Expanding Housing Affordability

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Denver needs more affordable housing not just for those with the lowest incomes, but also for teachers, firefighters, restaurant workers—people who make our city the great place we all love. This is an issue that affects all of us, and as a city we can do more and do better to address the housing needs of all residents. For the last few months, city staff, local partners, and members of the community have been working to develop a draft policy approach that is now ready for your review!

Download two-page summary(PDF, 124KB)

Download draft policy approach(PDF, 2MB)

Multiple opportunities to share your thoughts and ask questions will be available over the next few weeks. The city will use your input on the approach to continue to refine the proposal through the end of this year. Use the resources on this page to learn about the proposal and choose how you want to share your comments.  

Proposal Overview

  • The city is proposing to apply a mandatory affordable housing requirement to new residential developments of 8 or more units to ensure that as new residential buildings are added, so are new affordable homes. This will provide much-needed new workforce housing options in Denver.
  • Understanding that these policies will have an impact on home builders, the proposal includes zoning and financial incentives, such as flexible parking requirements or permit fee reductions, to help partially offset costs and encourage more affordable housing.
  • Finally, for construction that is not affected by the mandatory affordable housing requirement proposed above (commercial development and residential development of 7 or fewer units), the proposal includes an increase to the linkage fee to support the creation of future affordable housing. The proposed fee increase will bring Denver more in line with other cities along the Front Range and nationally.
  • Importantly, the proposal considers that these tools should be applied in a way that reflects the different market conditions in the city. 

Why this is the right approach

Project Guiding Principles  Key Goals of Proposed Policy Approach 
An equitable program that addresses housing needs for residents and families with low moderate incomes in every Denver neighborhood. 
  • An increase to the linkage fee would provide greater support for the city’s affordable housing fund, which prioritizes housing for residents with the highest need.
  • Requiring affordable housing units on site for developments of 8 units or more encourages the construction of more units and more mixed-use developments, supporting moderate-income housing needs. 
A predictable program that provides clarity and transparency of process, requirements and outcomes.   
  • Proposal sets clear and predictable requirements and provides clarity of outcomes to the development industry and the community. 
A market-based program that responds to varied market conditions and partnership opportunities. 
  • Proposal was informed by financial feasibility analysis. 
  • Alternatives and incentives provide flexibility while still addressing key housing needs.
  • How the tools are applied will reflect different market conditions in Denver. 

Upcoming Opportunities to Participate

Use the following link for different ways to ask questions and offer feedback on the draft policy approach.   

 

 

 


Project Overview

Watch more videos about the project on YouTube

We have an immediate and growing need for housing. As costs go up, more families are spending more on housing, and many are being priced out of the neighborhoods they grew up in. To address that need, the city is working to create more options for everybody. This project will develop tools to encourage the construction of affordable and mixed-income housing across the city. New housing where people can live near jobs, transit and the services they need will help address housing demands and create a more sustainable Denver.

The project launched in 2020 with a focus on a citywide zoning incentive. It has expanded to include an update to the city's linkage fee and to incorporate recent changes to state law allowing inclusionary housing.

The project is part of Community Planning and Development's efforts to fulfill Comprehensive Plan 2040's vision for an inclusive, connected and healthy city. It will also implement recommendations from Blueprint Denver that address the community's strong desire for more affordable housing options. 

Objective

To establish market-based programs for new development that complement existing tools and resources, enabling the city to address housing needs for households in every neighborhood.

Guiding Principles

  • An equitable program that addresses housing needs for residents and families with low and moderate incomes in every Denver neighborhood.
  • A predictable program with clear and transparent processes, requirements, and outcomes. 
  • A market-based program that responds to varied market conditions.

Project Partners

Process and Timeline

Phase 1: Understanding Housing Needs and Best Practices

Expected timeline: 1st quarter of 2021 

The project will study Denver's housing needs and industry considerations. It will also review best practices and lessons learned from similar programs here and in other cities. This work will build on 2020 efforts on incentive zoning, with the added focus on inclusionary housing and linkage fee programs.

