Agenda Date: 05/12/2026
Subject:
Title
South Metro Housing Options (SMHO) Board Joint Study Session
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Kathleen Osher, Deputy City Manager |
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Julie Latham, Housing Policy Manager |
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Presentations: |
SMHO staff and Board of Commissioners |
PURPOSE:
This is the annual joint meeting between Littleton City Council and the South Metro Housing Options (SMHO) Board of Commissioners.
LONG-TERM OUTCOME(S) SERVED:
Robust & Resilient Economy
DISCUSSION:
The South Metro Housing Options Board and staff will provide an update on recent accomplishments and ongoing work, including the annual cycle of Private Activity Bond allocation and a gap funding request on the Starlight project. SMHO’s Board will then engage Council in a discussion about future priorities and needs to further the city’s affordable housing goals, policies, and action steps.
BACKGROUND:
South Metro Housing Options (SMHO) provides affordable housing solutions in Littleton. SMHO is governed by a seven-member Board of Commissioners appointed by City Council.
Private Activity Bonds (PAB) are tax-exempt bonds that offer low-cost financing for private projects serving a public purpose. Unlike typical municipal bonds, PABs do not require the city to repay investors. The city is allocated funds on an annual basis that can be issued, carried forward, relinquished to the statewide balance, or assigned to a qualified issuer to support a project. PABs are a valuable tool for SMHO that unlocks the federal 4% Low Income Housing Tax Credit (LIHTC) program. In 2025, the city shifted from relinquishing its balance to the state to a policy of annual assignment to SMHO. Littleton’s PAB balance for 2026 is $3,162,447, and the annual assignment resolution is anticipated to be on City Council’s June 16 consent agenda.
SMHO’s Starlight project will redevelop property at the corner of W Littleton Blvd and Delaware to create 72 affordable multifamily units for families earning 30-70% of the area median income. This will also include eight foster youth vouchers to support those aging out of the foster care system. There are funding and cost challenges with the project and SMHO is requesting $1M from the city’s Affordable Housing Fund. The fund has collected $2,785,766 from inclusionary housing fee-in-lieu payments to date, with $1,990,929 committed for disbursement, leaving available funds of approximately $795k. 2026 budget estimates included the potential of one additional fee-in-lieu payment of $839k.
SMHO’s request for support meets the Affordable Housing Fund criteria as outlined below:
• The request supports 100% affordable properties that are deed, covenant, or otherwise restricted to ensure long-term (30+ years) affordability. Requests that create new formally restricted affordable units or extend the affordability of existing ones are in alignment with IHO parameters
√ Yes, units are formally restricted to serve 30-70% area median income levels
• The project is located within city limits
√ Yes
• The requested funding fills a demonstrable financing gap
√ Yes, it is a challenging construction environment and SMHO will provide additional details on their capital stack
• A preference but not requirement that the funding leverages other resources, such as county, state, or federal funds
√ Yes, SMHO is applying for the 4% Low-Income Housing Tax Credit (LIHTC) program and the city’s funding support will help the competitiveness of that application. The project is also anticipating funding from the Colorado Department of Housing and Arapahoe County, as well as 2025 PAB allocations from the City of Englewood and the City of Centennial.
Prior Actions or Discussions
• Annually City Council hosts a joint meeting with the SMHO Board of Commissioners during a study session to receive an update on the activities of the city’s housing authority.
• May 27, 2025 - South Metro Housing Authority and their bond counsel provided an overview of Private Activity Bonds (PABs), including their purpose, regulatory framework, and common uses, particularly in the development of affordable housing.
• June 25, 2025 - City Council Consent Agenda Resolution authorizing assignment of Littleton’s Private Activity Bonds to SMHO.
FISCAL IMPACTS:
The funding request will reduce funds in the Affordable Housing Fund.
STAFF RECOMMENDATION:
Staff recommend continuing the annual PAB allocation assignment to SMHO and providing funding support for Starlight by authorizing the City Manager to sign a funding agreement on behalf of the city.
ALTERNATIVES:
Council could fund at varying levels or deny the funding request.