Dedicated affordable housing fund is crucial for Denver

Denver skyline
Michael B. Hancock Mayor, Denver

Michael B. Hancock
Mayor, Denver

Thousands of people in our city lack access to the simple advantages so many of us take for granted, like a place to call home. And even though Denver has one of the strongest economies in the nation, thousands of people in our city are on the brink of losing their home due to rents and home prices that continue to rise, and others still do not have a home at all. It’s something we know our community is keenly focused on, especially as our city continues to grow.

Robin Kniech Councilwoman, Denver

Robin Kniech
Councilwoman, Denver

The numbers tell a staggering story. Our housing prices have risen at twice the national average, and rents here have increased 50 percent since 2011, according to data from the Apartment Association of Metro Denver. Our surge of new residents – approximately 1,000 people per month – further increases the need. What’s more, federal funding that the city receives for affordable housing has dropped by more than a third since 2010, according to our data. Together, these numbers clearly state that there is no more important priority in Denver right now than affordable housing

Albus Brooks Councilman, Denver

Albus Brooks
Councilman, Denver

When it comes to keeping Denver affordable and accessible, we’re working hard to tackle this issue head on. Together, the three of us have presented a detailed proposal to the City Council’s Safety Committee to create the city’s first permanent, dedicated fund for affordable housing. Our plan calls for generating $150 million over the first 10 years to produce and preserve 6,000 affordable apartments, condos and homes

The proposal calls for creating a permanent, dedicated revenue stream using two sources – property taxes and a new development fee – starting Jan. 1.

Specifically, the proposal would use 0.5 of a property tax mill in the first year, which would generate about $6.5 million. The cost for a typical homeowner would be about $1 a month, and for commercial owners it would be about $145 for every $1 million worth of property value.

Revenue from property taxes would be augmented by revenue from a new development fee that would be imposed one time on new construction on a per-square-foot basis. Fees would range from 40 cents to $1.70 per sf based on the type of development.

Denver doesn’t take the prospect of charging fees on development lightly. That’s why we rigorously tested different fee concepts for both a nexus to the housing demand created by new development, as well as for project feasibility. The proposed fees are broad, in most cases representing less than 1 percent of project cost. They are not only lower than almost any other city in the country and keep us competitive with our regional neighbors who charge fees for other purposes, but also they would replace the Inclusionary Housing Ordinance. The proposed fees would cost condo developers between one-fourth and one-tenth less than the cost of satisfying the IHO, which currently requires 10 percent affordability in all projects of 30 or more units.

This is a modest approach to help solve a significant challenge – an approach that was created with input over the past year from hundreds of people, including housing advocates, nonprofit and for-profit developers, homeless service providers, community representatives, a variety of business and industry groups, and many, many Denver residents.

Some will say our plan isn’t bold enough; others say that it’s too expensive and we can’t afford it. But one thing is certain – the status quo just isn’t an option anymore. This proposal keeps Denver diverse and inclusive, enhancing our vitality. Affordability is essential to maintaining our strong workforce and keeping our position as a leading city for business. Investing in more affordable housing will pay dividends for families, seniors and workers, as well as contribute to Denver’s overall economy and quality of life.

The new housing fund would be used to create and preserve housing for families across a wide income spectrum, from people just emerging from homelessness to those working in our hotels, restaurants, schools and retail shops.

Keeping Denver affordable is one of our highest priorities. We know it’s one of yours as well. This new permanent fund will help us harness resources, leverage federal, state and private dollars, and make significant progress.

We must seize this opportunity now with a renewed sense of urgency and with our entire community as partners.

Featured in the August 2016 Multifamily Properties Quarterly.

Edited by the Colorado Real Estate Journal staff.