, one of which is housing, but that's also not the only thing you're doing over there. It's not.

SPEAKER_01 3:57

Um, the fun thing about Don LK, or DK as we call it, so much easier, is that when you get hired at DK, uh you don't usually get hired to work on any specific issue area.

SPEAKER_00 4:11

I'm just a generalist.

SPEAKER_01 4:13

I love generalists, and I love to say there's three reasons why you get hired at DK. One is you have to be smart.

SPEAKER_00 4:21

I'm out.

SPEAKER_01 4:22

Yeah. I don't think so. Two, you have to be curious. If you're smart and you're curious, you're gonna you're gonna find things that bother you and don't make sense and you want to resolve those things. And in a policy context, that's what we're looking for. And the third thing is you gotta be fun because we spend time together. And so if you're not smart and curious and fun, it's not a great place to work. If you need somebody to direct your work and tell you what to do, it doesn't work well at TK. So people gravitate to issues, the issues we're working on now, early childhood, but only friend, family, and neighbor care, not center-based care, food access and nutritious food. So that's all the way to supporting small farmers and food systems, healthy school meals for all. Um, and we're working a bit on K-12 innovation, and we're working on affordable housing.

SPEAKER_00 5:19

Yeah, it's always interesting because whenever I talk to you, I feel, and I like I've been doing the education policy thing for a long time, right? And sometimes you can get a little cocky and you're like, oh, you know, I know how to do this thing. Uh, and then I'll go have coffee with you and you'll hit me with some idea where I'm like, well, I've never thought about that one time in my entire career, and now I need to, now I need to go chew on it. And it turns out there have been a couple of them actually just recently that have been uh really interesting to explore. But the housing piece in particular, I think is it's not unique, but it is an interesting angle. Uh, and I find housing policy fascinating. Like I've done a little bit on it with regard to how it relates to like former foster kids. And so I've been fortunate to work on those issues. But one of the crazy things in my journey, I started out, as most of you know, as a policy analyst just being a professional nerd. I was writing white papers and doing statistics and that kind of stuff. Uh, and I got really, really good at my particular issue areas. But public policy is a weird thing because you can be extraordinarily well informed about one area and sort of master it, and you know the game and you know the people and you know the stuff, and you've largely asked and answered most of the questions. And then you step into another one, like housing, and it's like you've never you're crawling out of a cave into the sunlight for the first time. Like you have no idea what the hell is going on. And it's funny because when I look across the number of bills just this session alone on housing, I mean, we've got bills that deal with tax incentives, we have bills dealing with being able to build on smaller lots, subdividing lots, all sorts of affordable housing legislation. There's a lot of it, and all of it is really complicated. And then simultaneously to that, we're living in Colorado, obviously, where affordable housing is a huge issue. I mean, it's this is not a cheap place to live. So tell me a little bit more about your work in the front.

SPEAKER_01 7:07

You're right. Um, the housing, there is a lot going on in housing right now, and and housing is complicated, and yet coming out of that cave and having that sunlight and not being an expert in housing is a good thing. Because there are so many experts in housing that are tweaking things and making really weedy decisions and legislation. It's good to have people come into the sphere saying, what's really going on? And when you do that and you look at the overall state of housing and affordable housing in Colorado, it's I don't know, disaster comes to mind.

SPEAKER_00 7:50

Um I wasn't sure which word you'd picked, but it ain't pretty.

SPEAKER_01 7:54

Um it's not pretty because we're building very little housing. Very little affordable housing.

SPEAKER_00 8:04

And it's why is that, just out of curiosity?

SPEAKER_01 8:08

Because oh I don't know, Ross. This is this is a tough this is a tough thing to explain. And I'm not sure I even totally understand it. As you mentioned, there are 20 plus bills, theoretically, most of them to improve the pace of building housing, affordable housing in Colorado. And it's just not happening. Here's here's uh one reason why. Here's here's just like a one example of what's going on. We got drugged into the housing sphere because my friend Paul Major at the Tell You Ride Foundation just he had just started Rural Homes, Colorado. And rural homes focuses on building affordable housing in rural areas of Colorado. The hardest thing you can do in housing. No developer wants to go out to rural Colorado and build a couple of units. There are no tax incentives for rural Colorado, especially in rental housing. All lie tech credits, low income tax credits, they're all urban. They're all rental, they're not homes for sale. So nobody wants to go to rural and just build a couple little things out there. And that's where we end up trying to spend our time because there's nobody else out there. But when Paul drug us into housing, it's because he got grants from the Department of Housing from Dola. And he wants to put modular homes in rural areas to be affordable. You have to put 50% down on the modular order in order to build those homes. Guess how long it takes Dola and DOH to get the grant money to you, even after it's been approved.

