Dedicated Affordable Housing Fund

There are about 150,000 renter households in Denver; about 61% of these households earn less than $50,000. Half of Denver's renters pay more than 30% of their income for housing; nearly a quarter of these households pay more than 50% for housing. 

For families in this situation, high housing costs can mean there is little left over to save or invest in the future.

For employers large and small, the high cost of living within a reasonable commute--even for very desirable jobs--could eclipse Denver's strong employment base and make talent very hard to recruit and retain.

Housing prices here have been rising at twice the national average. Rents have increased about 50% since 2010. It is not simply the homeless and most vulnerable people who are facing barriers to live affordably, but an alarming range of working families too.

Denver has added a substantial number of jobs in recent years, and income levels have risen as well, but when it comes to housing, even Denver's robust income growth has not translated into greater spending power for everyone.

For more detail on this challenge and the city's efforts to address Denver's affordable housing needs, please see the  2019 Housing Report and the 2021 Expanding Housing Affordability Report. 

To learn more about HOST's goals and plans for affordable housing in 2021, please see the 2021 HOST Action Plan and Homelessness Resolution Fund Addendum. 

During 2015, the development of the dedicated affordable housing fund involved a robust public process that was highly deliberate, open, and transparent, including the following:

• Rigorous vetting of possible funding sources that ultimately led to these proposed property tax and development impact fees
• Significant financial modeling that helped us arrive at a revenue projection of an estimated $150 million and 6,000 units over the first 10 years
• Monthly stakeholder meetings, convened starting in September 2015 and ongoing, with a diverse group including housing and service providers, affordable and market-rate residential developers, commercial developers, finance experts, and other real estate professionals
• Additional one-on-one outreach with other stakeholders
• April 26: Our first public meeting, at East High School, with 350 attendees
• Ongoing update presentations to Denver City Council's Safety and Housing Committee
• July 21: Our second public meeting, at North High School.
• August 2: Presentation of the draft ordinance at Safety and Housing Council Committee.
• August 17: More discussion at Safety and Housing Council Committee. 
• August 24: Vote to pass - Safety and Housing Council Committee.
• August 31: Mayor-Council Meeting, 9:30 a.m. 
• September 12: First reading at Council.
• September 19: Ordinance approved during second/final reading at Council, which included a one-hour courtesy public hearing

After approval, the following was accomplished:

• Nominated and confirmed new Housing Advisory Committee
• High level housing fund priorities set in the 2017 Budget 
• Streamlined investment terms and competitive processes for allocating local funds in 2017

Denver’s proposed revenue package is a balanced approach that relies both on the long-term stability of our property tax along with the opportunity to capitalize on the benefits during economic growth cycles through a one-time fee on development.

We worked to build this approach to generating revenue as flat as possible and as simple as possible.

Here are the approved impact fees:

Current modeling estimates housing fund revenue at approximately $150 million over the next 10 years with a balance of the two sources at a 50-50% split (property tax – development fee).

At the approved dedicated property tax of 0.5 mills:

• The impact on a typical homeowner in Denver will be $12 per year on a median home priced at $300,000
• The impact on a commercial property owner will be $145 per year for every $1M of value

Denver’s development fee was informed by best practice research, a leading industry consultant, and months of diverse local stakeholder input.

We used an RFP process to hire a nationally-respected consultant, David Rosen & Associates, utilizing their tested methodology that draws the "nexus" from development to jobs to housing need.

We also considered the perspectives of commercial and residential technical advisory groups of well-respected developers to help inform the nexus study.(PDF, 4MB)

The study identified “legally justified maximum fees” ranging from $28.51 to $119.29 per square foot for commercial development and $9.60 to $23.66 per square foot on residential development.

We further lowered the fee ceiling with a feasibility study that was designed to show at what threshold a fee would tip a project into a financially infeasible position based on a Return on Equity analysis.

We lowered the ceiling even more based on additional input and analysis, including a comparison to development fees for affordable housing in peer cities:

•     San Diego    
      $0.80 to $2.12 per square foot
•     Sacramento*    
      $0.50 to $2.58 per square foot
•     Boston    
      $8.34 per square foot
•     Boulder   
      $0.09 to $9.53 per square foot
•     Seattle                
      $5.00 to 17.50 per square foot
•     San Francisco      
      $16.01 to $24.03 per square foot

* Sacramento is the only city above that includes new residential development in its fee. The rest do not.

Development fees are a common source of revenue for jurisdictions across the Denver metro area, funding public investments such as affordable housing, transportation, parks, and public schools.

This new housing fund is designed to provide flexibility in addressing Denver’s housing needs, allowing the city to respond to changing market conditions and develop creative housing solutions.

A wide spectrum: The primary use of these funds will be the production and preservation of permanent supportive housing, workforce rental housing and for-sale housing. The spectrum of people benefiting from this fund will range from homeless individuals and those struggling to live below 30% Area Median Income ($16,830 for one person) through the income spectrum up to families of four earning 100% AMI ($80,100). 

Income limits: Rental housing projects will serve households up to 80% AMI ($64,080 for a family of four). For-sale housing investments will serve households up to 100% AMI ($80,100 for a family of four). Homeownership programs such as down payment assistance serve households up to 120% AMI ($96,120 for a family of four).

Filling gaps: A limited portion of funds will be available for supportive services such as case managers in permanent supportive housing developments after all other sources such as Medicaid are exhausted first.

Low administrative costs: A small portion of funds will be available for administrative expenses, capped at 8% of the total revenue from the fund but using less than the legal maximum in the first year.

Innovation: Fund deployment will leverage new and existing housing expertise to create competitive programs and streamline investment decision-making. 

To see more detail about how HOST is investing these dollars, please visit our Affordable Housing Dashboard. 

A specially appointed 23-member Housing Advisory Committee will provide essential strategic input on uses of the dedicated fund. The committee will meet monthly in publicly announced, open meetings.