DENVER | Main Development Thread #6

[Denver Dweller]

New charges, to be unveiled in July, are part of city's $150M strategy to subsidize residential projects


http://www.denverpost.com/2016/06/08/den...pers-will-pay-to-aid-affordable-housing/

[TakeFive]

Originally Posted by CherryCreek

I agree. For comparison:

Since two of the three properties (that I researched and the 3rd is now a vacant building) that you picked out were in museum districts let's do compare, apples to apples.

First we have the new Frederic C. Hamilton building at DAM:


Photo credit: The Denver Art Museum


The recently complete Art Hotel:


Photo credit: Denver Infill


Currently under construction is Eviva Cherokee:


Rendering via Signatureflip

Gosh, it appears to me that Denver's Museum District is very competitive with either Kansas City or Houston.

[CherryCreek]

Currently under construction is Eviva Cherokee:


Rendering via Signatureflip

Gosh, it appears to me that Denver's Museum District is very competitive with either Kansas City or Houston.[/QUOTE]

I'm not sure about the Eviva. Like it better than the Alexan for sure! Lots of glass makes a lot of sense in a sunny climate with great blue skies (usually) and mountain views.

Will be interesting to see its execution, particularly how the glass looks and plays in the light and off its surroundings.

[TakeFive]

Tell me something that I don't know.
Okay, did you know that 2020 Lawrence was owned by Berkshire Income Realty, Inc. aka Berkshire Communities?
That I did not know, thnx.

Remind me what that looks like.


Courtesy of Downtown Denver Partnership

[Agent Orange]

Originally Posted by Denver Dweller

New charges, to be unveiled in July, are part of city's $150M strategy to subsidize residential projects


http://www.denverpost.com/2016/06/08/den...pers-will-pay-to-aid-affordable-housing/

Excuse the rant, because besides reading the article, I haven't done a ton of research on this proposal. But, does anyone know of any objective research on whether the current trend of affordable housing subsidies has had a significant impact on lower and middle income people being able to live in a city? Because it seems to me that these costs would tend to reinforce "income inequality" trends in cities.

A) Brand new market priced units must go up in price to cover the costs of the subsidized units and increased impact/development fees. Or, worse, such costs deter developers from developing in the first place, leading to less new supply being built, which accelerates price growth for existing, exempt buildings/units. Additionally, increased property tax obviously also decreases the pool of people able to afford housing in the City of Denver.

B) The subsidized units tend to be very few in number and the income ceilings tend to be below that of your typical middle class household/person. This means that (made up numbers for example) most new residents will tend to be in the upper 25% bracket of wage earners with a pittance of under 25% wage earners. The middle 50% is pushed out more than if market forces were at play.


Maybe I'm a bit cynical, but it seems to me that such programs mostly accomplish pats on the back for the city government and concerned voters so everyone can tell themselves they're "doing something about the housing crisis". 600 units a year. How is that going to do anything significant? Depending on how severe the fees etc, I could see this easily driving away more than 600 units a year of market priced units (the affordable housing of the future). I'm worried we're following in the footsteps of Seattle which has a very convoluted, expensive regime of development incentives/fees.

[RyanD]

Have we talked about this?

New Capitol Hill Project: Saint Francis Apartments at Cathedral Square

50-units of permanent homeless housing, 6-stories. Not a bad looking project:

[mhays]

Originally Posted by Agent Orange

Excuse the rant, because besides reading the article, I haven't done a ton of research on this proposal. But, does anyone know of any objective research on whether the current trend of affordable housing subsidies has had a significant impact on lower and middle income people being able to live in a city? Because it seems to me that these costs would tend to reinforce "income inequality" trends in cities.

A) Brand new market priced units must go up in price to cover the costs of the subsidized units and increased impact/development fees. Or, worse, such costs deter developers from developing in the first place, leading to less new supply being built, which accelerates price growth for existing, exempt buildings/units. Additionally, increased property tax obviously also decreases the pool of people able to afford housing in the City of Denver.