We will share what we learn as part of our outreach, focusing resources on connecting with those most likely to be affected.

Phase 2: Market Feasibility Analysis and Exploring Policy Alternatives

Expected timeline: 2nd and 3rd quarters of 2021 

The project will develop policy proposals to address housing needs, taking equity and financial feasibility into account. Market and financial feasibility analysis will help refine each of the tools. The intent of the analysis is to ensure the tools work with the market to produce affordable housing. Discussion will start with inclusionary housing and linkage fees to determine the baseline expectations for all new development. Then, we will explore incentives to determine what offsets are necessary and where we can produce more housing affordability.

As we look at ways to use the tools and their feasibility, different approaches will have different trade-offs. Our outreach will focus on understanding community priorities to inform discussions around potential alternatives. Resources will aim to reach a broad audience, with a focus on connecting with those most likely to be affected.

Key Considerations for Linkage Fee
  • Fee varying depending on the uses in a development (for example, residential uses, commercial uses, etc.)
  • Multiple options for fulfilling requirements
  • When new rules would take effect
Key Considerations for Inclusionary Housing
  • The number of units in a project that would trigger a requirement to include affordable units on site, rather than paying a fee
  • Multiple options for fulfilling requirements
  • Development offsets, such as expedited permitting review, lower fees, flexible parking requirements
  • Different requirements for different areas based on varying costs and needs
  • Percentage of units that must be affordable
  • Who would qualify for rental and ownership units (for example, those making less than half of the average income, those making between half and 80 percent of the average income, etc.)
  • How long the units would have to be affordable (for example, 60 years or 99 years)
  • When new rules would take effect 
Key Policy Considerations for Incentive Zoning
  • Where incentives would apply
  • How much taller buildings could be
  • Additional zoning incentives (for example, flexibility with form standards, parking requirements)
  • Different requirements for different areas based on varying costs and needs
  • Percentage of units that must be affordable
  • Who would qualify for rental and ownership units (for example, those making less than half of the average income, those making between half and 80 percent of the average income, etc.)
  •  How long the units would have to be affordable (for example, 60 years or 99 years)
  • When new rules would take effect 


Phase 3: Confirming Requirements and Ordinance Drafting

Expected timeline: 3rd quarter of 2021

We will work with stakeholders and the broader community to refine and confirm policy approaches. The final policies will be drafted as ordinance/zoning language. 

In our outreach, our goal will be to build understanding of the final proposal and gain community support.


Phase 4: Legislative Review

The public will have a chance to review the proposed changes before review by the Denver Planning Board and City Council. Public comment is welcome throughout the process.

After public review, the Denver Planning Board will hold a public hearing and make a recommendation. The proposal then would move to City Council committee, and eventually the full council for a final hearing and vote.

Additional outreach will focus on successful implementation of the proposed rule changes, if adopted. 

Meet the Advisory Committee

City staff works with an advisory committee throughout the project. Committee members bring different perspectives and experiences. They help planners develop the recommended changes to current codes and policies.

All meetings are open to the public to observe and include a public comment period. Meeting information is posted ahead of time. Materials and summaries are available in the project archive.

Download committee charter(PDF, 89KB)

Name Role or interest Organizations/Affiliations
Dominique Acevedo  Non-profit affordable housing developer Northeast Denver Housing Center 

Jessie Adkins

Multi-family or mixed-use architect

Shears Adkins Rockmore

 Ángela Azua Community (CD 11) Juntos Colorado, Cultivando Network, Connectoras de Montbello 
Jeffery Bader  Denver Urban Renewal Authority (DURA)  DURA 

Erin Clark

Planning Board member

Denver Planning Board, Urban Land Conservancy

Rhys Duggan

Commercial developer

Revesco Properties

Dorit Fisher

Commercial real estate

Shames-Makovsky, Downtown Denver Partnership (board member)

