CREJ - Multifamily Properties Quarterly - March 2016
Affordable housing is in more demand than ever due to the rapidly rising real estate prices found in the Denver metropolitan area. An increasing number of renters find themselves priced out of their existing homes and neighborhoods, even though they are employed full time, sometimes with multiple jobs. These individuals and families are experiencing pressure to make difficult decisions between living near their workplace and schools in their communities where they have lived, often, for generations and moving to more affordable locations further away. While these locations may be more affordable financially, they come at the cost of increased commute time and expense, new schools for children and the loss of a network created when people know and support their neighbors. Our region now is confronted with several important questions that will set a trajectory for the future of our cities and neighborhoods. Primarily, as a society, we must decide to encourage and foster economic diversity in order to preserve Denver and our surrounding cities. The human capital that creates the vibrant economy that we currently enjoy must not be forced to commute from great distances. Instead, we should envision and implement a city with a variety of housing types in every neighborhood, creating a holistic, sustainable and healthy community, animated by diversity and not monoculture. This will have an impact on how our communities look for generations to come. These decisions are as important as others that our community answered over past decades, such as the decision to support FasTracks as well as realizing how a new airport would lay the groundwork for regional economic growth. The Denver metropolitan region has risen to the challenge on these important issues and, as a result, our city has enjoyed sustained growth, even when other cities nationally remained flat. Now is the time to organize a planning strategy to ensure that diverse housing types are preserved throughout the region. There is no easy solution for this issue, but there are steps that every municipality can take to encourage mixed-income development. • First, zoning ordinances should provide incentives for moderately priced housing to be included in market-rate developments. If a development chooses to provide units for moderate-income earners, it should benefit from parking reductions, fee waivers and density bonuses. This is a common-sense policy and several metro municipalities incorporate elements of these. However, there is a need for a thoughtful and comprehensive evaluation of these obstacles, which can be updated and crafted to dovetail with the current development environment. • Zoning ordinances should allow and encourage diverse unit creation, such as accessory dwelling units – also known as “granny flats” – or small apartments over a garage in single-family neighborhoods. These units allow for increased density in established neighborhoods, without the need for additional municipal infrastructure, and create a terrific and affordable housing type that can be built without subsidy by households seeking additional income. • Zoning ordinances should eliminate minimum unit sizes to encourage the development of smaller housing units. Smaller units present a common-sense option for many people in our community to live near services without huge living expenses. Small units are less expensive to build, consume less energy annually and allow for high-density development in a small package. • Construction defects (litigation) reform must be a priority. Attached units are economically built, inherently affordable and generally are appropriate in neighborhoods with established density. This housing represents an entire product type that’s missing from the marketplace. As we see apartments constructed by the thousands, we are missing the condos. Colorado must find compromise on this topic, and 2016 is the year. • The state of Colorado must extend and consider expanding the state tax credit for low- and moderate-income housing. This tax credit proved to be extraordinarily effective at creating units for households with low incomes. • Municipalities must encourage the preservation of existing affordable housing, and seek opportunities to create new inventory from existing buildings. The above are policies and changes that we can enact in 2016. Additionally, we must rethink our concept of affordable housing. Instead of concentrations of poverty, housing represents the economic engine of our region and, to the extent that we have a diverse range of housing options, so will we be capable of attracting talented workers, preserving the richness and heritage that our neighborhoods were built on and maintaining multigenerational communities. Often, affordable housing developments can catalyze and stabilize neighborhoods, providing identity, opportunities for community art, health and sustainability. As real estate professionals, we must be aware of these impacts and leverage them for the benefit of our city, and effectively communicate the positive impacts to members of our community. To make meaningful progress on this topic will require awareness, advocacy and leadership. Our collective vision should be ensuring that communities along the Front Range are inclusive, durable and diverse. By taking action on the ideas above and identifying new ways to encourage housing diversity, Denver will continue to prove its commitment to investing today to benefit future generations.