Denver’s Housing Strategies and Revisions to the Inclusionary Housing Ordinance

Robin Kniech, Councilwoman At Large

November 18, 2014

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Inclusionary Housing is just one tool in Denver’s Approach to Affordable Housing

• Homeownership

• “Workforce” or moderate affordability

Five Year Affordable Housing Plan

• Diverse set of strategies that will help build and preserve housing at all levels of affordability, including housing for the homeless and deeply affordable rental housing for seniors, low-wage workers, etc.

Other programs for affordable housing including the Revolving Loan fund, a tool to help close a financial gap for projects receiving federal tax credits, a down-payment assistance program to help qualifying homebuyers purchase in the Denver Metro Area, and a mortgage credit certificate program to help qualifying homeowners increase their usable income

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Denver’s Housing Plan

• 2 year stakeholder process, most significant updates since the ordinance was originally passed in 2002

• Stakeholder committee comprised of public sector representatives, and experts in real estate, finance, and housing development

• Two phases of ordinance revisions– Phase One adopted by Council in June 2013– Phase Two adopted by Council in August 2014

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Process to Revise Denver’s IHO

History of the IHO

What is the Inclusionary Housing Ordinance (IHO)?

• Adopted by City Council in 2002

• Created a unified affordable housing approach to address severe housing shortage of moderately priced homes

• Requires that all developments of thirty (30) or more detached for sale single family dwelling units and all for sale attached or multi-family projects of thirty (30) or more units include a minimum number of moderately priced units.

– Developer Requirement – 10% affordability– Restricted sale price– Income eligible buyers

NOTE: GVR and Stapleton have separate agreements that are not governed by this Ordinance, but they do receive subsidies through it

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IHO Basics

Who are the families

the ordinance was designed to help?

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Income Level 1 (person) 2 (persons) 3 (persons) 4 (persons)

100% AMI $53,700 $61,400 $69,100 $76,700

< 80% AMI < $42,950 < $49,100 < $55,250 < $61,350

Ordinance Revisions

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items in red indicate revisions

Both the Current and Revised IHO treat all neighborhoods the same when building on-site: 10% of Units Affordable*

* Wherever built in City, high cost structures with elevators allowed to sell affordable units at 95% AMI to compensate for higher construction costs.

2014 Ordinance Revisions

“Zones” for Cash-in-lieu or Incentives

Zones based on Need/Transit

Distribution:LOW = 25%MEDIUM = 60%HIGH = 15%

IHO Variation Based on Statistical Neighborhood Zone

Zone *Cash in Lieu *Cash Incentives

High 70% of Sales Price

$25,000per unit

Medium 50% ofSales Price (Existing)

$6,500per unit

(Existing adjusted by inflation)

Low 25% of Sales price

$2,500per unit

* Except within ½ mile of transit, which receives the medium incentive

Tiering Cash in Lieu and Incentives by Zones

IHO Variation Based on Statistical Neighborhood Zone

Cash In-Lieu Cash Subsidy

$2,500

$6,500

$20,000-$149,879

-$99,919

-$49,960

-$175,000 -$150,000 -$125,000 -$100,000 -$75,000 -$50,000 -$25,000 $0 $25,000 $50,000

-$175,000 -$150,000 -$125,000 -$100,000 -$75,000 -$50,000 -$25,000 $0 $25,000 $50,000

Low

Medium

High

More Flexibility to Get More Homes and/or Reduce Burden

Provide expertise and support to developers willing to explore other ways to build housing Denver needs than the 10% formula requirement. Could be on-site or off-site.

These “outside of the box” solutions could create better outcomes for all parties (developers, City, families needing affordable housing, etc.):

– Rental housing vs. for-sale

– Deeper affordability

– Fewer units but with more bedrooms

– Leveraging the Ordinance units with other projects/subsidies

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Ordinance Revisions

Denver City Councilwoman At-Large

Robin Kniech

(720) 337-7712

robin.kniech@denvergov.org

www.denvergov.org/robinkniech

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@kniechatlarge

Robin Kniech, Denver City Council At-Large