As Denver program percolates, renters hang on A different tale in two cities
As Denver waits for its mandate to produce affordable units, Boulder continues to refine its rules
When Gov. Jared Polis and Democratic allies sought to overhaul land use rules in the state last year in hopes of spurring more housing development they faced immediate blowback from municipalities intent on protecting their local control.
But one Front Range city publicly supported that ultimately doomed legislation. That was Boulder, the college town and tech hub with a well-earned reputation for anti-development policies.
In Denver, some leaders eyed Polis’ proposal with cautious optimism. If other cities added more housing density it could take some of the pressure off the state capital where housing prices have exploded over the last decade driving gentrification in many of the city’s historically Black and Latino neighborhoods.
City Council President Jamie Torres did wonder how Polis’ reforms might impact Denver’s nascent Expanding Housing Affordability program.
The EHA took effect in July 2022 and is known in government parlance as an inclusionary zoning.
It requires developers of market-rate residential projects of 10 or more units to dedicate between 8% and 15% of those units as affordable housing for 99 years. Developers can opt out of building those units if they pay steep fees in lieu of construction — a minimum of $270,000 per unit — or directly negotiate other offsets with the city housing department.
Torres and the City Council didn’t have to wonder how the bill would interact with Denver’s approach for long.
The land use reform effort fell flat last spring. The sweeping package is now working its way back through the legislature in more bite-sized pieces. While that process plays out, Denver officials continue to wait for the EHA program to bear fruit and provide more options for people struggling to balance their housing costs and basic needs like food and health care. City planning officials contacted for this story said they did not have data showing how many new affordable units have been created under the EHA policy.
Meanwhile, Boulder — among the first cities in the country to enact an inclusionary housing ordinance in 2000, according to city officials — has continued to refine its requirements. The city increased its demands on market-rate projects in 2018, now mandating developers provide at least 25% of units as affordable housing, pay cash in lieu of construction into the city’s affordable housing fund or provide other offsets.
The two communities have starkly different housing landscapes but share one feature in common: they are pricing out lowand middle-income residents.
Boulder’s experience with inclusionary housing provides a glimpse of how those mandates can play an important role in shaping a city’s housing market. But it also demonstrates the limitations of the approach when even market-rate construction does keep up with demand.
“Sometimes these problems can feel overwhelming,” Boulder Mayor Aaron Brockett said of the housing crisis. “But every single unit of affordable housing is making an enormous difference for the family living there.”
Successes — and limits — of Boulder’s policy
Boulder tracks its affordable housing stock on an online dashboard. Denver is working to launch one of its own soon to track the EHA policy’s progress, city planning officials say.
According to Boulder’s data, 8.3% of all housing in the city was permanently affordable as of 2022. That’s 3,946 apartments, townhomes, and other housing types in a city of roughly 105,000 people, according to the U.S. Census Bureau.
Boulder’s goal is to reach a point where 15% of its housing stock is permanently affordable. It’s a moving target, officials acknowledge.
Not all of those affordable homes were created under the inclusionary housing ordinance but the policy is a cornerstone of the city’s efforts. Boulder’s policy is tilted in the opposite direction of Denver. Fees in lieu of construction are low, maxing out at $47 per square foot for most projects. That adds up to less than $40,000 to opt out of building an 800-squarefoot apartment. Naturally, paying those fees is far and away the option developers prefer.
Cash coming into the city’s affordable housing fund provides flexibility, Brockett said.
“Take the typical 100unit development; we could get 25 units on site” Brockett said. “With cash on lieu, we are able to leverage that up to 30 to 40 (affordable) units.”
The city’s primary partner for delivering those affordable projects is the local housing authority, Boulder Housing Partners. The organization taps into federal low-income housing tax credits and other funding tools to finance development but the city’s support is critical to filling in the gaps, said Jeremy Durham, the organization’s executive director.
“I don’t think it’s possible to build in Boulder without substantial local investment just because of how expensive it is to build in this community,” he said.
