Denver City Council to Consider Inclusionary Zoning Proposal

New developments in Denver could soon have more requirements for affordable housing.
Evan Semón
New developments in Denver could soon have more requirements for affordable housing.
Serving a city that has become increasingly less affordable over the past decade, Denver City Council members are now considering market-based fixes to the affordability crisis.

"I think that we should move quickly with this. We have an affordable-housing crisis, but we also have a lot of development," Councilman Chris Hinds said during a July 29 Denver City Council committee meeting where Community Planning and Development presented an overview of an in-the-works affordability proposal.

Over the past eighteen months, the city agency has been working on a plan to create affordable-housing requirements for new multi-unit rental developments; raising a fee that developers currently pay the city, which goes into an affordable-housing construction pool; and creating more incentives for developers to build affordable units themselves.

The new affordable-housing proposal, which city planners expect to unveil in late September, was made possible by a law passed by the Colorado Legislature and signed by Governor Jared Polis earlier this year that removes a prohibition on municipalities requiring affordable-housing construction for rental developments.

Community Planning and Development is currently debating what percentage of units should be affordable — and affordable at what level of area median income. "Do we focus on serving fewer households but those with greater housing needs?" asked Analiese Hock, a CPD staffer, at the July 29 committee meeting. "Or do we focus more on just generating and creating a supply of affordable units?"

A feasibility study conducted by CPD showed that an inclusionary zoning ordinance could include a 5 percent affordability requirement in a typical market and an 8 percent affordability requirement in high-cost markets at 50 percent area median income, which is about $42,000 for a single-income-earner household. On the other end, an ordinance could include a 12 percent affordability requirement in a typical market and a 15 percent affordability requirement for high-cost markets at 80 percent of the area median income, which is a little over $67,000.

The vast majority of new rental units built in Denver over the last few years have been affordable only for people making 80 percent or more of the area median income. And the cost of housing has increased two times more than the rate of income. "Even though [the market is] providing a lot of new units, it really is producing units at that higher income spectrum," Hock explained.

Since early 2020, an advisory committee that includes for-profit developers has been guiding CPD in crafting its proposal. "I'm a proponent of the inclusionary housing ordinance. I think it provides certainty. Right now, every deal negotiated on a rezoning basis is different. I don't know that that's the best way of implementing public policy," says Susan Powers, a for-profit affordable-housing developer who's president of Urban Ventures and a member of the committee.

Powers doesn't think an inclusionary zoning ordinance will stifle the construction of housing. "We're still a growing community, so it'll be effective," she says. "And to me, more effective than paying into a fund. I just think that doesn't get us as much."

In addition to working on the inclusionary zoning proposal, CPD is also proposing to write ordinance language that would raise the fee charged commercial developers that goes into an affordable-housing pot, and also create specific affordable-housing incentives, such as allowing increased height for buildings. Denver City Council would need to approve this package for it to take effect.