Council Finalizes Inclusionary Housing Parameters

On Tuesday night the City Council finished its preliminary discussion on inclusionary housing and provided feedback, allowing staff to draft an ordinance. The ordinance will require 12 percent of any size residential housing development to be deed-restricted and for sale to people making between 61 and 80 percent of the area median income (AMI).

City residents and workers will receive preference, although other buyers could qualify. Developers will be required to build the deed-restricted units onsite but could also provide a payment-in-lieu, donate land or build off-site, but those options would necessitate special approval from the City Council. All deed-restricted units will be permanently affordable, which a city consultant said would make the program easier to enforce and avoid the situation that recently occurred in Denver, in which deed-restrict homes were sold to unqualified buyers.

The Council also supported a policy to incent the construction of smaller homes for buyers making between 81 to 100 percent of the AMI by offering developers a lower payment-in-lieu fee. Likewise, a larger payment-in-lieu fee will be charged for developers who want to build larger homes. Other incentives, such as density bonuses, will be considered after the program has been in effect for a while.

Under Colorado law, “rent control” is prohibited. However, if a developer chooses to pay cash-in-lieu of building deed-restricted units, the City can deposit the payment into its affordable housing fund. Rental units built using these proceeds would be deed-restricted for 30 years and available to those making 50 percent of the AMI or less.

The implementation date for the Inclusionary Housing requirement remains unknown. Mayor Pro Tem Polly Christensen expressed frustration and said there has been too much discussion. If it were up to her, the effective date would be “tomorrow,” she said. In general, the Council would like the requirement to apply to developments that have not proceeded to the final review stage. However, the City Attorney is still researching the legal options to make a risk determination.

It is likely the Council will consider the ordinance in July. Council expressed some urgency about moving forward. Mayor Pro Tem Christensen became emotional, declaring, “This has been delayed and delayed and delayed. Let’s move on and we can amend later. I implore you to move forward without more meetings and data and updates.”

Mayor Bagley and Councilman Waters expressed support for continuing conversations with developers to get their feedback on a parallel track while the ordinance is written. Staff will develop metrics to continually assess the impact of the program on building permits and development applications. It is estimated Inclusionary Housing will require additional staff time and at least one new staff person will be hired to help manage the program.

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