Denver’s local government is again aiming for an ordinance meant to increase the stock of affordable housing as the city’s crisis worsens each year.
A new proposal aims to increase the number of affordable housing units in the city of Denver,
The city’s latest proposal would ask multi-family developers to include affordable housing in their developments or pay a fee instead and increase the link fees paid for other types of development, funneling money to the city’s affordable housing fund.
The proposal, headed to the legislative process this spring, is the latest iteration of the city’s inclusive housing requirement and aims to build more affordable housing as well as market-priced housing, leading to the creation of new developments and mixed-income neighborhoods, Denver Principal City Planner Analiese Hock said bisnow.
“What the city is trying to change is to make sure that we’re creating more housing in the city, we’re also creating more affordable housing at the same time,” she said.
Housing affordability has been a growing challenge for Denver since the end of the Great Recession in particular, with home prices rising steadily in double digits year over year for much of the 2010s.
More high-paying companies are moving into the area, often bringing with them coastal employees who see real estate in the Denver area as a bargain. And they value longtime residents who took advantage of the city’s low cost of living. Teachers, nurses and firefighters struggle to find affordable housing while software engineers gawk at the reasonable price of houses compared to Silicon Valley.
This housing crisis worsened for years before Covid-19 supercharged it. Economic hardship and uncertainty, combined with rapidly rising rents, have made it harder than ever to find housing in many parts of metro Denver, with the city of Denver home to many of the most expensive pockets of the region.
People are increasingly living with relatives or roommates to cope with rising costs or downsizing again and again. The number of homeless people doubled between 2020 and 2021.
Denver is not alone in this struggle, with cities across the country struggling to increase inventory amid the pandemic, supply chain shortages and economic uncertainty. In the United States, housing inventory began 2022 at an all-time high of 1.1 million available homes, according to Nadia Evangelou, senior economist and director of forecasting for the National Association of Realtors.
“2021 was the best year for the real estate market since 2006 in terms of existing home sales,” she said.
Evangelou also doesn’t see the flood of buyers entering the Denver market slowing down anytime soon. In 2020, Denver was the second most popular area for millennials among the 100 largest metropolises in the United States, she said, and many of them are finally entering the phase of buying a home. house of their life.
Apartment developers will either be required to include limited income units or pay a fee.
Attempts to resolve this crisis have resulted in several iterations of plans and proposals. The current one is part of a five-year strategic plan formulated by the city’s Department of Housing Sustainability, made possible in part by a change in state law last year.
Previous attempts to establish an inclusive housing ordinance in the city were hampered by a state law that said the rules could only be applied to developments for sale, excluding multi-family rentals. . Attached sales projects, typically urban condos, have been rare in Colorado for more than 10 years, with developers and many local officials blaming statewide building defect laws that have made too easy for condo owners to sue developers and builders if something goes wrong with their property.
But it wasn’t a change in construction defect laws that opened the door to this new Denver proposal, Hock said.
Instead, it was a decision by the state legislature last year to overturn a longstanding Colorado Supreme Court ruling and allow housing requirements to be imposed. affordable on rental properties.
This shift has ushered in a whole new world of affordable housing opportunities in Denver, which has seen unprecedented levels of apartment development in recent years amid a flood of developer interest that has only been partially blocked by the pandemic.
As it stands, the proposal provides options for developers who choose to build affordable homes as part of their overall development. In each of these options, there are slightly different income restrictions for rental properties compared to properties for sale.
Incentives will also be available in some cases, in the form of reduced parking requirements, increased height allowances and reduced permit fees for developers who qualify by adding affordable units to their projects.
State law still requires localities to provide alternatives to the affordable housing requirement, so there is also an alternative fee option for affordable units, ranging from $250,000 to $478,000. varying by type of property and market area.
Finally, the proposal builds on the link fee system that was established in 2016, requiring developers of all kinds to contribute to the city’s Affordable Housing Fund. Fees are paid per square foot and vary by property type, ranging from 40 cents for industrial buildings to $1.86 for offices, hotels and retail. The new proposal would increase these fees over the next three years to range from $2 to $8 per square foot.
City developers are divided in their opinions on the proposal, according to a review of public comments submitted to the city. Some see the plan as a necessary way to increase the city’s affordable housing stock while others say the additional fees will actually have the opposite effect, driving up the rents they will ultimately have to charge to make their homes feasible projects.
By combining these two approaches, the proposal brings together aspects of the last two plans — the Inclusive Housing Ordinance and the Linkage Fee — to better meet the needs of the growing city, Hock said.
“[The inclusionary housing ordinance] put the burden on a very small slice of the pie. Linkage fees went the other way to ask a bit of everyone,” Hock said.
The new proposal expands both streams to achieve better results overall.
The new proposal has neared the end of its public comment period, which included input from residents, apartment owners, housing affordability advocates, members of the development community and others. He can now begin to work his way through the winding corridors of local government, with the aim of reaching city council by June, Hock said.
Not only does the city hope to increase the number of affordable units available, but it would like to see more dynamic developments that serve diverse groups of people, and the new proposal aims to achieve this.