A new developer fee is being proposed to help fund a $150 million fund for affordable housing in Denver, Mayor Michael B. Hancock and Councilwoman Robin Kniech announced on Tuesday.
They released the final details of a plan to create the city’s first dedicated funding stream for affordable housing, which would help create 6,000 new homes for low- to moderate-income families during the next 10 years.
The proposal – developed by Hancock, Kniech and City Councilman Albus Brooks after nearly a year of analysis and public input – calls for allocating half of a property tax mill and a new development fee to generate an estimated $150 million in the first 10 years starting Jan. 1.
“There is no more important a priority in Denver right now than affordable housing,” Mayor Hancock said. “In my State of the City speech yesterday, I spoke about the thousands of people who lack the simple advantages so many of us take for granted, like a place to call home. Home ownership gives families a foundation to build equity, build wealth and build a life. This is a fair, balanced and modest approach to address one of the most pressing problems facing Denver today.”
Hancock first announced his intent to establish a permanent source of local funding for affordable housing last year during his second Inaugural address on Monday.
The final details of the proposal will be presented to the City Council’s Safety and Well-Being Committee at 1:30 p.m. on Wednesday.
Those details include how the funds would be generated, spent and overseen.
Revenue: Voters authorized annual increases in city property tax revenue to pay for essential city services in 2012. Utilizing half a mill for affordable housing would cost the typical residential property owner $1 a month and the typical commercial owner $145 annually for every $1 million worth of commercial valuation. The proposal also calls for establishing a new development fee. One-time fees on new construction would range from 40 cents a square foot for industrial projects to $1.70 per sf on retail, hotel and other commercial development. There also would be a 60-cent fee on single-family construction and $1.50 per sf fee on multi-family construction. The new development fee would be collected at the time that a new project receives its building permit.
Expenditures: The new fund would allow for the creation, preservation and rehabilitation of 6,000 affordable housing units over 10 years. Primary use of funds will be the production and preservation of permanent supportive housing, workforce rental housing, and for-sale housing. Expenditures would support households across a wide income spectrum, including people experiencing homelessness, low- and moderate-income renters and future homeowners.
Governance: An appointed 21-member advisory board would provide essential, strategic governance and input on uses of the housing fund. This body would meet monthly in publically announced, open meetings.
“Our next step is to continue the dialogue on the methods the city is proposing for raising this money, an approach we believe is reasonable and fair,” Kniech said.
“By pairing a small portion of the property tax revenue that Denver voters approved almost four years ago with what would be one of the lowest one-time fees on new residential and commercial development in the nation, our broader community will be coming together with a sector of the economy generating some of the demand to create a bold solution for affordable housing in Denver.”
Over the past several months, city officials – together with housing advocates, developers, homeless service providers, community representatives and industry groups – have been exploring the best approach for establishing a new, local housing fund. Specific revenue sources were developed following thorough analysis, including peer-city research, the findings of a nationally known consultant, a local feasibility study, and multiple layers of public and stakeholder input.
The idea of a local, sustainable fund for affordable housing, and the fiscal approaches available to establish it, was the subject of a public listening session convened by the city in April that attracted more than 350 people. A second, similar session will be held on July 21 at North High School, 2960 Speer Blvd, beginning at 6 p.m.
Since 2011, Denver’s strong gains in population, employment and income growth have clearly increased demand for housing across a wide income spectrum, Hancock said. The city’s revenue proposal for affordable housing spreads the burden across every Denver property owner, both residential and commercial, and the new ordinance would replace the city’s inclusionary housing ordinance—which applied requirements only to developers of multi-family, for-sale projects with more than 30 units.
City Council will consider the revenue proposal over the remainder of the summer, with a formal vote expected by early September. If adopted, the new ordinance would go into effect Jan. 1.