B) The subsidized units tend to be very few in number and the income ceilings tend to be below that of your typical middle class household/person. This means that (made up numbers for example) most new residents will tend to be in the upper 25% bracket of wage earners with a pittance of under 25% wage earners. The middle 50% is pushed out more than if market forces were at play.


Maybe I'm a bit cynical, but it seems to me that such programs mostly accomplish pats on the back for the city government and concerned voters so everyone can tell themselves they're "doing something about the housing crisis". 600 units a year. How is that going to do anything significant? Depending on how severe the fees etc, I could see this easily driving away more than 600 units a year of market priced units (the affordable housing of the future). I'm worried we're following in the footsteps of Seattle which has a very convoluted, expensive regime of development incentives/fees.

Good summary.

We haven't seen the outcome in Seattle yet. The new fees are being phased in. Except the unrelated height fees which we're already paying, which the new fees add to.

The biggest disconnect on the fees is that they help relatively few people, but impact the entire rental market. For 600 more units per year (or whatever it is) you're making life expensive for maybe 100,000+ renting households, plus others outside the city limits.

[enjo13]

Originally Posted by Agent Orange

Maybe I'm a bit cynical, but it seems to me that such programs mostly accomplish pats on the back for the city government and concerned voters so everyone can tell themselves they're "doing something about the housing crisis". 600 units a year. How is that going to do anything significant? Depending on how severe the fees etc, I could see this easily driving away more than 600 units a year of market priced units (the affordable housing of the future). I'm worried we're following in the footsteps of Seattle which has a very convoluted, expensive regime of development incentives/fees.

You're 100% correct. This is rent control with a different name. You only need to look at the results in Manhattan and San Francisco to see that not only does it not work, it actually makes the problem worse (for reasons you identified).

I say this as a homeowner in Denver who would benefit from this nonsense.

[Robert.hampton]

Originally Posted by RyanD

Have we talked about this?

New Capitol Hill Project: Saint Francis Apartments at Cathedral Square

50-units of permanent homeless housing, 6-stories. Not a bad looking project:

I am sure the developers of the project are well intentioned, but given the target population is it really helpful to develop this project with Argonaut literally in their back yard?

[TakeFive]

Originally Posted by enjo13

You're 100% correct. This is rent control with a different name. You only need to look at the results in Manhattan and San Francisco to see that not only does it not work, it actually makes the problem worse (for reasons you identified).

I'll disagree although I wouldn't be in favor of this proposal. My opinion is that tenants are charged what the market will bear. It would impact how developers pencil their proposed projects since it's an upfront cost to them.

It may sound counterintuitive but as an alternative I'd suggest a rental "use" (or sales) tax of something like 1.5%. It's much broader (obviously) and doesn't just penalize the new kid on the block. That said, I don't care much for the whole concept.

[CherryCreek]

Originally Posted by Agent Orange

Excuse the rant, because besides reading the article, I haven't done a ton of research on this proposal. But, does anyone know of any objective research on whether the current trend of affordable housing subsidies has had a significant impact on lower and middle income people being able to live in a city? Because it seems to me that these costs would tend to reinforce "income inequality" trends in cities.

A) Brand new market priced units must go up in price to cover the costs of the subsidized units and increased impact/development fees. Or, worse, such costs deter developers from developing in the first place, leading to less new supply being built, which accelerates price growth for existing, exempt buildings/units. Additionally, increased property tax obviously also decreases the pool of people able to afford housing in the City of Denver.

B) The subsidized units tend to be very few in number and the income ceilings tend to be below that of your typical middle class household/person. This means that (made up numbers for example) most new residents will tend to be in the upper 25% bracket of wage earners with a pittance of under 25% wage earners. The middle 50% is pushed out more than if market forces were at play.


Maybe I'm a bit cynical, but it seems to me that such programs mostly accomplish pats on the back for the city government and concerned voters so everyone can tell themselves they're "doing something about the housing crisis". 600 units a year. How is that going to do anything significant? Depending on how severe the fees etc, I could see this easily driving away more than 600 units a year of market priced units (the affordable housing of the future). I'm worried we're following in the footsteps of Seattle which has a very convoluted, expensive regime of development incentives/fees.

