Denver Mayor Michael Hancock has amplified the city’s need for affordable housing during his two-plus terms in office. And Butler Snow’s Dawn Bookhardt led a team of attorneys in creating an agreement to help move the city’s affordable housing plan along. She helped close an agreement that brought together a high-profile social issue and a financing approach that took some legal acrobatics.
Butler Snow represented the Denver Housing Authority and the City and County of Denver since April 2018 in structuring an agreement between the two governmental bodies for new units of affordable housing.
The DHA raised $130 million in funds from bonds to pay for the housing, according to Butler Snow’s submission to Law Week’s Q3 2019 Big Deals issue, and Denver will pay the DHA through 2038 with the money subject to appropriation from the budget each year by City Council.
The housing is intended for people and households earning 80% of the area median income or less, ranging from rank-and-file civil servants to people who are homeless. Bookhardt said half the money paid to the DHA will go toward housing for people making 30% or less of the AMI.
She said she’s passionate about the issue of affordable housing because people close to her have struggled with mental health and addiction that has put them on a path to homelessness. “Those people are so important to me, and just finding them places to live along the way is so hard.”
Bookhardt added she has also seen through her sister, who works in education, the struggles of children who are homeless and how it interferes with their ability to focus on school. “Housing is a basic need, and so it is near and dear to my heart.”
The estimated mill levy revenue available from Denver’s Affordable Housing Fund for payments to the DHA started in 2019 at about $7.3 million and will go up to about $8.7 million by 2038, according to the agreement. Bookhardt acknowledged the agreement does carry some risk for the DHA because payment from Denver each year isn’t automatic.
“The city is not going to just give them money every year on an annual basis unless it’s appropriated,” she said. She said the S&P has rated the bonds AA+. The rating “suggests that the program is very strong, and it also suggests that the city is good for their word.”
The agreement is structured to avoid running afoul of the Taxpayer Bill of Rights, which would have come into play had the city considered taking on debt to finance its affordable housing plan. Bookhardt said the agreement was carefully crafted to make sure the bond issue didn’t appear as Denver’s debt masquerading as debt taken on by the DHA.
“That’s why we imposed this annual appropriation standard, which is pure. … If City Council says, ‘No, we don’t want to appropriate,’ then they won’t.” Bookhardt said that while putting the agreement together, she read a lot of case law to make sure she and the other lawyers understood how courts have interpreted when debt really belongs to one entity but is disguised as debt taken on by another. She added structuring the agreement as payment to the DHA for a service is the other component that “TABOR-proofed” the agreement.
“It’s fairly difficult, and it takes a lot of analysis and a lot of fiddling to get there, but once you do … we could honestly say with a straight face these [bond] issues and this debt is going to be the debt of the Denver Housing Authority.”
Bookhardt said the agreement also required balancing interests between the city and the DHA. The DHA has a pipeline of housing projects to deliver, and Denver has its own ideas of how to prioritize them.
“Balancing those two issues was very, very difficult,” she said.
She said there have also been nuanced considerations — which are still ongoing — about how to treat the land, such as whether to allocate land to the affordable housing program and allow the Housing Authority to use it however it chooses or require the DHA to acquire the property and then allow other bodies to use it.
“I’ve got to say, the Denver Housing Authority is quite adept at first identifying [legal] land mines and then addressing them,” she said. “What do we really need to do to get this project through the door?”
Bookhardt’s other victory this year came in the personal realm. She regained much of her eyesight lost to acanthamoeba, a parasite that lives in tap water and can transfer to people through exposed contact lenses. She was diagnosed in 2015, and though the disease didn’t leave Bookhardt totally blind, she conveyed a tone of genuine gratitude for the everyday experience of seeing while talking about her newly regained eyesight. She said she had successful corneal transplant surgery in October — the day after the Denver Housing Authority agreement closed.
“If you’ve never noticed a traffic light before, please do,” she said. “Please notice that vibrant color, and that excellent shape of the mountaintops with the light dusting of snow. I am so excited to be sighted during this time of year, when the holiday lights are out.”
—Julia Cardi