The City of Denver is considering a proposal to create a mandatory affordable housing requirement for all new residential developments of eight units or more within the city.
If passed, this would require new developments in typical market areas to build 8% of new units for tenants who make 60% or below the area median income or 12% of the units for up to 80% the area median income.
To meet the city’s definition of affordable housing, the income-restricted units must cost no more than 30% of the tenants’ household income.
“The creation of affordable housing requirements is one of many tools that Denver needs to accomplish our housing goals,” said Britta Fisher with the Department of Housing Stability. “In order to meet the scale of need that we see in Denver, our market rate partners must be part of our affordable housing solutions.”
For high-cost market areas, the affordable housing requirements would increase to 10% of units for 60% or below the area median income or 15% of the units for up to 80% the area median income.
As an alternative, new developments could choose to pay a fee or negotiate alternatives instead of building affordable units. For typical market areas, the fee would be $268,000 per required affordable unit. For high-cost market areas, it would be $311,000.
Developments that choose to build affordable units instead of paying the fee would receive incentives like reducing or eliminating parking requirements, permit fees and building height requirements.
Officials from Community Planning and Development presented the proposal to the Denver City Council policy committee Monday. The committee’s discussion largely centered around the alternative fee amount.
“I feel like we’re setting ourselves up for failure with this one,” said Councilwoman Candi CdeBaca. “Developers choose the fee because it’s cheaper than actually building the unit. … If I were a developer, I’d pay the fee in lieu and further segregate our communities.”
Councilwoman Robin Kniech defended the fee amount, pointing to Denver’s revised Inclusionary Housing Ordinance that was in effect from 2014 to 2016, requiring 10% affordability in new, for-sale developments of 30 or more units.
“We left the fee in lieu to about $125,000 for high-cost areas … and people did choose to build on-site,” Kniech said. “$125,000 was a deterrent. … We’re going to hear some challenges with the fees being as high as they are.”
The proposal would also increase the city’s existing affordable housing fee required for all new residential, office, retail and industrial developments. The fee goes to a fund to create or preserve affordable homes for low- to moderate-income families in Denver.
Under the proposal, the fee would increase to between $4 and $8 per square foot of the development, depending on the type of development. Currently, the fee ranges from $0.44 to $1.86.
No action was taken on the proposal on Monday. Community Planning and Development will meet with council members throughout October and November to refine the plan. A community feedback meeting is also scheduled for Nov. 4.
Community Planning and Development plans to release a finalized public draft of the proposal in January 2022.