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Page 4 — Multifamily Properties Quarterly — November 2018 www.crej.com Market Update The nation’s #1multifamily lender is lending in your backyard. Chase is known for our fast and efficient loan processing. It’s what has made us #1 in multifamily lending nationwide. With great rates, low fees, and a deep understanding of the local market, our team gets apartment loans done right. Catherine Murphy Executive Director (303) 512-1283 catherine.murphy@chase.com Josh Tidwell Executive Director (303) 244-3403 joshua.m.tidwell@chase.com Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply. Terms and conditions subject to commitment letter. Products and services provided by JPMorgan Chase Bank, N.A. #1 claim based on 2017 FDIC data. ©2018 JPMorgan Chase & Co. All rights reserved. Chase is a marketing name for certain businesses of JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., Member FDIC. 469067 MULTIFAMILY LENDING Low Fees | Great Rates | Streamlined Process W e face real challenges to the affordable housing issue. In both the public and politi- cal arena, the increase in demand for attainable housing, coupled with hurdles to cre- ate more housing, is a growing prob- lem. Limited government funding, headwinds of increased regulatory requirements such as harmful policies like rent control and displacement concerns, make the environment for the multifamily housing industry daunting. • The numbers. Over one-third of Americans chose to rent. The National Multifamily Housing Council and National Apartment Association state: • There are currently 43.3 million rental units. • Colorado has over 410,000 apart- ment units, plus additional single- family housing rentals. • Over 110 million people reside in rental housing. • In the past five years, a record average of 1 million new renter households formed every year. • Renter households are expected to grow by 500,000 each year for the next 10 years. • Nationally, there is a need for 4.6 million new units by 2030. • Thirty-two percent of multifamily construction cost is from regulation. The National Association of Home Builders and NMHC states regulation imposed by government accounts for an average of 32.1 percent of multi- family construction costs. Building codes, development requirements, impact fees, inspections and other fees contribute to this highly regu- lated industry, which translates into higher rents and reduced affordability. Lack of labor, land prices and costs of materials have increased over 30 percent in the past two years. The not- in-my-backyard movement and moratoriums placed on multifamily con- struction equate to millions of dollars in legal fees and slows the time for units to reach the market. Blocking new development doesn’t keep people frommoving in, but it usually prices people out of the neighborhood. Building more lessens the likelihood of displacement and gentrification. Ballot initiatives have been intro- duced that would increase housing costs. In Colorado, a measure was proposed to cap all housing starts at 1 percent, which would have had devas- tating consequences for our economy. The Obama Administration released aWhite House study on barriers to affordable housing. It con- cluded the reduction and removal of arbitrary and antiquated regulations, streamlining the development per- mitting process, and creating laws designed to assist multifamily and affordable housing are necessary. When rent and production costs rise, the price of housing increases, putting a strain on already-insufficient public resources for affordable housing. “We can work together to break down rules that stand in the way of building new housing and that keep families frommoving to growing, dynamic cities,” said President Barack Obama in his remarks to the U.S. Con- ference of Mayors Jan. 21, 2016. • Reduce regulation, incentivize and invest. Canada has invested nearly $9 billion to create more attainable hous- ing earmarked for the middle working class. The U.S. Department of Housing and Urban Development created a “landlord task force” to look at incen- tives and reduce regulatory require- ments in the complicated process of offering housing choice vouchers. Onboarding each renter costs nearly $1,300. Minneapolis incentivizes landlords to retain a 40 percent tax abatement if 20 percent of the units are set aside for 60 percent area median income or less, for a 10-year term. New Orleans is constructing a co- living roommate model arrangement in a multifamily building near down- town. It features furnished rooms, paper products and house cleaning for under $1,300 per month. Manage- ment is working with AirBnB to allow residents to rent their rooms and retain 75 percent of the proceeds. San Antonio encouraged additional housing by creating the Center City Housing Incentive Policy, which has provided over $100 million in loans, fee waivers and property tax breaks. One development received $10 mil- lion to offer for-sale units starting at $400,000 that cost upward of $4 mil- lion. California citizens voted on Prop 1, which authorizes a $4 billion bond issuance for affordable housing, and $1.5 billion for multifamily housing. Denver is a point of reference in affordable housing solutions, too. City Council recently adopted the Lower Income Voucher Equity Denver pro- gram, the first-of-its-kind, public-pri- vate partnership highlighting an inte- grated, transitional, two-year afford- able housing model that is being con- sidered in other cities. It is designed for working citizens earning $23,000 to $67,000 (40 to 80 percent AMI) that leverages employer and foundation support to buy down rents. • Nontraditional housing. More types of housing are surfacing, such as tiny homes and tiny-home kits that can be shipped anywhere in the world; off-site assembled manu- factured homes, the largest source of unsubsidized housing, priced around $70,000; popping tops; 3D printed homes created in 24 hours, costing around $5,000; repurposing old school houses and administra- tive buildings; shipping containers; silos; earth home kits for purchase; RVs and boats. Seniors are moving in with other seniors, larger homes are being rented out by the room with shared common areas. Roommates and couch-surfing still are popular, but we need to work on solutions through a holistic approach. A stable housing market is vital to our community. Businesses rely on responsive housing markets to attract employees. Today’s housing discussion is complex and varied. It has evolved from yesterday’s speak of only utilizing government subsidies for low-income housing to unique housing solutions through reduction of regulatory policies and incentiviz- ing through urban planning that now focuses on the average American renter. s Plain and simple: Colorado needs more housing Nancy Burke Vice president of government and community affairs, Colorado Apartment Association/ Apartment Association of Metro Denver