SPEAKER_00 9:57

Let me make sure I understand. So you have to put 50% down on the so when you order it, right? You physically order the modular unit, you got to put 50% down. Correct. And then how long does it take?

SPEAKER_01 10:06

And then they can crank those houses out fast, but it takes up to six months to actually get your grant money from Dola. So unless you have a bunch of capital that you can front 50% of all the houses that you want to build, you're waiting an additional six months after the grant has been approved by Dola to get the money, to put the order in, and then another, you know, X number of months, six or eight months for the houses to be built. So all of a sudden you're a year out after been a having been awarded your money from the state, and you haven't constructed a single home in that time.

SPEAKER_00 10:47

Which I mean, in a rural community where you have folks who I mean, I we talk a lot about living in urban communities, and housing here is tough too, right? Like I'm looking for a house right now, and it's every time you see the price tag, you sort of are like, well, I have I'm gonna go look at something else now for a while, you know. Um and there's a lot of focus, just not just in housing, but in all politics on Denver. Like Denver and Denver in the front range and the metro, and that's uh that's where most of the people are. I get it. I it is what it is. But rural rural Colorado and rural America in general, and I spent a lot of time driving through these places. I I mean these are those are almost emergency situations, right? Those folks have to go somewhere. So if you're sitting on a year lag time, what what do they do?

SPEAKER_01 11:25

Uh who knows like we met uh we met a uh hospital worker in Holyoke. She came from the Philippines, she had to live with her boss for a year. Wow. There's no housing stock in some of these places. Like physically, they're like physically, there's literally no housing. So it's not even that it's unaffordable, there's just nothing you can rent or buy. So we got drug into this with Paul because we just fronted in the money, right? He asked us if we could give him, you know, a couple million dollars so he could put his order in for the house. Super low risk for us. He already has been approved for a grant. So we gave him money so he could get his housing built. And then you're six months ahead. Because if you have that lag time, then all the costs have gone up. Now your grant doesn't actually cover and your capital stack doesn't cover what you thought it was gonna cover six or eight months ago. Because construction costs have are crazy in terms of how much they've increased.

SPEAKER_00 12:28

Which is why the developers don't want to do it in these places, right? Because you've got to build some type of volume to be able to turn a profit. Yeah.

SPEAKER_01 12:35

Without volume, it's hard to build homes.

SPEAKER_00 12:37

Right. So talk to me a little bit. I mean, this is an interesting thing, right? Because in a lot of the sort of urban and suburban areas, the fight is generally, and there, I mean, there's a lot going on in the state legislature, so I don't mean to sort of erase that, but a lot of it happens at the local level between developers and landowners and members of the community and other folks who are trying to figure out how the heck to stick all this stuff together. Who is sort of at the table in the rural areas? I mean, that you said the developers aren't really there, but you've got this need. Right. You have the state stepping into it, you have private money stepping into it, but like who's who's driving it?

SPEAKER_01 13:16

Right. And then you have state policy like Prop 123, which was supposed to be the driver for much of this and isn't because in the end, what you understand coming into this sector, what I've finally grasped, is that municipalities don't build houses generally, governments don't build houses, developers build houses. Developers build, and without a developer, you can incent a municipality, you can incent a county to build housing. They don't know how. It's not in their wheelhouse, it's not a core competency. Building homes in this country has always been done by private developers. So Paul and his crew at Rural Homes is a nonprofit developer, which helps in a rural area. You're taking at least some margin out of the equation. But again, it's a volume and subsidy problem to build in rural Colorado.

SPEAKER_00 14:17

So how's it? I mean, talk to me a little bit about. I mean, these are kind of the these are almost buzzwords, right? So I hate to, I hate to throw them at you. But in almost any policy conversation you have, you're gonna have somebody that brings up the idea of sustainability and the idea of scalability, right? So does this work at scale, right? You can do it in one or two places, but can you do it in 20? And then if you can do it in 20, can you do it for a long period of time in a sustainable fashion in 20? And I I just am I'm fascinated by the idea of having a nonprofit developer funded in part by private money, in part by state grants, who's out there doing it, presumably because this is sort of a mission-aligned thing for them. They're doing it because this is what they do and they believe in it. But does that how does that work at scale? Does it get us there?

SPEAKER_01 15:03

Uh depends what you mean by scale. If you really mean across all of rural Colorado, no, one profit developer, non nonprofit developer can't do that. Could other nonprofit developers arise? Yes, if you can see the capital stack being being made available for them to do their work. So what's difficult in this equation, especially in rural Colorado, is you have state money, you've got local money, you've got debt, but you still need philanthropy to come in to make that equation work. And that's why I think it's maybe not necessarily sustainable and not scalable, because you need PRIs, program-related investments, loans, low interest loans from funders to fill out the gaps in that capital stack. So you're putting all the money you can together as cheaply as you can together, and there's still a gap there, even as a nonprofit developer, and you need foundation capital in order to make the it pencil, right?

