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ABOUT AFFORDABLE HOUSING

 

Access to safe, decent affordable housing has never been more important in Denver. Today 100,000 more people live in Denver than did just a dozen years ago, with as many as 100,000 more anticipated over the next decade. While our city's population has spiked, the housing stock is simply not keeping pace with community needs. Ironically, while home prices have risen dramatically here--generally good news for a city's economy--this boom is also increasingly making rentals and for-sale housing unaffordable for too many.

Denver's population is growing much faster than our supply of housing, and this gap is growing every year. With demand growing so much faster than supply, prices have risen dramatically.

Vacancy rates--that is, the number of apartments available for rent, or houses available to rent or buy--are very low. Today in 2018, even though we're seeing a robust boom in the construction of housing, particularly in and around downtown, the overall challenge of affordability is still very real for too many Denver households.

The average rent in Denver for a two-bedroom apartment is nearly $1,500--more than many working people can afford. 

The short answer is easy: Denver's affordable housing issues affect everyone.

Anyone who cares about the quality of life here can appreciate that housing affordability is a critical issue for many residents. Remember that we are not simply talking about the challenges of homelessness and people with extremely low income; we are also talking about a wide spectrum of working people who earn up to $50,000 or more, yet struggle with basic monthly bills for housing and utilities.

Denver's workforce includes a varied range of occupations and annual incomes, such as:
    Dishwasher - $19,380
    Waiter/waitress - $21,910
    Home health aide - $24,980
    Teaching assistant - $27,620
    Bank teller - $29,330
    Veterinary tech - $31,180
    Bus driver - $32,920
    Community health worker - $36,830
    
Many young people, growing families, low- and middle-income families, older adults, or people with disabilities do not have the income that is needed to keep up with the rise in housing costs and the scarcity of availability.

Denver will not be the Denver that we all love--and all work to preserve, protect, and grow--without the opportunity for people of all income levels to live in safety and peace.

Employers are struggling to hire the workers they need to grow their businesses, because workers cannot find housing within reasonable commuting distance.

Our ability to recruit companies to locate here could be reduced if our housing prices and availability does not improve.

Our wonderful climate for entrepreneurs is equally at risk.

Is our lack of affordable housing your problem? It is if you love Denver.

Area Median Income, commonly referred to as "AMI," is a federal calulation based on census data from every geographic area. The number matters a great deal when we look at affordable housing in Denver--an area with a current AMI of $63,000 for a one-person household.

Anyone you know who earns less than that figure is very likely to be adversely affected by housing costs here. Below is the 2018 AMI chart for Denver, by household size. Consider that many people who work, including full-time work, earn less than 100% AMI. This is why we are so concerned about income levels, housing affordability, and creating more units for people in the 30-80% AMI range.

 

Across the U.S., housing costs are considered "affordable" if your monthly rent or mortgage, plus utilities, add up to no more than one-third of your gross household earnings.

This means that if an individual person earns $43,000 annually, for example, he or she has a before-tax monthly income of about $3,580. One-third of that would be about $1,200. In this example, that would leave about $2,380 for every other expense, including:

    taxes
    clothing
    child care
    groceries
    transportation
    savings
    health care (premium + out of pocket)
    phone
    internet
    consumer debt or loans
    education beyond high school

You can quickly see that paying any amount greater than 30% of your gross monthly income for housing does not leave much flexibility to build a better future--to be able to sustain meeting the kinds of expenses on this list.

Today too many Denver households are "rent-burdened"--meaning that they pay more than this 30% of their monthly income for housing.

  • There are about 70,000 renter households in Denver today. There are about 30,000 homeowner households.

  • 87% of Denver's renter households earn less than $35,000 annually.

  • About half of all renter households in Denver, and a third of all households here--combining renters and owners---struggle with this guideline of "affordability" and are potentially at risk for eviction.
  • The national standard of not paying more than 30% of monthly income for housing is even more relevant to homeownership, since missing payments can lead to foreclosure.

The city is extremely reluctant to approve a buyer a for-sale affordable home when the buyer's income verification shows that more than 30% of monthly income is required for housing because having so little financial flexibility increases the likelihood that future mortgage payments could be missed.

We all want owners to have a home they can keep. If an owner is paying more than 30% of his/her income for housing, that household is more likely to be one job loss, one medical emergency, one unforeseen household applicance needing replacement or car repair away from not covering other expenses--like the mortgage. 

On the DEVELOPMENT side, OED invests in affordable units. 
    We deliver on the city's ambitious goals to build units and to preserve existing income-restricted units
    We help fund emergency shelter and supportive housing
    We close the gap for affordable units between developer and bank financing, making projects possible with local and federal dollars
    We add convenants to funded projects to ensure that affordable units stay that way in the future
    We manage the units created by Denver's Inclusionary Housing Ordinance 

On the PROGRAM side, OED provides in services for people.  
      We fund tenant-based rental assistance programs    
      We fund emergency rental and utility assistance payments
      We fund and coordinate rent "gap" funding so that qualified renters can pay 30-35% of their monthly income, not 50% or more
      We fund homebuyer counseling for people ready to buy
      We income-verify prospective buyers to ensure that they are purchasing a home they can sustainably afford to keep, with housing costs less than 30% of their monthly income
      We fund down payment assistance 
      We fund emergency home repair programs and 
accessibility modifications  

Together, this is an ambitious approach to reach five overall goals:

1 - Creating opportunities for all residents to live where they work and play

2 - Investing in mixed-use, mixed-income projects wherever possible to create the greatest economic diversity

3 - Focusing affordable housing investments near transit and in targeted neighborhoods to create catalytic economic opportunities

4 - Anticipating and, where possible, mitigating the involuntary displacement from gentrification

5 - Providing incentives and resources to support private and nonprofit investment

For more detail about Denver's current and future plans and affordable housing goals, see the city's Five-Year Comprehensive Plan for Housing.

In the past, federal HOME and Community Development Block Grant (CDBG) funds have been the city's primary tools for investing in housing. These funding sources are both declining sharply and are especially uncertain in our current national political climate.

Starting in 2015, the city of Denver began to step in to fill this alarming gap. In 2015, the city, the State and the Colorado Housing Financing Authority (CHFA) together invested $10M in what was launched as the Revolving Affordable Housing Loan Fund (RAHLF). Projects began moving swiftly through this new pipeline, and the loan fund was fully invested by 2017.

In 2016, the city made a one-time allocation of $8M from its General Fund for affordable housing.

In 2017, the city launched its historic dedicated fund for affordable housing, which is anticipated to raise up to $15M annually for a 10-year period.

In 2018, the city annunced its intention to double its local Affordable Housing Fund from $15M to $30M annually and also, through bond revenue issued by the Denver Housing Authority, add an additional $105M to the fund over the next five years.

So while the federal funding outlook for housing is uncertain, we have taken local steps to ensure that our bold plans to improve our create and preserve our affordable housing units can continue.