As rent and home prices continue to increase across Denver, new state legislation gives the city more ability to dictate what developers are building. Now, the City and County of Denver has crafted their first proposal using the new state law and are looking for feedback from the community.
The proposal is the work of the Community Planning and Development Department (CPD) as well as the Department of Housing Stability (HOST) and includes three main elements:
● Requires all new residential developments with 8 or more units (rental or for-sale) allocate 8-18% of units for residents earning below the area median income. The exact percentage varies depending on a number of factors.
● Creation of zoning and financial incentive for developers to offset costs, such as permit fee reductions or increased building height
● Increased linkage fees for commercial development and residential development of 7 or fewer units. Linkage fees are fees based on a building’s use and square footage; the funds are used to help build affordable housing projects.
The area median income (AMI) for Denver in 2021 is $73,360 for a 1 person household and $83,840 for a 2 person household. The median home (single family or attached) sale price in Denver in September was $525,000 and the average was $657,082, according to the market trends report produced by the Denver Metro Association of Realtors. Depending on a down payment and other factors, homes of that range require a salary of around $100,000 – higher than the average income for Denverites and much higher than many traditionally middle class jobs pay, such as a teacher or nurse, putting home ownership out of reach and pushing lower wage earners out of the city.
The proposal hopes to close that gap by creating housing for residents earning less, using 60% of AMI as a benchmark. 60% of AMI is approximately $44,000 annually, a salary that today isn’t likely to enable someone to own a home anywhere in the city (or in the increasingly expensive suburbs).
The proposal also seeks to make renting more affordable, as rent increases continue to outpace wage increases in the city. Just as for-sale projects must have a set amount of more affordable units, so will rental projects. In order for the same person making $44,000 annually not to be considered rent-burdened (paying more than ⅓ of their salary in rent), they would need to pay less than $1200/month in rent. Few unsubsidized new units are in that range and older units are becoming more scarce.
“If we are to create an inclusive city where our workforce, our first-time homebuyers, and our long-time residents can afford to live, our neighborhoods must provide a range of housing options at varying price points,” said Laura E. Aldrete, executive director of CPD. “It’s not enough just to have more new homes, we must also have new, affordable homes.”
Developers would have a few ways they could meet the requirements. For example, they could build 8% of their rental units for households earning 60% AMI. Alternatively they could build only 6% at 60% but an additional 6% at 80% for a total of 12%. For-sale builds have similar options. The proposal also allows for other alternatives that could be negotiated with city officials.
“In order to meet the scale of the need that we see in Denver, our market-rate partners must be part of the affordability solution,” said Britta Fisher, executive director of HOST. “Cities across the nation have used similar policies, and we are encouraged by discussions to date on what is workable to provide greater affordability in Denver.”
A 24 person advisory committee composed of council members, community members, developers and other stakeholders, has been providing input to the city as the proposal was being created.
Councilwoman Amanda P. Sandoval, who represents North Denver, is one of those 24 members.
“The Expanding Affordable Housing proposal is unlike any other housing policy in the history of Denver. This policy will require all new development over 8 units to significantly contribute towards building new affordable workforce housing. The policy will be consistent, transparent, and increase predictability within the development community. I expect my colleagues and I will hear from the development community that this proposal will stop and/or negatively impact development but I disagree–this policy was informed by industry experts and a financial feasibility analysis to ensure it won’t hinder development. I believe it is the responsibility of City Council to be bold now that we have the ability to create such a law, thanks to our State Representatives passing HB21-1117 this year. We have heard loud and clear that the people of Denver want to make sure new housing continues to serve people of all income levels. At the same time, we will hear push-back from developers who won’t want this policy to be as bold as it is. I encourage everyone to weigh in on the draft proposal and continue to participate as this process moves forward. It is essential I hear feedback from my constituents so we get it right.”
Now the city wants to hear from you. Do you want to weigh in on the proposal? The full 28 page study, as well as a 2 page summary, can be found searching the city’s website — we’ll also link to it in the online version of this story. The community is encouraged to give feedback by the end of the year as they hope to move a proposal forward in the spring after they review input from the community.