You are here

Denver City Council Overhauls Zoning Rules to Increase Affordable Housing

Denver Zoning Rules

DENVER, Colo. -- After a lengthy debate, the Denver City Council voted 7-6 to change its Inclusionary Housing Ordinance aimed at increasing the availability of affordable housing in the city. The changes to the original 2002 ordinance include a zone system for the city and increased incentives for developers to provide affordable units. Mayor Michael Hancock is expected to sign the bill, which will then go into effect Dec. 1. The law applies to for-sale multifamily developments. 

While developers, city officials and affordable housing advocates agree that increasing available apartment stock and other rental housing in Denver would help low-income families, concerns remain in the development community that the incentives still aren’t large enough. According to a city-conducted market analysis, Denver faces a shortage of more than 30,000 affordable homes.

The law requires that 10 percent of units in apartment communities with more than 30 units must be affordable for people making moderate incomes. That is defined as a person who makes 80 percent of area median income, which is about $42,000 annually. However, the State Housing Board president believes the 80 percent threshold fails to address most of the problem, saying that there are tens of thousands of people in the zero-to-60 percent threshold that will still need help.

Developers also have the option to pay cash-in-lieu of designating more affordable units. The ordinance splits the city into three types of zones based on the cost and need in the area. For "high" zones, where median for-sale home prices are highest, the cash-in-lieu payment is 70 percent of the sales price. In "medium" areas, the payment will be 50 percent of the sales price and in "low" areas, the payment will be 25 percent of the sales price.

If developers provide affordable units, they are given a cash incentive, which also varies under the new law depending the cost in the area surrounding a development. Under the 2002 ordinance, the incentive was $5,500 per unit. For the "high" zones, this incentive now will be $25,000 per unit, for "medium" zones, $6,500 per unit and for "low" zones, $2,500 per unit — unless the development is located within a half-mile of public transit, in which case the incentive is bumped up to $6,500.The incentive is meant to help cover the cost of permit fees, according to the bill’s sponsor, Councilwoman Robin Kniech. However, even with a substantial increase to the incentive, developers could still stand to lose money on affordable housing units.

Source: The Denver Post, the Denver Business Journal