Kirsty Greer For-profit housing developer McWhinney, RiNo General Improvement District (board member), Denver Metro Commercial Association of Realtors (board member)
 Tony Hernandez Community (CD2)   Southwest Improvement Council
Ryan Keeney  Community (CD 10)  YIMBY Denver (co-founder and board secretary), Capitol Hill United Neighborhoods (board delegate) 

Robin Kniech

City Council

At-Large

Candace Kristensson Community (CD 7)  University Park Community Council President

Shelly Marquez

Housing finance

Wells Fargo, Housing Colorado (board member), Community First Foundation (board member), Enterprise Community Partners (leadership council)

Darion Mayhorn

Community (CD 8)

East Colfax Neighborhood Association, East Colfax Community Collective, Fax Partnership (board member) 

Nola Miguel

Community

Globeville, Elyria-Swansea Coalition Organizing for Health and Housing Justice

Susan Powers

For-profit affordable housing developer

Urban Ventures, Mothers of Housing Advocates, All in Denver (board member), Elevation Community Land Trust (board member)

Jennie Rogers

Housing finance

Enterprise Community Partners, Colorado Division of Housing Strategic Housing Working Group

Amanda Sandoval

City Council

District 1

Dain Shiele Community (CD 5) Lowry United Neigbors RNO (board member) 
Shane Southerland Community (CD 8)   Chair Elect to Greater Park Hill Community

Ean Tafoya

Community

Denver Inter-Neighborhood Cooperation, Colorado Latino Coalition

Molly Urbina

Policy and planning

Urbina Strategies, Urban Land Conservancy (board member)

Sherri Way

Community (CD 7)

West Wash Park Neighborhood Association

 Tim Welland For-profit housing developer Palisade Partners, Urban Land Institute, Five Points Business Improvement District 

Tools We're Exploring

This effort is considering three tools--described below--to increase the supply of affordable housing, create a more inclusive and equitable community, and take advantage of current and planned transit investments. These tools use the private development market to produce and fund affordable housing. As such, they must respond to market demands and remain financially feasible.

To learn more about the city's housing priorities and programs, and for more on market conditions, housing production, and funding, visit Housing an inclusive Denver and the Denver Affordable Housing Dashboard.

Linkage Fee

What it is: A fee paid by all new development to support Denver's affordable housing fund.

What the project will do: Consider increasing the existing fee to reflect market conditions and bring in more funds for affordable housing.

Thumbnail of graphic explaining linkage fee

 


Inclusionary Housing

What it is: A policy that requires new residential development to include affordable units. Due to a change in state law in spring 2021, cities across Colorado now have more flexibility to establish inclusionary policies.

What the project will do: Examine how this policy could be used in Denver for both for-sale and rental housing.

 Thumbnail of graphic explaining inclusionary housing


Incentive Zoning

What it is: A policy that provides incentives to projects--such as taller buildings, less parking, lower fees--in exchange for adding affordable housing units. Incentives can also be a part of an inclusionary housing program to offset the cost of providing affordable units. 

What the project will do: Create zoning incentives that can be applied across the city, focused on areas with easy access to public transit. 

Thumbnail of graphic explaining incentive zoning

Common Questions

Housing is considered affordable when a resident or family spends no more than 30 percent of their income on where they live. But as a policy, affordable housing isn’t just about who can pay their rent. It also affects the local workforce and the economy. Below we address common questions affordable housing and why it matters. We also define common terms related to affordable housing policy so that every can participate in this important conversation. 

What is affordable housing? 

Housing is considered affordable when no more than 30 percent of a person or family’s income covers the rent or mortgage. This leaves money for other necessities like food, healthcare, transportation, education, childcare and savings.

There are two types of affordable housing.  