I'm equally skeptical that this accomplishes its goals in any sort of cost-efficient manner, when considering the greater good. I suppose the "most" you can say about this is that it probably preferable to full-blown rent control, or massive public housing projects and the blight they can bring to the cities.

It gives the politicians some space to say they are doing "something" (albeit something of doubtful value), without going full on crazy with socialized housing.

[enjo13]

Originally Posted by CherryCreek

It gives the politicians some space to say they are doing "something" (albeit something of doubtful value), without going full on crazy with socialized housing.

It's not that benign tho. They're proposing a rather hideous tax on new development ALONG with raising property taxes. Both of those things are actively opposed to bringing prices down as they make things less affordable (property taxes) AND add further impediments to inventory (less building thanks to additional taxes).

This is simple economics that our leadership is failing.

[Fritzdude]

Originally Posted by TakeFive

I'll disagree although I wouldn't be in favor of this proposal. My opinion is that tenants are charged what the market will bear. It would impact how developers pencil their proposed projects since it's an upfront cost to them.

It may sound counterintuitive but as an alternative I'd suggest a rental "use" (or sales) tax of something like 1.5%. It's much broader (obviously) and doesn't just penalize the new kid on the block. That said, I don't care much for the whole concept.

Why not just take the developers out of the equation and simply provide stipend checks to people who qualify for the "program" and issue whatever amount they might deem fit. Hello Betty, since you make less than $30K per year and have met the requirements for lower housing allowance, here is a $450 monthly check that can be used to supplement your housing expenses. Go live wherever you might want..

[comoneymaker]

So Obamahousing? I like it. It works. Even though move than half the people hate it. I wouldn't say where ever you want though. Someone could have a rich partner and they claim separate and then be getting money for housing when you live in a $2500 a month luxury condo.

[TakeFive]

Originally Posted by Fritzdude

Why not just take the developers out of the equation and simply provide stipend checks to people who qualify for the "program" and issue whatever amount they might deem fit. Hello Betty, since you make less than $30K per year and have met the requirements for lower housing allowance, here is a $450 monthly check that can be used to supplement your housing expenses. Go live wherever you might want..

Makes a lot of sense to me. I suppose that's sort of being done by building affordable units but there's a lot to be said for letting the consumer pick their own place to live using a stipend.

[mhays]

Originally Posted by TakeFive

I'll disagree although I wouldn't be in favor of this proposal. My opinion is that tenants are charged what the market will bear. It would impact how developers pencil their proposed projects since it's an upfront cost to them.

It may sound counterintuitive but as an alternative I'd suggest a rental "use" (or sales) tax of something like 1.5%. It's much broader (obviously) and doesn't just penalize the new kid on the block. That said, I don't care much for the whole concept.

The system increases rents because is reduces construction, creating scarcity.

Buildings charge what the market will bear. But they only get built when they're better investments than other planned buildings.

So construction reduces until it causes scarcity, which pushes rents back up, which gets construction going again though probably at a lower volume.

I agree that a more generalized tax is better. That wouldn't avoid disincentivizing supply.

Back to the Seattle example, one thing we do well is a voter-approved property tax levy that raises $16,000,000 per year for affordable housing. Non-profit builders use most of this, and they build a lot with it. This November we'll vote on a renewal at double the volume.

[bunt_q]

Originally Posted by Fritzdude

Why not just take the developers out of the equation and simply provide stipend checks to people who qualify for the "program" and issue whatever amount they might deem fit. Hello Betty, since you make less than $30K per year and have met the requirements for lower housing allowance, here is a $450 monthly check that can be used to supplement your housing expenses. Go live wherever you might want..

But still no condos, we'll keep those illegal. Which means Betty will rent, and be dependent on government largess, forever. Yay for entitlement culture!

I have a better approach. Kill the rich.

[RyanD]

I'm announcing a new condo project on DenverInfill tomorrow. Any guesses?

[CPVLIVE]

^^^^

Yay - condos for the rich! You might be able to afford a closet in that development for your 350 Bunt.

[bunt_q]

Hey, at $750 per square foot I can probably afford a whole bedroom!