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New data suggests Denver affordable housing ordinance scaring away development

Posted at 4:44 PM, Feb 06, 2023
and last updated 2023-02-06 20:49:43-05

DENVER — According to the Apartment Association of Metro Denver, applications for new apartment development declined by a dramatic 88% in the three months following the passage of a new affordable housing ordinance.

Many experts warned about the blowback.

“What it does is – it kills investment in new housing,” said Drew Hamrick, in-house counsel for the Apartment Association of Metro Denver.

Last year, Denver's city council approved a plan called expanding housing affordability, an ordinance that now requires new residential developments of 10 units or more to designate eight to 12 percent of the units as affordable to those making 60% of AMI, area median income.

That's regardless of whether the units are for rent or for sale. The ordinance still has many vocal critics.

“We don’t want to disincentivize apartment construction because apartments are the affordable option,” said housing and apartment expert Scott Rathbun.

According to new numbers from the Apartment Association of Metro Denver, those predictions were correct.

In the three months before the effective date of the new ordinance, April, May and June of 2022, there were 12,800 applications for new multi-family units.

In the three months after it took effect on July 1, including July, August and September, applications for new development dropped to 1,500.

“It’s 88% in terms of the decline,” Hamrick said. “It’s almost immeasurable it’s so dramatic. It is even greater than I think most of us predicted.”

What the new figures suggest is that new apartments – like the Jayne in Denver’s Baker neighborhood – got in just in the nick of time, but you will now likely see less of this kind of construction and housing in the future.

New data suggests Denver affordable housing ordinance scaring away development

The Jayne just opened on December 1 and is already 50% full. The city has suggested it’s not a crisis.

“Every time we talk about a developer requirement, developers have told us they will stop building in Denver,” said councilwoman Robin Kniech. “Well, guess what? Do you still see some cranes out there? I bet you do. Development is still happening in Denver.”

Hamrick says while that may be true, the cranes you see today are putting up buildings that were permitted months if not years ago. He says they will soon go away.

“Today’s cranes are the applications from three years ago,” Hamrick said.

New data also suggests applications for new construction have increased in most, if not all Denver suburbs in recent months, suggesting developers are still here, just shifting their focus outside Denver proper because of the new ordinance.

“But that’s not a good thing either,” said Hamrick. “The reason our roads are so crowded is because people must live somewhere they don’t want to. Anytime you artificially force people to live where they don’t want to, you increase traffic problems.

Some experts suggest what Denver really needs is more housing for those making 80-100% of the median income. A group of people often referred to as the "missing middle."

Those are middle-income earners who don’t qualify for many affordable housing programs but also don’t make enough to rent or buy under current market conditions.

“Where we’re off the charts low is in housing stock for people making 80-100% of area median income,” Hamrick said. “And that’s the working middle; your entry-level teachers, your entry-level police officers, your entry-level firefighters, your entry-level nurses. All the people who most agree are really getting pinched by this. Yet those are the people you want living in the community where they work.”

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