Oh Denver, Where are we growing?
Denver’s growing at a brisk pace, but steadily rising rents and lack of affordable housing are putting a major strain on developers and city planners to come up with adequate solutions. At the same time, Denver residents are struggling to maintain a comfortable living in the city they love. It’s the issue everyone is talking about but no one seems to grasp what’s really going on or where we’re headed.
by Diana Aqra
Denver’s growth over recent years is quite remarkable. Estimates show that in our metro area population has increased by more than 50,000 people in the last year, making it the sixth fastest growing city in the United States. Our growth proves that our city is bountiful; we get to share the great outdoors, an eclectic culture, and a healthy lifestyle with people from all over the country and even the world.
The worrisome part is, however, that residents and city planners are finding it more and more difficult to stretch resources to new limits. Housing—arguably, the most essential component to a healthy life and economy— is facing severe shortages in the Denver metro area. According to the City and County of Denver, it is estimated that there is a shortage of about 30,000 affordable housing units in Denver county alone. In the seven county Denver metro area (including Boulder, Adams, Arapahoe, Douglas, Jefferson, and Broomfield), the number is closer to a shortage of 60,000 affordable housing units.
As the population grows and large corporations with high-paying jobs continue to relocate to Denver, the gap to provide affordable housing in the metro area will continue to widen greatly.
“Our millennial population is growing while baby boomers are retiring. This is putting tremendous downward pressure on housing,” said Rick Padilla, the City and County of Denver’s Director for Housing and Neighborhood Development.
“It’s a double-edged sword,” he tells Asian Avenue. Denver’s growth is on track with cities like Los Angeles and San Francisco. But, with our popularity comes “numerous issues metro-wide,” he maintained.
Simply, the main issue is supply. Apartment buildings, especially affordable housing units, are becoming less and less available, causing rents to soar.
On a whole, there is a lack of housing supply for those that want to live in Denver. According to the Denver Metro Apartment Association, at the end of 2014, the vacancy rate for the entire metro area was on average 4.6%, markedly lower the natural rate of 5%. While the number for the entire area doesn’t seem too far from the norm, many areas in and around Denver are near 2%, a dangerous rate. Southwest Denver’s vacancy rate was 2.8% and Aurora North, the area marked by Green Valley Ranch and Montbello, are only 1%. Under these conditions, rents have soared 12% in 2014 to $1,168 per month, on average for the metro area.
For those making more than $60,000 per year, the situation is not as daunting. Families with large amounts of income to put towards several months of rent are welcomed by landlords and property owners who are, in general, “banking” on the situation.
In the current market, “many landlords are realizing that they can charge 20% higher from what they used to,” said Shannon Peer, director of Housing Counseling at Brothers Redevelopment, a nonprofit organization helping to alleviate homelessness and improve sustainable housing in Denver. Most of these landlords haven’t increased the rent in years, he tells Asian Avenue, but it is still quite a shock for people who are paying rental rates from a few years ago. At the same time, the wages and salaries of the majority of renters has not offset increased rental rates.
“It is especially hard for immigrants and refugees,” said Harry Budisidharta, a Health Equity Advocate for the Asian Pacific Development Center in Aurora, Colorado. Aurora was once one of the most welcoming and affordable places for immigrants and refugees to come, making it known as one of the most diverse cities in the United States. People in Denver frequently travel to find international grocery stores, the best Asian restaurants, and a wide variety of authentic cultural events seldom seen in Denver.
“Because the rent is too high, now immigrants and refugees are moving away,” said Budisidharta. It is likely to see one bedroom apartments filling with four to five families because of high rent, he said, which can be dangerous for their health and future.
What may shock many is that 40% of all Denver residents live on less than $30,000 a year, according to City Data.com, making the average workforce; professionals in teaching, small business and construction, considerably housing burdened.
According to the City and County of Denver, more than $450,000 has been given to the Colorado Coalition for the Homeless to fund new affordable units. Still, only 12,000 affordable housing units have been built.