Dedicated affordable housing units - These are usually created through public assistance and public-private partnerships. They are essential for ensuring affordability in neighborhoods where market rents are rising rapidly. They are also well suited to create inclusive communities and provide affordable housing to households with very low incomes. There is commonly a deed restriction or other regulating mechanism that keeps the rent or sale price low and ensures the cost remains affordable over a period of time. This project will focus on increasing the supply of dedicated affordable units.  

Naturally occurring affordable units - These are units that may rent or sell at affordable levels, but are not legally required to stay at a certain price and may grow unaffordable over time. These units are commonly provided by the private sector. Examples include older apartments that have not been remodeled or refurbished. These units become less affordable when housing prices increase because there is more demand. Additionally, they can also be redeveloped into more expensive units that are no longer affordable.

Why is affordable housing important?  

As housing costs go up, more families in Denver are spending more of their budgets on where they live or finding themselves priced out of neighborhoods. Citywide plans and policy documents reflect this need and call for new tools to create more housing opportunities.  

Additionally, when housing is unaffordable, we see the following things happen: 

  • Individuals and families are forced to leave their homes and neighborhoods
  • Pre-existing inequities get worse when low-income individuals or families can’t live in areas with good access to jobs, multi-modal transportation, parks and other amenities. 
  • Less money flows into the local economy. This is because when a greater portion of people’s incomes goes into housing costs, less money is left over for other types of spending that can support the local economy. 
  • Economic growth within the region slows as employers cannot find workers who can afford to live close to their jobs. 
  • Traffic becomes more congested and public infrastructure costs grow as workers live further away from jobs.

What is AMI and why does it matter?  

Area Median Income (AMI) is a measure that helps determine whether a person or family is eligible to rent or buy an income-restricted apartment or house. AMI thresholds are adjusted by the number of people in a household and vary by location. This allows income-restricted housing programs to determine eligibility using income levels that make sense for the area.  

For example, the average income for a two-person household in Pitkin County is $88,400. This would be referred to as 100% AMI in Pitkin County. In Trinidad, Colorado, 100% AMI for the same size household is $56,200.  

Instead of thinking about AMI as a table of numbers, it’s important to understand that these categories represent people with jobs working in a range of professions who are supporting a range of household sizes.  

Graphic explaining what AMI isDownload graphic with text translation(PDF, 257KB)

Do inclusionary housing policies increase overall housing prices?  

Research on the impact of these policies on housing prices and production is mixed. The outcomes depend on what the policy does and on the housing market. Evidence suggests that strong housing markets can make it easier for developers to contribute below-market units or units that more people can afford. When calibrated properly to the market, these policies have not driven up housing costs. Additionally, combining requirements with other incentives such as additional stories, lower fees, and flexible parking requirements can off-set the cost of providing affordable units.  

Do inclusionary housing policies slow down housing development?  

The pace of housing development depends on numerous factors including population and employment growth, available capital, available land, and developer capacity, among others. An analysis of the permit activity in cities similar to Denver found that permits increase prior to adoption of inclusionary housing policies, decline shortly after adoption, and return to pre-adoption levels typically within one year.   

What types of incomes and household types are served by these tools?  

Market based tools are best set-up to serve low- to moderate-income individuals and families. For Denver, these are households with incomes between $40,000 and $80,000. These tools are best set up when they complement other programs. Housing for extremely low to very low income households, residents transitioning out of homelessness, and residents with special needs is typically provided by public and nonprofit organizations. That type of housing requires a significant subsidy. In this process, we will further refine the income levels served by these tools. 

Does building only market-rate units create more affordability? 

Market-rate housing production tends to be associated with higher rental costs in the short run—and lower median rents in the long run. Both market-rate and affordable housing development can contribute to affordability, but subsidized units have a higher and much more immediate impact.  

In places with strong housing markets, older market-rate housing becoming more affordable as new units are built happens slowly. It can take decades before those units become affordable for low income households.   

Who lives in the units created through inclusionary housing policies? 

Inclusionary housing polices tend to target households that earn 60 percent to 120 percent of the area median income. These can be successful in creating workforce housing (the type of housing that is affordable for a range of jobs such as teachers or firefighters) in communities where the cost of living high. 

