Is plan bold enough? Would it charge developers unfairly? Council members hold range of opinions
Denver plans to raise more than $150 million over 10 years to address affordable housing.
Denver’s long-discussed $150 million plan to boost affordable housing construction faces uncertain waters ahead of a key test vote Monday night by the City Council.
Some housing advocates and council members think the 10-year plan, which relies on a property tax increase and new development impact fees to raise that money, isn’t bold enough to make a dent in the city’s affordable housing gap. Others see the impact fees as unfair to the developers who would pay them — and ripe for unintended effects on home prices.
The city’s goal is to subsidize the preservation or building of 6,000 units, beyond than the 1,400 or so that its normal housing programs are projected to underwrite in the coming decade.
A trio of council members on Thursday teed up a new, competing proposal that attempts to tackle both main currents of criticism while treating the original plan as a back-up. Their version would require the consideration of alternative sources of money over the next year, Councilman Chris Herndon says, while at the same time targeting a more ambitious amount to spend on the new housing program.
In the meantime, they would charge the administration with cobbling together money from the city’s flush reserves to kick-start the program.
“I felt as if we didn’t do enough from Day One,” Herndon said of the original plan, “and felt as if we could do more quicker, as opposed to (an average) $15 million a year over next 10 years.”
Councilwoman Robin Kniech and council president Albus Brooks, who have worked with Mayor Michael Hancock’s administration on the main proposal for more than a year, say they’re still optimistic their proposalwill advance to final consideration Sept. 19.
But the initial vote during Monday’s 5:30 p.m. meeting could be close.
“I believe that we have the right proposal in the bill that I’m co-sponsoring,” Kniech said. “It’s been thoroughly vetted by the public and thoroughly vetted by the council. And I don’t believe that delaying any further is in the public’s best interest — it’s in the public’s best interest that we finalize a permanent fund and get it started as soon as possible.”
On Monday, both affordable housing proposals will face first-reading votes, along with the chance for amendments on the floor.
Herndon said he planned to urge his colleagues to keep both alive. That would give the public a chance to weigh in on the competing approaches during a one-hour hearing Sept. 19, before the council takes final action.
Key differences between proposals
The main proposal calls for a property tax increase of half a mill, which city leaders say is allowed without a city-wide vote because of Denver voters’ approval in 2012 of a relaxation of rules under the Taxpayer’s Bill of Rights. The owner of a median home valued at $300,000 would pay $12 more a year.
Proposed development impact fees — called “linkage fees” — would range from 40 cents to $1.70 per square foot, depending on the type of new building or expansion project. During the permitting process, developers would pay $1,500 extra for a simple single-family home, while large hotels or office buildings might deliver a hit reaching into the hundreds of thousands of dollars or even over $1 million.
The city would use the money raised to support projects that produce income-restricted apartments and for-sale homes, to buy land in gentrifying and “high opportunity” areas, to provide emergency assistance for people to stay in their homes and for program administration costs.
For weeks, Herndon has floated the idea of a one-year pause in the funding plan, with money in city reserves — and perhaps marijuana tax proceeds — filling the gap until the council sets permanent sources.
The twist now, as colleagues Rafael Espinoza and Debbie Ortega join Herndon for the newly filed proposal, is that their plan incorporates the main proposal’s core elements. But it would delay the impact fees from taking effect until October 2017 and the property tax hike until the start of 2018.
Before then, a community committee appointed by the mayor and council would consider other sources of money for the plan, potentially including some ruled out previously by administration officials, Brooks and Kniech during their year-long stakeholder review.
If that effort fails, then Brooks’ and Kniech’s plan would take effect — a year late.
City officials have said that because of next year’s coming reassessment, the city may not have room to increase the property tax rate in 2018 under a growth cap for tax collections that was part of the 2012 TABOR vote.
Kniech said the competing proposal wasn’t vetted by a committee, as happened over several weeks for the main plan. Evan Dreyer, Hancock’s deputy chief of staff and point person for the affordable housing plan, echoed her in saying it was “extremely important and urgent that we take this step forward for the thousands of families that this will help.”
But Herndon says the city doesn’t need to wait to invest more in its housing programs even if his plan passes.
“The amount that the three of us feel is needed (next year) is $20 million,” he said of his co-sponsors. “I certainly believe that in a city with a $1.2 billion budget, they can find $20 million for the first year.”
The council has heard all summer from affordable housing advocates, community and neighborhood groups, and even some developers who support the main proposal as written. They include developers Susan Powers and Dana Crawford, who started Mothers Advocating for Affordable Housing.
Some of those backers, including a new group called “All In Denver,” consider Kniech and Brooks’ plan “a good start” — if not, in their view, ambitious enough.
Business interests including the Downtown Denver Partnership, the Apartment Association of Metro Denver and several developers have spoken out against the fees. But they’ve said with a mostly unified voice that they support the creation of an affordable housing fund — as long as it’s funded another way, perhaps squarely by property taxpayers.
Their arguments and call for more study have swayed Councilwoman Kendra Black, who said she would support Herndon’s competing proposal.
“My concern is unintended consequences,” she said, “because I believe that our construction defects law and our Inclusionary Housing Ordinance” — which requires condo developers to set aside some units for income-qualified buyers in larger projects — “has resulted in no condos being built, which is part of our housing crisis.”
Kniech has pushed back against assertions that developers would simply pass on the impact fees, saying the economic picture is more complicated because many already are charging buyers the most allowed by market forces — meaning that they may be forced to absorb all or most of the fees.
Aside from people with business or development interests, Kniech said, “I have not had a member of the general public who has expressed an opposition to the linkage fees. If anything, many of them think they’re too low.”
But on the council, some of her colleagues have said they aren’t ready to dismiss developers’ concerns.