SPEAKER_00 16:21

Are there other nonprofit developers out there? I I've never even heard of that. Not that I know of. Yeah.

SPEAKER_01 16:26

I mean, there may be, but I don't know of them.

SPEAKER_00 16:29

Okay, so then talk to me. If we if we know that in the long run, we're gonna have to do something bigger, right? You've got this problem. Uh, Colorado, obviously, most of the population, like we said, lives in Denver, but Colorado's a actually really big place. Uh and there are people spread out all over the place. And most of the state geographically is rural, right? And this is the funny thing about the housing issue is that it doesn't just exist in certain pockets of rural Colorado. It's on the eastern plains, it's in the mountains, it's up north, it's down south, it's all over the place. Yeah. So talk to me a little bit about Prop 123 and a little bit about sort of uh how do we fix it? What's the what's the policy thing that we could do or think about doing that might help us get to something a little bit more sustainable on this front?

SPEAKER_01 17:13

Whew, that's a tough question. I don't know if I'll be able to answer it, Ross. Um it's 123 does a couple of things that aren't super helpful. One, it tries to incent municipalities to build. And they had to sign on to do this, they had to raise their hand, most of them did, but then it's punitive in the sense that it in three years, if you haven't built the number of affordable housing units that you are required by Prop 123 to build, then you're out and you're out for a number of years. So almost no municipality could actually build enough units to stay in compliance with 123. And 123, again, incense government, local government to try to build houses. Developers build houses.

SPEAKER_00 18:09

Local government doesn't know how to do that.

SPEAKER_01 18:11

No, they don't have the capacity. When when we went uh to the Eastern Plains and talked to municipalities and and county governments, they both would like point fingers at each other and say, that's your job, and they'd be, oh no, that's your job. It's like you have capacity. No, we don't have capacity. We don't have a single person to work on housing in this county or in this municipality. It's nobody's job. So you can try to incense this, but it's it's more than just a desire. You need bodies to actually do the work. And it's it's rare in Eastern Plains, Colorado to be able to do that.

SPEAKER_00 18:47

So if they can't meet the requirement, they can't build enough stuff, do they just not participate? Is it an optional participatory thing, or is it uh you turn a blind eye and hope for the best?

SPEAKER_01 18:57

Or how does it we will see? And there are some fixes to 123 being proposed this year. I haven't tracked it as closely as I should. But um there are no really easy answers, but I think we have to have a mind shift from government building homes to developers build homes. And how do we incent more nonprofit developers to arise? How do we subsidize some of that work? How do we provide? So we're working on housing on school district property. School districts are the same as municipalities. They have no core competency in housing, and they shouldn't. They don't have a person assigned to it, they don't know how to build homes, but they need homes, both rental and for sale, for their workforce. And we think that that's part of what the state can do is incent that and subsidize that and make it available. But you have to build in that technical expertise and help for school districts to be able to do that.

SPEAKER_00 20:05

Yeah, this is an interesting thing because there are so many policy areas that uh they start here, right? There's a pressing problem that needs to be fixed right now. Um, you know, anybody who's worked in or around public policy in any form or fashion, legislative, regulatory, agency level, doesn't matter. Uh, nothing happens as fast as you would like it to, which is kind of what you were saying earlier, where you have this long lag time. Um, problems usually arise quickly and solutions arise slowly. And that can be difficult to deal with. But also, there's some reason to hope because this happens a lot in a lot of different policy spaces. Something pops up, someone has a good idea, in this case, a nonprofit developer who's doing it, you have philanthropic money who is willing to step in and sort of start filling the gaps, you have some level of tentative toe-dipping involvement from the state in the form of grant programs or something else. And that's often the beginning of something that looks like a solution or an approach, right? And I would imagine while you're doing that work that you know you're kind of getting more and more involved in the nitty-gritty side of how this stuff works politically. Because there's a lot of overlap in the housing Venn diagram. You know, you've got funding, obviously, you have agency level grant programs, you have environmental concerns, you have transportation, they all energy, they all overlap to some extent. Water, uh, assuming we ever have if we ever get water again. Um and it's uh I think in some ways it's sort of a it's like a trial run, right? Does yeah, does this work? And if the answer is yes, then how do we scale it, or how do we change it into something that could work more sustainably across a broader swath of the state?

