DENVER — Luke Traeger is comfortable at his home off South Broadway in Denver.
“I’m a professional. I work for a start-up based here in Denver,” he said.
With a roommate and a good income, his rent is manageable.
“I like being able to bike and walk to friend’s houses,” he said.
But in a city where the cost of living is skyrocketing, that comfortability is often threatened.
“I don’t have a partner that I would buy a house with at the moment," he said. "Plus, there’s not a lot of (housing) options, honestly.”
The City of Denver is now proposing a new strategy to provide more affordable housing for both renters and buyers.
The signature feature of the new proposal is a section of the ordinance that would make it mandatory for developers to offer about 10% of any new project of 10 or more apartments or condos as affordable.
For example, on the rental side, if a developer was building a 20-unit condo complex with rents averaging $2,000 per month, two units must be offered for around $1,200 per month to those making 60 to 70% of the Area Median Income, or AMI.
This plan is praised by some, criticized by some and has others on the fence about its viability.
Nearly half of all renters in Denver are considered rent-burdened, meaning they spend more than 30% of their monthly income on housing.
Scott Rathbun is the president of Apartment Appraisers and Consultants and said he sees this kind of proposal as a failing proposition because it puts builders under water, making some projects unfeasible.
“They’re trying to kind of force a square peg into a round hole,” Rathbun said. “A lot of development is just not going to happen. It’s not going to pencil. Over the last 12 years, single-family homes have appreciated 180%. And what we don’t want to do is we don’t want to dis-incentivize apartment construction. Because apartments are the affordable option.”
Drew Hamrick with the Colorado Apartment Association said he agrees.
“It doesn’t work,” Hamrick said. “The better solution is a federal program called LIHTC, Low-Income Housing Tax Credit.”
Experts say LIHTC incentivizes developers to offer multiple units, or sometimes entire developments, as affordable.
“Those projects work. They get built all the time,” Hamrick said. “Twenty percent of the units will have the rents capped and subsidized, if you will, but the difference is what the government is giving the developer is worth that loss of income. The better way is to build more housing units at all price points.”
Hamrick and others, like former mayoral candidate and development consultant Jamie Giellis, say this proposal will cause builders to retract, exit the market and leave buyers and renters high and dry with even fewer places to live.
“My general observation is you can’t make housing more affordable by making it more expensive,” Giellis said.
“You end up with fewer overall units to meet that demand, which is exactly what we don’t need in the existing market,” Hamrick said.
But Councilwoman Robin Kniech said the sky-is-falling criticism of the proposal is unfounded and she’s calling their bluff.
“Every time we talk about a developer requirement, developers have told us they will stop building in Denver,” Kniech said. “Guess what? Do you still see some cranes out there? I bet you do. Development is still happening in Denver.”
Kniech spent a decade working on affordable housing and said a new bill from the Colorado state legislature last year finally allows cities like Denver to require a percentage of new homes as affordable.
Kniech said there are already roughly 1,000 municipal ordinances like this across the country.
“And I can tell you, in every market that has these laws, housing is still being built,” Kniech said.
Brother Jeff Fard, community activist and founder of Brother Jeff’s Cultural Center, said the proposal is the right direction.
Fard said Denver’s affordability crisis is a direct reflection of bad policy making for decades.
“And it looks like these new policies are saying, 'We not only have policies, we have teeth inside those policies,'” Fard said. “So, if you want to participate in this market, we want affordable housing. Are you able to do that? And if you’re not, then we’re looking for developers that are.”
While this is a small step, Fard said we’re still not building a city for families.
“Every single piece of Earth you see in this city is building taller and taller and taller,” he said. “But at some point, they’re going to want to start a family, and this won’t be the city for families.”
Realtor Joy Dysart with HomeSmart sees the viability of the proposal and has tracked the market as much as anyone.
“In general, I do support it,” Dysart said.
But she said the devil is in the details. She’s concerned about how it will be managed and believes Denver must have a department dedicated to keeping track of these affordable units.
“On the surface it looks good,” Dysart said. “Denver has not always managed these programs. Who’s going to monitor that? That is a huge undertaking to ensure that this is going to work for the long-term.”
Managing affordable housing is a tricky business and if it falls on developers, it adds time and money to their projects.
“You have to interview people and do paperwork on people and understand their income,” Giellis said.
Caught in the middle is the so-called missing middle: middle-income earners like Traeger.
“I would like to own a home, eventually,” Traeger said.
He’s a current renter, a future buyer, but feeling squeezed out at the moment by a housing market that seems to cater to cash. And lots of it.
“It’s almost laughable to me that it is a debate,” Traeger said. “It’s a basic necessity that human beings need to survive.”
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