DENVER, CO - Providing affordable or work force housing has been an ongoing need in many communities, including the Denver metro area and, increasingly, in our resort areas. According to the City and County of Denver 2008-2012 Consolidated Plan and 2008 Action Plan, there is a shortage of more than 25,500 units to serve the city's renters who earn less than $20,000 per year. In the mountains, the growth of the second-home market and continued resort redevelopment has amplified the housing issue for those who serve the resort economies.
With the looming effects of the credit crunch and the increased activity in our resort areas, the need for affordable housing (referring to those households who make below 80 percent of the median income in an area) has increased throughout the entire state, said Jim Mercado, a local affordable housing expert and the Colorado representative for McCormack Baron Salazar (MBS), a national developer of affordable housing communities. "The credit crunch has exacerbated the problem," Mercado said. "With the increase in foreclosures, there are more people entering the rental market and rents immediately go higher, making them less affordable to working folks."
As the need continues to rise, more developers are incorporating affordable components in the interest of creating more integrated communities, based on increasing mandates from cities and counties as part of more stringent inclusionary zoning laws. Since 2002, Denver has required developers to include at least a 10 percent affordable component of all for sale products of more than 30 units. The same rule currently doesn't apply to rental properties.
Steamboat requires 15 percent of all units built in the city limits to be targeted at an average of 100 percent of the area medium income (AMI). Eagle County commissioners are evaluating a proposal that would require the inclusion of 30 percent work force housing and another 10 percent owned by local residents.
Denver and jurisdictions throughout the state offer incentives to developers for the addition of affordable units. In Denver, standard incentives are offered in the form of reimbursements from a special revenue fund. Supplemental incentives, in the form of a density bonus and a parking reduction, are available as well. These incentives are administered through the Denver Office of Economic Development, Division of Housing and Neighborhood Development.
As more builders and developers are becoming engaged in this process, they're looking for creative alternatives to traditional affordable projects, such as mixed-income housing and incorporating higher-end amenities to serve residents within their own community. "We believe the mixed-income housing model has worked because it doesn't isolate the affordable product and blends the populations together," Mercado said. MBS, like other developers, integrates affordable and market-rate housing to create a cohesive community and keep up with the growing demand. With this model, the inclusion of market-rate housing helps developers build more affordable units and offer the same amenities across the board.
An article published by the Urban Land Institute points out that, "Low and moderate income families do not differ from other families in their desire for housing with access to basic amenities and advantages. Accordingly, developers should site affordable housing to maximize economic and social opportunities for its residents as well as to allow for quality-of-life amenities, including access to good schools, safe streets and parks, and public transportation options."
"Low-cost housing doesn't require [developers] to pinch pennies on the design," Mercado says. "We believe you've got to provide amenities equal to what's being developed by market-rate communities to be competitive in the mar
Source: Denver Business Journal