SPEAKER_01 21:46

It yeah, great question. What you have to remember is that there's not one answer, right? So rural homes building affordable homes in rural Colorado is part of the answer. What we're starting to learn is a huge part of the answer, and this is the least sexy, least exciting thing you can do. You're really selling the Timmy Tony. Preserve housing. Nobody nobody wants to point to a affordable apartment building and say, we're gonna buy that. City of Aurora's gonna buy that and keep it as affordable housing because it's not new. You're not building anything, you're not selling this idea and this vision and this beautiful picture of a of a nice new affordable housing unit. What you're saying is the Litech credits that are keeping this affordable are running out after 30 years. And now somebody can buy that apartment building and jack up the rent. We're gonna buy that and we're gonna keep it affordable. We need to be doing a lot more preservation of current and naturally occurring affordable housing at the same time as we're trying to build housing in areas that need it. You've got to do both at once. You've got to walk and chew bubble gum, you've got to, you've got to preserve housing, you've got to build affordable housing. But if you don't preserve affordable housing at the same time, we're always gonna be in a net deficit of affordable housing.

SPEAKER_00 23:23

That's a really interesting point because I mean the the typical way that somebody would approach that is that you buy the old crappy apartment building and you bulldoze it and it becomes a beautiful new several duplexes or a new apartment building or something else, depending on how it's zoned. I guess I had never thought about the fact that that does, it would create a perpetual day. You'd never catch up. You never catch up. It's like pulling on different ends of the same rope.

SPEAKER_01 23:45

Yes. And that's why that's where we are in Colorado. We're not preserving and the money, small amount of money in Prop 123 to preserve, I don't think has even been used. Like we need to preserve things, like we're focusing now on trailer parks in Colorado, because they're naturally occurring affordable housing, if you think about it. You know, you don't own the land, but you own your unit. Well, you can buy a new unit for about $180,000. That's pretty cheap. And they're pretty well built now compared to trying to construct a home, even a modular home. But again, it's not a sexy thing to preserve trailer parks or I mean, or God forbid, build a new trailer park. Like I don't know the last time a new trailer park has been established in Colorado.

SPEAKER_00 24:35

Aaron Powell Well, that's a hard sell, right? In part because of the fact that the devi, as you said, the developers are uh they have very strong incentives to build nice things near other nice things, right? And uh trailer parks are at least historically not considered to be in that vein. So yeah, I imagine that's a that's a hard road to hoe.

SPEAKER_01 24:52

It is. And yet we're losing units. Every day we're losing units.

SPEAKER_00 24:56

Aaron Powell And when you do, then people have nowhere to where you go. Which then creates a whole cascade of other policy questions, right? So they have to go into more expensive units that necessitates something that looks like conversations about wages and tax credits and incentive programs and any type of help or benefit program that might be out there, uh, which, you know, that's all complicated too. So eventually we're gonna have to we're gonna have to drill down and actually talk about it, it seems.

SPEAKER_01 25:21

Yeah. None of these things exist in a silo, right? They're all related and they all have to be dealt with at the same time. And it's it's not easy, but but it is fun. It is fun. There's a lot to do out there from preserving to building new and rural on school district land. Like there are great things to do out there, and we just got to keep pushing on all those threads at once.

SPEAKER_00 25:45

I've said often that I've been a lot of things doing this. I've been frustrated, I've been overjoyed, I've been happy, I've been sad. I don't think I've ever been bored. And I don't think you're ever gonna get bored. It seems like one that you might be able to spend some time on.

SPEAKER_01 25:58

Absolutely.

SPEAKER_00 25:59

So if somebody wanted to learn more about affordable housing in general or affordable housing in rural areas specifically, or if they wanted to support this idea of a nonprofit developer or support DK's work, yeah, where would they where would they go? Where do they start?

SPEAKER_01 26:14

Come to our website. We have a couple blog posts on affordable housing. Um, go to rural homes in Colorado uh and check out their website and what that nonprofit developer is doing. Um where else? Uh Kit Carson is a fascinating example right now. Uh there is a housing um authority in Kit Carson that is putting two uh trailers on inside Kit Carson as a municipality on some undeveloped land, and they're doing a beautiful job of it. It's really cool to see. And it's great to see a city step up and change its zoning to allow for that.

SPEAKER_00 26:56

So I'm gonna have to have you come back and do a whole episode just about zoning because that is a it is a that that one I have worked on, and it's uh solving a Rubik's Cube on a freight train underwater. It's it's complicated. So if you have an interest in learning more about any of this stuff, it's obviously complicated. It is something that uh is gonna take a lot of time and a lot of intentionality to untangle, but it's also something that really matters to everybody. It really doesn't matter where in Colorado you live, affordable housing is probably something that you were thinking about. People hit it from different perspectives, of course, but we should probably be talking about it because otherwise we're all gonna wind up living somewhere else eventually. So, Tony, thanks for coming. I really appreciated the conversation.

SPEAKER_01 27:37

I did as well. Thanks for having me.

SPEAKER_00 27:39

You bet. That'll do it for this week's episode of the Straight Up 30. Thanks for joining us, and we will see you back here next week.