A report by the advocacy and education nonprofit, Housing Colorado, expanded on the severity of the shortage in a report in 2014: “While this gap [of 60,000] may not sound like a large number, put in perspective, it is an affordable housing gap equal to almost 16% of the existing rental housing stock in the State of Colorado. At the current rates of affordable rental housing construction of 823 homes a year, it will take over 100 years to eliminate.”
What seems to be apparent is that the majority of Denver’s housing development is geared toward renters who earn between $25,000 and $37,000. According to Denver Housing Authority data only 4% of new housing development built by private developers is being built for those earning less than $20,000 per year, 58% of new private development is being developed for those making at least $25,000 and $31,000, and 30% is being built for those making $32,000 to $50,000.
Padilla, director of Housing for the City and County of Denver, reflected on the fact that there is not enough affordable public or private housing being developed to meet the current demand.
One of the main financial tools the City is currently using to develop new housing is called the “Revolving Loan Fund,” in which $10 million is being used to support the development of affordable multifamily rental units. Units funded by this loan program, however, are also priced for families and individuals earning more than $30,000 per year. Additionally, this is only a short-term solution, while the City looks for a “permanent source of funding,” for future affordable housing.
Padilla said the key to manage population growth is to make sure public transportation is expanding and reaching people living outside the metro area, which he says is being aided by the expansion of the light rail system.
As a last resort, people may turn to the Federal Section 8 program, which gives low-income individuals and families vouchers to use to pay for rent. But, sadly, this program is also on its last legs.
“People have been languishing,” on the Section 8 process, said Stella Madrid, Intergovernmental and Community Affairs Officer with Denver Housing Authority in a phone interview, explaining that it has been so strained that it hasn’t been able to offer any “real-time response for housing.” Vouchers are not covering the amount of rent in Denver, Shannon Peer of Brothers Development explained. While the city waits for an adjustment of the Federal limits, there is only a lottery system that opens once a year, giving a very low number of people a chance to win. The Section 8 program hasn’t even existed for years in the city of Aurora, according to housing representative at the local office. When asked about rent-subsidized housing for Aurora, only two complexes were offering just a handful of units, for which the waiting list was at least three years, according to property managers.
The Young, Low-wage Earners and Singles Most Affected
Those living as single parents with a single income, young people working in low-wage jobs and ex-offenders are most affected by the housing crisis. Asian Avenue spoke with several people from all walks of life to understand the problem is not reduced to a small segment of society.
Sonya, is a young mother and part-time teacher living in the Highlands of Denver. Her financial situation is improving by becoming a full-time as a teacher in the Fall. Yet, the housing situation is actually making her condition worse. She currently lives in a rent-restricted apartment, and pays $750 per month for rent, which is a rarity in Denver. Because her salary is increasing, she will no longer qualify for the apartment. Paradoxically, her new wages still cannot afford a unit within her building that will now rent for $1,600 per month. Even if she could afford the rent, there are no available units left in her building. Sonya is one of the many people living “on the edge” of poverty who can quickly fall off when subsidies are taken away. She is considering moving in with her ex- husband, whom she divorced two years ago.
“There aren’t many options,” echoes Franklin, a man of color in his 50’s who was born and raised in Denver. For him, stagnant wages in his industry are the problem. Although he, his four other siblings and two parents grew up comfortably in the Park Hill neighborhood, he said his wage as a factory and construction worker have decreased from $15 per hour to $10 per hour since the 1990s. After separating from his wife and foreclosing on his house, being convicted of a crime, and serving time in prison for four years more than a decade ago, he has struggled to find rental housing. He has lived on couches of friends and family and even in lived in his car for four months at the Cherry Creek Reservoir, which costs $450 per month for the $15 per day camping fee.
Both Sonya and Franklin’s situation are difficult because they do not want to leave their “beloved community” behind. Sonya’s worst fear is taking her children out of a school that they have established themselves in and moving away from affordable childcare. “I have invested too much in this community,” Sonya said. Although resources are dry for housing, Franklin is optimistic that he will find suitable work with buzz that Denver is expected to add another 45,000 jobs in 2015, on top of 3.2% employment growth in 2015, compared to a 1.9% national average.
