Hancock’s affordable housing plan goes for council vote, despite many doubts

Denver City Council will cast its first vote this evening on a proposed plan to ease the city’s housing crisis.

As the local economy booms, rents have outstripped wages and many Denverites find themselves struggling to cover housing costs. An estimated 87,000 families in the city are housing insecure, meaning that they pay more than 30 percent of their income on housing.

Over the past several years, Mayor Michael Hancock’s administration, working with councilwoman Robin Kniech and council president Albus Brooks, has tried to identify solutions.

What they came up with was officially announced at Hancock’s State of the City address in July. It involves an increase in property taxes paired with a fee on new development to help fund the construction of new affordable housing and preservation of existing units.

Other council members have expressed skepticism about the proposed plan. Their concerns vary. Some fear an unintended chilling effect on development. Others think the city needs to do far more to help provide housing to vulnerable residents.

Councilman Chris Herndon has proposed an alternative, more flexible plan, which is on the agenda for tonight and jeopardizes the administration’s plan’s likelihood of success. It would draw $20 million from the city’s general fund for the first year of the program, giving council more time to find a funding source with more universal support. So far, Herndon’s alternative has garnered support from two other council members, Rafael Espinoza and Debbie Ortega. It needs four more votes to pass.

Here’s a primer about the plans.

What would the administration’s plan do?

Hancock’s plan would impose a half-mill levy on properties in Denver, which translates to roughly $12 per year on a median home. It would also place a fee on new development, which ranges from $.40 to $1.70 per square foot, depending on the type of building. These revenue streams are projected to raise $150 million over ten years — on average $15 million per year. If the plan is passed, these fees would be imposed starting on January 1, 2017.

Council members Kniech and Brooks have long described a thorough process of collaboration with community members that led to the plan, which they support and helped to develop. They also claim that the revenue structure would protect revenues from economic fluctuations. Drawing funds from, say, marijuana revenue, wouldn’t  provide the same predictability, they say.

What’s the concern among other council members?

The most common concern, brought up in past meetings by council members Jolon Clark, Kendra Black, Rafael Espinoza and Paul Lopez, is that the plan simply wouldn’t raise enough money to put a real dent in Denver’s affordable housing crisis. In Lopez’s words, $150 million over ten years is “a drop in the bucket.” Some council members have pointed to the staggering numbers of homeless and housing-insecure families in Denver, as well as to comparable cities that have dedicated far more resources to the issue.

Councilman Wayne New, for example, points to Seattle, which recently passed a city ballot initiative that doubled its housing levy. Seattle also has a comprehensive affordable housing plan that includes a real estate excise tax, removing barriers to housing for people with criminal histories, and measures to prevent displacement.

“Seattle is very comparable. We compare notes all the time,” New said.

Other council members take issue with the property tax part of Hancock’s plan. When Councilman Herndon introduced his proposal, he cited excessive fees being squeezed out of Denver residents, claiming that council was “nickel and diming” the community. He pointed to a recently-approved stormwater drainage fee, this November’s bond issue to fund Denver Public Schools, and a potential 2017 bond to pay for repairing the city’s aging infrastructure.

Finally, some council members are expressing concerns of the development community. Members of the Downtown Denver Partnership, the Apartment Association of Metro Denver, and others have spoken out against the development fees in past council hearings. They say they support the notion of a dedicated fund for affordable housing, but that the development fee would be an unpalatable deterrent and that council should explore other options.

Councilwoman Kendra Black fears building owners will simply be able to pass the development fee on to tenants, hiking rents even more. Black has not formally committed to either plan.

In response, Kniech says that, in accordance with pure free-market analysis, buildings are currently charging as much as they possibly can for rent, making it impossible to slap more fees on renters.

What are critics of Hancock’s plan proposing instead?

Herndon’s proposal would dedicate $20 million directly from the city’s general fund for affordable housing in the first year. Then Hancock’s administration and council would work together to come up with a funding source that everyone can agree on. Some have suggested marijuana revenue, as well as simply continuing to draw money from the general fund. Council members Espinoza and Ortega have signed on to this proposal to buy time to create a more comprehensive affordable housing plan.

What’s next?

The two plans will be considered during tonight’s council meeting.

Depending on how the vote goes tonight, the plan or plans will be heard for a second reading on September 19th, and, if passed, would go into effect on January 1, 2017. There will be a public hearing prior to the September 19th meeting.

Both sides – those supporting the Hancock/Brooks/Kniech proposal and those supporting Herndon’s alternative – have expressed confidence that their plan will be successful.

Photo Credit: Ove, Creative Commons, Flickr


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