Inclusionary housing is a useful mechanism to give residents the opportunity to stay in their communities and benefit from the amenities and economic opportunities brought by investment. In addition to increasing the amount of affordable housing, these policies can create more mixed-income communities. Research on the effectiveness of inclusionary housing at improving economic opportunity generally finds that these policies increase access to economic opportunities for low income households. 

Is inclusionary housing the same as rent control?  

Rent control is a cap on rent increases that applies to rental units owned and operated by the private sector. Inclusionary housing takes many forms but generally applies only to a portion of newly built units. It is often at least partially offset by additional stories, fee waivers, and parking reductions. Inclusionary housing also allows rents to move with household income increases.  

Where will the zoning incentive for taller buildings apply?  

The city’s plans call for creating more housing opportunities that more people can afford in areas near train stations and bus stops. We will also consider using potential incentives in regional and community centers and corridors, where multi-family and mixed-use development is appropriate and where people can live near jobs and amenities. Through this process we will work with the community to decide where it makes the most sense.   

Why has housing become unaffordable? 

Rising housing costs cannot be attributed to one single issue. They are a result of many different economic factors locally and globally. For example, in recent years, labor and material costs have grown by more than 50 percent. Land costs have doubled in many of Denver’s neighborhoods. Investors have sold homes they rented to new homebuyers displacing renters.  

For many in Denver, this means that wages and incomes have significantly lagged increases in housing costs. As Denver looks toward the future, it will have trouble providing housing to its growing workforce in critical industries without creating affordable housing.   

Comparing increases in rent, home value and income

Between 2021 and 2019, median rent increased 77 percent, median home value increased 79 percent and the median income for a 2-person household increased 32 percent. 

Rent, Home Value, and Income comparison graphic

Will these tools serve those experiencing homelessness? 

Programs serving individuals and families with very low incomes require significant public assistance funding or subsidy. This would include those who make less than 30 percent of the average income and those experiencing homelessness. Incentives and inclusionary tools serve moderate and workforce housing needs, but the linkage fee can provide increased revenue to meet the needs of our most vulnerable through the creation and preservation of new housing, along with the necessary services to support those individuals and families. Additionally, if these tools are adopted, they can alleviate current HOST resources serving higher incomes and enable resources to be re-prioritized to areas with the greatest housing need.  


Common Terms  

Cost Burdened: Refers to those who pay more than 30 percent of their income for housing and may have difficulty affording necessities such as food, clothing, transportation, and medical care.  

Extremely Cost Burdened: Refers to those who pay more than 50 percent of their income for housing and may have difficulty affording necessities such as food, clothing, transportation, and medical care. Additionally, they may be at high risk of displacement.

Change in cost burden

Among renters earning between $35,000 and $50,000 annually (40-60% AMI):

  • In 2010, four out of ten were cost burdened.
  • In 2019, eight out of ten were cost burdened.

Among renters earning between $50,000 and $75,000 annually (60-100% AMI):

  • In 2010, one out of ten was cost burdened.
  • In 2019, four out of ten were cost burdened.

Cost burden graphic

Housing Continuum: The spectrum of all possible housing conditions one might experience – from homelessness to seeking affordable and workforce rental housing to attainable homeownership.  

Strong Housing Market: The housing market is considered "strong" when there is a lot of demand (people looking to rent or buy) and a lot of supply (new housing getting built). A good housing market provides a good opportunity to use market-based tools, like the three being studied as part of this project, to encourage the creation of more affordable housing.   

Resources and Downloads

Download to read

A key step in this project is ensuring new requirements will be financially feasible. The city is using a financial feasibility model informed by data on real building costs, operating costs, rents and sales prices on recent projects. The model incorporates variations by geographic submarket and by development prototype/height. It does not yet reflect any incentives or off-sets that may be added over the course of this project, which would improve financial feasibility. Please note this is a technical report providing critical data needed to develop and evaluate future policy proposals. It is not a policy recommendation or a draft proposal.