Is there future relief from the housing crunch?
While the city is being built for the more affluent and affordable housing is slowed to a crawl, poverty is expected to grow. According to “Confronting Suburban Poverty” by the Brookings Institute, poverty has grown 61.6% in the city of Denver and 138% in suburban areas from 2000 to 2011.
“There’s a real lack of availability of affordable housing and a lack of funding to develop more affordable housing,” Brendalee Connors of Metro West Housing Solutions commented in a recently produced video by Jefferson County Human Services, where rent is an average of $1,123 per month.
“It seems so simple,” commented LuAnn Smidt of LifePoint Realty in the same video. “Just build it. But I also understand the counties and the building process itself. There’s also the construction defect litigation issue,” which is cited by several sources as the reason for slow development of housing, especially affordable units.
The Construction Defect Bill was legislation (Senate Bill 177) introduced two years ago in the Colorado legislature and was squashed in the last session. Proponents of the bill said, if passed, it would give developers security to build multifamily condos without fear that buyers/owners would sue for exorbitant amounts if they discovered a defect in their property. The bill was opposed by Colorado Democrats who believed the result would not be a greater number of affordable housing units, but rather, protection for developers and slashing home-owners’ rights. Funding as authorized by the State is still cited as a major barrier to affordable developments.
“Until the State dictates that we need to do something different, counties hands are tied,” said Smidt. “They can’t make us do affordable housing.”
While the problem of housing affordability in the Denver-metro region is a big concern for city government, the solution is not all in their hands. Community efforts made up of private and nonprofit organizations are undertaking the huge challenge.
Metro Denver Homeless Initiative (MDHI) is a funded nonprofit working to build cooperative relationships between the community and the private sector to prevent homelessness and build stable and sustainable communities.
In 2015, MDHI and its partner organizations were awarded millions of dollars to alleviate the housing crisis by starting the Landlord Recruitment Campaign, a program which offers incentives for landlords to set aside properties for low-income families. Under this program, landlords that participate are provided a subsidy from MDHI that covers a portion of the rent. Landlords can also receive incentives for housing improvements, or repairs for damages, and cleaning services.
The most valuable part of this program is that property managers are setting aside properties for low-income families who would normally get looked over in the highly competitive market, Peer said. Even as rents increase, the program ensures low-income families will get a chance at landing a rental, while landlords can still receive market value rent.
Peer said he and his organization are working with “civic-minded,” people that want to see the city prosper. While the program is still in its infancy, it has provided 40 units and leased 5 since it began six months ago, Peer said. He is hoping the program grows.
“We can’t control how many people move to Denver,” Peer said, “but we can still grow.” The organization is working with the private sector interested in investing in affordable housing to contribute to economic prosperity in Denver.
“We have a bit of a ‘funding soup,’” said Peer, which consists of cities, counties, corporations, and even state Attorney Generals whose mission is in alignment with reducing the housing crisis – a concern and need that is “evident and warranted in our conversations.”
“Our experience has been successful,” he said optimistically.
Still, people will need to be educated on the “rough market,” Peer stated. If you are looking, “start sooner than later and cast a wide open net,” he said. Do not expect to find a place within a month of looking.
At the same time, low-income people who are interested in the issue of housing affordability need to be involved in future conversations.
“They are our workforce and they support our city,” Peer said.
Slowly, people are realizing that, amidst the problem, they need to become part of the solution. A newly arrived millennial, Dane Ralston, who moved from Austin, Texas one month ago to find work and housing, said that it is part of our “cultural responsibility,” to make sure our people maintain the quality of life we want while the city grows.
Even though he is homeless and looking for work, he is optimistic that he will be able to to find work and live here. To do that, we need to get people off the streets (by creating more green spaces), and build housing that is close to working centers.
That, he said, is what will truly “develop Denver.”