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Developers Push Back Against Impact Fees in Denver

Digested from “Building industry pushes back on Denver development fees for affordable housing” in Denver Post (7/13/2016) by Murray, John

The Denver mayor’s office hopes to raise $150 million to support an affordable-housing fund to help the city build or preserve government-subsidized rental housing. Various methods and various timelines to raise this money have been considered.

One way would be to charge apartment developers, in addition to the proposed bill, an impact fee, which may amount to as much as $1.70 per sq. ft. Other possibilities would be to tap into the revenue raised through Colorado’s booming marijuana market.

Local leaders in the apartment industry oppose such impact fees for many reasons. The Apartment Association of Metro Denver says that fees could deter housing development, which will have a negative impact on affordability.

“This fee isn’t budgeted for and it’s going to trickle down to the consumer, said Nancy Burke, the Colorado Apartment Association’s vice president of government and community affairs.

Another negative consequence of the fees concerns developers as they consider whether or not to create new housing supply within the city. "We [the apartment industry] are the ones scrambling to create much-needed housing supply into the market," Burke said; some developers will not be able to build in Denver, defeating the purpose of trying to build "affordable housing."

One alternative solution that developers have proposed is to take a portion of their existing rental housing and convert it to “affordable housing” and then have the city extend tax breaks or some financial incentive to encourage conversion. The Denver City Council has delayed consideration of this idea until September.

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