Hit play to watch

Project overview

 

The Basics of Affordable Housing

Programs in Peer Cities

 

Denver's Housing Market

 

Get caught up: Project Archive

Community Events, Presentations and Office Hours

Webinar: How Development Works
4:30-5:30 p.m., August 25, 2020
Virtual event via Zoom

Have you ever wondered what goes into the real estate development process? This one hour webinar provides a baseline understanding of the development process, from land acquisition to construction and key milestones between. We dive into the financial considerations that are used to determine if a project is feasible. The presentation lasts about 45 minutes with sone Q&A.

Community Office Hours
5-6 p.m., Wednesday, September 22, 2021
Visit event page for complete details


Focus Groups

Affordable Housing Developers
3-4:30 p.m., May 14, 2020 
Virtual Meeting Via WebEx


Business Improvement Districts
4-5:30 p.m., May 19, 2020 
Virtual Meeting Via WebEx


Industry Focus Groups
September 8 and 9, 2021
Virtual Meeting via Zoom


Implementation Focus Group
Noon-1 p.m., September 30, 2021
Virtual meeting via Zoom


Advisory Committee Meetings

Meeting 1
3-6 p.m., February 25, 2020
Webb Municipal Building, Room 4.G.2. 
201 W. Colfax Ave., Denver 


Meeting 2
3-6 p.m., March 24, 2020
Virtual meeting via Zoom


Meeting 3A - Equity Focus
8-9:30 a.m., June 18, 2020
Virtual meeting via Zoom


Meeting 3B - Market Assumptions Focus
4-5:30 p.m., June 18, 2020
Virtual meeting via Zoom


Meeting 4A
5-7 p.m., September 1, 2020
Virtual meeting via Zoom 


Meeting 4B
4-6 p.m., September 15, 2020
Virtual meeting via Zoom


Meeting 5 - First meeting reflecting new scope of project
4-6 p.m., Tuesday, March 2
Virtual meeting via Zoom


Meeting 6  
4-6 p.m., Tuesday, June 15, 2021
Virtual meeting via Zoom


Meeting 7
4-6 p.m., Thursday, July 22, 2021
Virtual meeting via Zoom


Meeting 8
4-6:30 p.m., Thursday, October 7, 2021
Virtual meeting via Zoom

 

 

 

 

 

 

 


Phase 1 Outreach Summary

The purpose of this outreach phase was as follows:

  • Informing the community of the project purpose, timeline, and opportunities to participate
  • Building a shared understanding of current programs, outcomes, and lessons learned from peer cities and Denver programs
  • Listening to community priorities, ideas, and considerations
  • Answering questions

Goals for Community Engagement include:

  • Informing the community by distributing accurate, objective, and timely information.
  • Fostering understanding of zoning and affordable housing systems.
  • Identifying and addressing questions and concerns.
  • Soliciting input and feedback to ensure key issues, interests and needs are integrated into the process and project outcomes; and,
  • Building awareness around the project and informing outcomes.

Principles for Community Engagement include:

  • Tailoring content and discussions to the specific needs and interests of the community.
  • Leveraging existing community groups and networks.
  • Being efficient and respectful of the time volunteered by all participants; and
  • Engaging in diverse representation with a variety of socio-economic backgrounds and perspectives.

Outreach was conducted using the following approaches:

  • Connecting with existing community groups and industry organizations
  • Office Hours
  • Partnering with council offices to share information and co-host community events
  • Community Connector information sessions
  • Focus Groups
  • Feedback Forms

Additionally, information was made accessible on the project website including reports, summaries, common questions and responses, and four informational videos: 1) Affordable Housing Basics; 2) Project Overview; 3) Denver’s Housing Market; and 4) Peer City Research.

Download full Phase 1 Engagement Summary(PDF, 244KB)