Hancock’s affordable housing plan met with doubts
Mayor Michael Hancock’s plan to support Denverites who are struggling with skyrocketing housing costs is receiving a decidedly mixed response from city council members.
The Council’s Committee on Safety & Well-being met today to evaluate Hancock’s proposal. After a review of the details, the public got a chance to weigh in. Following the public hearing, Council members expressed a wide array of concerns – including several who say the proposal isn’t nearly ambitious enough and would hardly put a dent in Denver’s affordable housing crisis.
The plan, which Hancock unveiled in his July 11 State of the City address, would dedicate $150 million over the next 10 years to build and preserve affordable housing projects through increased property taxes and a fee on new development. Crafted by Hancock, Councilwoman Robin Kniech and Councilman Albus Brooks, it’s the city’s attempt to address a housing market that has catapulted home prices and rents out of the reach of many. An estimated 87,000 Denver families are now considered “housing insecure” in that they’re paying more than one-third of their incomes on rent or mortgages.
The proposal aims to build 6,000 new affordable units in Denver over ten years.
“I think we all agree that this is not enough money,” Councilwoman Kendra Black said near the end of the session.
“This is a drop in the bucket,” echoed Councilman Paul Lopez, citing a single 197-unit affordable housing project that cost $42 million.
Councilman Kevin Flynn had a different take, expressing apprehension about assuming that Denver’s housing crisis will continue to worsen.
“I’m struggling with the notion that we may be reacting at the peak to a problem that could naturally ease over time,” Flynn said in an email before the meeting. “Are we looking at the overcrowded church on Easter Sunday and raising money to build a bigger church, when in another week or so we won’t need all those new pews?”
Hancock’s plan would levy a fee on new development in Denver ranging 40 cents to $1.70 per square foot, depending on the type of construction. That fee would be paired with an increase in property taxes of 50 cents per $1,000 in valuation – that’s about $12 per year on a median-priced home in the city. Each funding source would make up 50 percent of the affordable housing fund.
The plan has been in development for quite a while now. Councilwoman Kniech told The Independent that her team has been working with stakeholders for 18 months, and that the work on refining the concept stretches back five years.
According to the project’s website, the development fee figures were derived from a comprehensive study and comparisons with peer cities. However, the peer cities Denver’s report lists all have significantly higher development fees than Hancock’s plan proposes. Neighboring Boulder charges up to $9.53 per square foot – more than five times the fee Hancock is eyeing. And new commercial developments in San Francisco pay up to $24.03 – more than 14 times more than Hancock’s plan.
Kwame Holmes, a professor of Ethnic Studies at the University of Colorado, attended a meeting prior to today’s public hearing and found the numbers wanting.
“The development tax should be significantly higher, and there should be real regulations on developers’ ability to pass on the tax to potential tenants,” Holmes said.
Councilwoman Mary Beth Sussman had the same concerns. She asked Kniech whether it’s possible that the development fee would simply be passed on to tenants and increase the cost of housing.
Kniech responded by pointing out that the development fee is quite low, which reduces the likelihood of that happening. She also presented a pure market analysis, which holds that landlords are currently charging the most they possibly can. By that logic, she argued, there’s no way for landlords to slap additional fees on top of rent to make up for the development fee.
The development fee has many critics. At a July 21st public hearing, city officials conducted a poll among attendees to gauge reaction to the proposed fees. The results: 61% of the respondents selected the statement, “Too low; we should be charging more.”
Central Denver Councilman Wayne New – who chairs the Safety and Well-being Committee – pointed to Seattle as a city to emulate. A primary ballot initiative there, to be voted on Tuesday, would secure funding for a $750 million affordable housing plan by doubling that city’s housing levy. Combined with other funding from federal, private, state and county sources, Seattle’s plan is projected to provide 20,000 affordable homes over the next 10 years. That’s more than three times more affordable units than Denver’s plan could fund, and in a city with less than half the number of housing-insecure households.
“They’re very similar cities, we compare notes with Seattle all the time,” New said. “I don’t think it’s enough money.”
Councilwoman Kendra Black lauded her colleagues’ work, but struck a cautious tone.
“For me personally, I want to hear more discussions,” she said. “I want to hear from opponents, and I want to hear about unintended consequences that we don’t see.”
Kniech is eager to get to work.
“The most important thing we can do is start,” she said.
The proposal was originally slated for a final vote on August 29, but the timeline was pushed back. The committee will review the plan again August 17, it will be introduced to the full council September 12 and a final vote will take place September 19.
Managing Editor Tina Griego contributed reporting to this story.
Photo by Susan Greene
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