Boulder Housing Partners currently has 1,597 permanently affordable units in its portfolio, Durham said. City inclusionary housing funds contributed to 64% of those.
Rebecca Herr lives in a Boulder Housing Partners building, the Canyon Pointe apartments for seniors on the western end of Walnut Street. The building was built in 1979 before the inclusionary housing ordinance.
Herr, 68, made sacrifices to live in Boulder for the last 50 years even as she watched working-class friends move to more affordable communities. She didn’t travel beyond camping or wringing an extra day out of work trips with her daughter. She visited food banks when necessary.
By her count, she has lived in 27 places in the city since 1973.
“Every time the rent went up $100 or more a month, I had to move because my income never went up $100 a month or more,” Herr said. “I never had a chance to build wealth. I just paid for my right to stay here.”
Finally, in December 2022 after months of waiting and dozens of emails to the property manager, Herr was selected from a pool of applicants and moved into her apartment at Canyon Pointe. She pays $462 per month, one-third of her monthly Social Security income. Her apartment is close to a senior center. She has a view of the mountains. She can finally breathe and focus on things she enjoys like camping trips or leading sign language classes for people with hearing loss like her.
“The Boulder plague has spread, you know, and it’s awful,” Herr said of the state’s affordable housing crisis on a recent afternoon. She gestured at her apartment. “If they can invest in more of these properties, there’s a need now that I don’t think there’s been in previous years and it can help bring things into balance.”
The ordinance’s ability to deliver for people living on the low end of Boulder’s housing spectrum meets a significant need, said Eric Budd, a housing activist and part of the leadership for the Boulder Progressives organization. But it is tied to deliveries of marketrate housing and adds costs for developers who already struggle with the city’s market conditions.
Meanwhile, little housing is available to middleincome earners, driving them to the periphery of town or to other communities they have to commute from. Budd wants to see more housing built in Boulder, period.
“The higher and higher you make those (inclusionary housing) fees the less and less market-rate housing you’re going to get,” Budd said. “I think an argument could be made at 25% Boulder is too high. It’s stifling those marketrate units.”
The Boulder City Council considered lowering requirements in its latest updates to the ordinance language, said Boulder’s inclusionary housing program manager Sloane Walbert, but leaders ultimately decided that based on projection the changes would not generate enough market-rate housing to offset the lost income to the housing fund.
The construction industry was sounding the alarm that inclusionary housing rules would add costs and drag down new construction deliveries in Denver before the City Council adopted the EHA policy in 2022.
But Robin Kniech, the former three-term city councilwoman who was a driving force behind the legislation, didn’t agree then and doesn’t agree now. Kniech said the research she reviewed while working on the ordinance reinforced her view that including affordable units in projects was a manageable cost to developers.
“Seat belts add costs to cars but we decided that it’s worth it,” she said.
But so far, Denver doesn’t have much to show for the policy it enacted almost two years ago largely because developers rushed to beat the clock and avoid the new regulations and the planning department is still working through that backlog.
As outlined in a presentation to the City Council’s land use, transportation and infrastructure committee in February, developers submitted 261 conceptual-level project plans in the three months before the EHA policy took effect. That is about two-and-half times the median number of plans submitted to the city in an average threemonth period, according to Emily Collins, the city’s EHA program administrator.
Collins’ presentation also showed a slowdown in new submittals since the EHA program was enacted. There were 258 new submittals in all of 2023, down from 446 in 2021.
Kniech points to the many other factors weighing on development in the POST-COVID-19 world — persistently high interest rates, higher-than-ever construction costs and finite land. She and city planners predicted there would be a rush to seek permits ahead of the policy’s effective date followed by a lull. It will take time for the market to adjust and return to a normal cadence.
“We had a Super Bowl extravaganza. (Developers) were taking every piece of land and every financing package available,” Kneich said. “So have apartment permits slowed? Yes. We told you they would as they have in every city after that initial binge.”
Large projects — like a massive redevelopment planned for the parking lots around Ball Arena — and rezoning of other parcels around town to make way for future multifamily projects are signs of big things to come, Kniech says.