INSIDE
T
housands of people in our
city lack access to the simple
advantages so many of us
take for granted, like a place
to call home. And even
though Denver has one of the stron-
gest economies in the nation, thou-
sands of people in our city are on
the brink of losing their home due
to rents and home prices that con-
tinue to rise, and others still do not
have a home at all. It’s something
we know our community is keenly
focused on, especially as our city
continues to grow.
The numbers tell a staggering
story. Our housing prices have risen
at twice the national average, and
rents here have increased 50 per-
cent since 2011, according to data
from the Apartment Association of
Metro Denver. Our surge of new res-
idents – approximately 1,000 people
per month – further increases the
need. What’s more, federal funding
that the city receives for afford-
able housing has dropped by more
than a third since 2010, according to
our data. Together, these numbers
clearly state that there is no more
important priority in Denver right
now than affordable housing
When it comes to keeping Den-
ver affordable and accessible, we’re
working hard to tackle this issue
head on. Together, the three of us
have presented a detailed proposal
to the City Council’s Safety Commit-
tee to create the city’s first perma-
nent, dedicated fund for affordable
housing. Our plan calls for generat-
ing $150 million over the first 10
years to produce and preserve 6,000
affordable apartments, condos and
homes
The proposal calls for creating
a permanent, dedicated revenue
stream using two sources – property
taxes and a new development fee –
starting Jan. 1.
Specifically, the proposal would
use 0.5 of a property tax mill in the
first year, which would generate
about $6.5 million. The cost for a
typical homeown-
er would be about
$1 a month, and
for commercial
owners it would
be about $145 for
every $1 million
worth of property
value.
Revenue from
property taxes
would be aug-
mented by rev-
enue from a new
development fee
that would be
imposed one time
on new construc-
tion on a per-
square-foot basis.
Fees would range
from 40 cents to
$1.70 per sf based
on the type of
development.
Denver doesn’t
take the prospect
of charging fees
on development
lightly. That’s why
we rigorously
tested different fee
concepts for both
a nexus to the
housing demand
created by new
development, as
well as for project
feasibility. The
proposed fees are
broad, in most
cases represent-
ing less than 1 percent of project
cost. They are not only lower than
almost any other city in the coun-
try and keep us competitive with
our regional neighbors who charge
fees for other purposes, but also
they would replace the Inclusionary
Housing Ordinance. The proposed
fees would cost condo developers
between one-fourth and one-tenth
N
AIOP Colorado, the com-
mercial real estate devel-
opment association, is
concerned about the lack
of affordable housing in
Denver. Not only are we pricing
ourselves out of the market for
business relocation, but also we are
at risk of losing our highly educated
and talented younger workforce.
Affordable housing is an issue that
spans our entire society.
Therefore, we applaud Denver
for taking this on. However, the
desire to develop good public policy
requires us to request further infor-
mation and to make suggestions
regarding how best to proceed,
given that these proposed solutions
will impact our city for years to
come.
It appears the city targeted the
mill levy and, particularly, the
impact fee, early on. We did not see
any evidence that the city looked at
other potential sources of revenue.
Nor did we see information that
the city conducted reviews, compa-
rable analysis or nexus or feasibility
studies on other funding options.
Affordable housing is a commu-
nitywide concern; therefore, we
would expect that the revenue for
solutions would come from a broad
base, reflecting this community-
wide nature.
The solution should not single
out one sector, but rather draw
from all who stand to benefit from
affordable housing. Included should
be employers, employees and oth-
ers who live in the city and those
who don’t live in the city but use its
resources.
We encourage the city to avoid
choosing funding sources that
might be expedient but, instead,
choose those that are appropriate.
Don’t reach for a quick solution
that may not get you what you
need and may have detrimental,
unintended consequences.
If, as we have heard, this issue
relates to jobs and job creation,
there is certainly
a clearer connec-
tion between the
need for afford-
able housing for
employees and
solutions coming
from those who
create the jobs,
our employers.
Has this source
been reviewed and
fully vetted? We
submit that it has
not.
Targeting the
development com-
munity that is
responsive to – but
not responsible
for – the demand
misses the mark.
Employers create
the demand for
employees who,
in turn, create the
demand for hous-
ing and for office
space. Develop-
ers respond to
employer require-
ments and demands.
Moreover, impact fees on resi-
dential construction will result in
higher costs that must be assumed
by the consumer. This will have the
direct opposite impact the city is
looking for by increasing the cost of
housing and thereby increasing the
affordability gap.
We understand the city’s position
with respect to the mill levy since
it gets at all real estate ownership
interests, which certainly represent
a broad spectrum of the commu-
nity. And this is a consistent source
of funding, not subject to develop-
ment cycles.
However, the property tax share
paid by commercial real estate is
significantly higher based on our
state’s “Gallagher” amendment. To
Michael B.
Hancock
Mayor, Denver
Kevin Kelley
United Properties
and president,
NAIOP Colorado,
Denver
Robin Kniech
Councilwoman,
Denver
Kathie Barstnar
Executive director,
NAIOP Colorado,
Denver
Albus Brooks
Councilman,
Denver
Affordable Housing Initiative
