Denver Development

Denver City Council to Vote on Major Affordable-Housing Policy Today

New developments in Denver could soon have more requirements for affordable housing.
New developments in Denver could soon have more requirements for affordable housing. Evan Semón
On June 6, Denver City Council will vote on one of the most consequential housing policy proposals in years — but not before the members hear plenty from the public.

"This ordinance will ensure that as new homes are built, more affordable homes are built, too. City, state and federal agencies are helping fund housing development, but it’s not enough to meet our population’s growing housing needs," says Analiese Hock, who has been leading the Expanding Housing Affordability project for the Denver Department of Community Planning and Development.

The Expanding Housing Affordability package would require developers to build affordable-housing units in new projects, a policy commonly referred to as inclusionary zoning. Developers would also have to pay a higher per-square-foot fee, known as a linkage fee, for new construction. Money generated from that fee would go toward constructing more affordable housing.

Although not presented as a complete solution for Denver's affordable-housing crunch by CPD officials, who've been working on it for over two years, the proposal is designed to produce more affordable units in a city that has become increasingly unaffordable over the last decade. And while development has been booming in Denver, the vast majority of rental units built over the past few years have been affordable only for people making 80 percent or more of the area median income, which is now $83,840 for a two-person household.

"Our housing crisis is as crushing as it's ever been," Denver City Councilmember Robin Kniech said during an April 18 Land Use, Transportation and Infrastructure Committee meeting, adding that the inclusionary zoning proposal would produce a "modest but steady supply" of affordable housing.

The proposal is geared toward households that fall into the 60 and 70 percent AMI brackets.

"By leveraging the market to help build units for people who make less than the area median income, this ordinance will create new housing options for people who are critical to a healthy, balanced workforce but who are struggling to find housing they can afford in Denver," Hock explains.

The policy would codify a scattershot practice that's evolved in recent years, in which CPD has worked with developers on including affordable-housing components in their proposals as a way to better guarantee rezoning support from Denver City Council.

"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 is president of Urban Ventures and served on an advisory committee that helped craft the proposal.

The proposed inclusionary-zoning policy includes a formula for how much affordable housing developers will need to provide in their projects. It will be based on a flexible formula that's affected by whether a development's units are for sale or rent, whether the project is in a high-cost or typical market, and at which income level the units are considered affordable. New residential developments that involve ten or more units will be required to contribute in some way to the creation of affordable units, while developments with fewer than ten units would need to pay significantly higher linkage fees. By 2025, developers of smaller non-residential projects would have to pay $6 per square foot in a typical market and $9 per square foot in a high-cost market; the current fee is just $1.86 per square foot.

While developers say they appreciate the potential for increased clarity on what will and won't work in the city, they're split on this particular proposal.

Powers doesn't think that the inclusionary-zoning policy will discourage 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."

But a group of development and real estate businesses and trade associations, including NAI Shames Makovsky, Mile High Development and McWhinney, sent a letter in March to CPD expressing concerns about the proposal.

"While we understand the City’s ongoing position to maintain the high-cost and typical-cost markets, we must again go on record and stress that more stringent inclusionary standards and higher linkage fee requirements will likely have the inverse effect and produce less affordable units in the areas where we need them the most," they wrote.

The inclusionary-zoning proposal is coming before Denver City Council now because of recent action by the Colorado Legislature. Back in 2000, a Colorado Supreme Court ruling known as the Telluride Decision effectively prevented municipalities from adopting inclusionary-zoning policies. But in 2021, the Colorado Legislature passed a bill that made it clear that inclusionary-zoning policies were legal, with a provision suggested by Governor Jared Polis that requires municipalities that adopt such policies to provide developers with opt-outs, such as allowing them to pay a fee in lieu of building the required affordable units.

To entice more developers into opting in rather than paying such a fee, Community Planning and Development has provided incentives, such as access to parking requirement reductions, commercial permit fee reductions and a linkage-fee exemption for the ground floors of mixed-use projects, which often feature commercial entities.

Still, some developers say those incentives aren't enough.

"I think that legislation like this should not be one and done, because the markets are so dynamic that we will need to come back and revisit some of the incentives in the next few years to make sure this is delivering the numbers of units that the city wants and that we’re not constricting development," notes David Zucker, CEO of Zocalo Community Development.

The proposal moved from CPD to council's Land Use, Transportation and Infrastructure Committee in April. Since then, there's been one significant change: expanding a parking-exemption incentive for projects in areas that are close to future rapid-transit corridors that have already seen capital investment, rather than just existing public transit stations.

But there are some in Denver who believe council should go further to help provide housing for lower AMI levels.

"Instead of using this opportunity to mandate real affordable housing, this opportunity is being wasted to protect the status quo," the organization Housekeys Action Network Denver wrote in a June 1 email encouraging members of the public to testify at the June 6 public hearing. "In this proposal, no housing is required to be built under 50 percent AMI. Our community, in most need of housing, is completely left out of this plan. Rather, we were told our people can go to shelters ’cause this bill can’t make housing for our poor asses."
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Conor McCormick-Cavanagh is a staff writer at Westword, where he covers a range of beats, including local politics, immigration and homelessness. He previously worked as a journalist in Tunisia and loves to talk New York sports.