Den­ver af­ford­able hous­ing pro­posal is worth a try

The Denver Post - - PERSPECTIVE - By Vin­cent Car­roll

As Den­ver of­fi­cials gear up to spend the city’s new af­ford­able hous­ing fund, they’d be fool­ish to ig­nore a pro­posal that could pro­vide the big­gest bang for the buck as well as a rel­a­tively quick re­turn on in­vest­ment.

It could cre­ate hun­dreds, and pos­si­bly thou­sands, of in­come-re­stricted apart­ments from ex­ist­ing units — at the vol­un­tary ini­tia­tive of the own­ers. And the Apart­ment As­so­ci­a­tion of Metro Den­ver, which de­vel­oped the plan, says it ap­par­ently would be unique in the na­tion.

The ba­sic con­cept is fairly sim­ple: Own­ers of apart­ment build­ings could vol­un­tar­ily of­fer a per­cent­age of units at be­low-mar­ket rent to in­come-qual­i­fied ten­ants in a 10- or 20year com­mit­ment in re­turn for an up-front pay­ment from the city in an amount that is agree­able to both par­ties (you didn’t think

this was go­ing to be a gift, did you?). So in a 100-unit com­plex where one-bed­room units go for, say, $1,500 a month, the owner might of­fer to rent 10 units for $900. If the city was in­ter­ested in af­ford­able units at that lo­ca­tion, it would ne­go­ti­ate a legally bind­ing deal with the owner to be ad­min­is­tered by the Of­fice of Eco­nomic De­vel­op­ment or Den­ver Hous­ing Au­thor­ity.

RedPeak Apart­ments CEO Mike Zoell­ner, who had a hand in de­vel­op­ing the idea, tells me the goal is to pro­vide hous­ing to work­ing peo­ple with in­comes be­tween 50 per­cent and 100 per­cent of the $56,000 metro me­dian. And while it’s nat­u­ral that some apart­ment own­ers in this high-de­mand mar­ket would balk at com­mit­ting even a small per­cent­age of units to the red tape needed to ad­min­is­ter com­pli­ance, Zoell­ner be­lieves many would par­tic­i­pate, slash­ing rents on those units.

“We’ve met with a num­ber of large own­ers and are con­vinced the in­ter­est is there,” he says.

The idea is hardly a sil­ver bul­let, of course. But then what “af­ford­able hous­ing” pol­icy is? The spike in rental and hous­ing prices in re­cent years is no mys­tery. When pub­lic of­fi­cials wel­come a surge of new jobs but tamp down hous­ing sup­ply with a host of land-use and growth rules (many of which seem em­i­nently rea­son- able when con­sid­ered in iso­la­tion), the re­sult is higher prices. The Den­ver Post re­ported in Septem­ber that metro Den­ver had cre­ated nearly 146,000 new jobs in the pre­vi­ous three years but added only 24,000 new homes, and this gap be­tween sup­ply and de­mand didn’t start then.

And while rental prices have dipped in re­cent months, they’re still higher than a year ago.

A sen­si­ble re­sponse to this short­fall would be for of­fi­cials across the metro area to sys­tem­at­i­cally re­view ideas to en­cour­age the full range of hous­ing — with­out un­der­min­ing neigh­bor­hoods, of course — rather than lean mainly on the hope that they can sub­si­dize and tax their way out of the prob­lem. Cities that ded­i­cate far higher taxes and fees to hous­ing than Den­ver haven’t suc­ceeded in mak­ing their towns af­ford­able. In fact, many — such as Moun­tain View, Calif., with its stag­ger­ing $25 per-square-foot fee on de­vel­op­ers — are among the least af­ford­able places in the na­tion.

To his credit, Den­ver Mayor Michael Han­cock has helped lead the so-far fu­tile at­tempt to prod the leg­is­la­ture into ad­dress­ing ob­sta­cles to con­do­minium con­struc­tion, which has fallen off the cliff over the past decade be­cause of lit­i­ga­tion. But Den­ver’s main fo­cus has been the tra­di­tional route of cre­at­ing a hous­ing fund, which the coun­cil ap­proved in Septem­ber and which will raise $10 mil­lion a year through a prop­erty tax hike and de­vel­op­ment fees.

My own pref­er­ence would have been for the city to find another source for the fund, as sev­eral coun­cil mem­bers urged. What­ever good the new money will do, it will also have the ironic and cor­ro­sive ef­fect of boost­ing hous­ing prices fur­ther, since the de­vel­op­ment fees range from $1,500 for a stan­dard new house to six or seven fig­ures for com­mer­cial build­ings.

Coun­cil­woman Ken­dra Black tells me that one al­ter­na­tive she fa­vored was to ear­mark some of Den­ver’s mar­i­juana taxes for af­ford­able hous­ing — an­tic­i­pat­ing the gov­er­nor’s more re­cent plan to set aside a por­tion of state pot taxes for hous­ing for the home­less. Black ar­gues that it makes more sense to fun­nel a prop­erty tax hike to­ward civic ameni­ties or in­fra­struc­ture that ben­e­fit all tax­pay­ers.

She’s right, but the die is cast. And now it’s up to of­fi­cials to seek the max­i­mum lever­age from their mod­est pot of money for af­ford­able hous­ing. If they’re sin­cere about that, they’ll take a close look at the pro­posal from the Apart­ment As­so­ci­a­tion, which has been en­dorsed by the Down­town Den­ver Part­ner­ship, for en­tic­ing ex­ist­ing own­ers from ev­ery cor­ner of the city into the ef­fort.

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