Every month, city officials say, another thousand people move to Denver. Believe it or not, in recent years the city’s housing production numbers have just about kept up, at least on the rental side. Basic economics says that means rental prices should level off, and they practically have. But the real world is much more complicated than basic economics.
“There’s been tremendous development, but the majority of the units that have come online, because they are planned and construction begins two or three years out, cater to higher income brackets,” says Erik Soliván, inaugural director of Denver’s newly created Office of Housing and Opportunities for People Everywhere, or HOPE. “The population coming in and what the market was developing…weren’t aligned.”
According to Soliván, around two or three hundred of each month’s new Denver residents can afford the housing stock that’s available—some 3,000 estimated vacant units, he says. “The rest coming into Denver are coming into our core workforce, working at bars, restaurants, construction sites, hotels, helping to provide medical services,” says Soliván—and they can’t afford the housing that’s available. But, according to Soliván, they’re also mostly ineligible for federal rental assistance. The city estimates there are around 52,000 households earning between 40 and 80 percent of Denver’s area median income, but only those earning less than 50 percent of Denver’s area median income, or $41,950 for a family of four, are eligible for federal rental assistance.
The first major initiative from the Office of HOPE, the Lower Income Voucher Equity program is a public-private partnership designed to address the gaps. In its pilot phase, it will provide two years of rental assistance for 400 families earning between 40 and 80 percent of Denver’s area median income. The program is already in motion, with some families moving into units last month, and a pipeline of existing or future units voluntarily committed from Denver landlords and developers.
Because the program is targeting units already under construction, which are very nearly all luxury units originally built for rent or sale to higher-income households, Soliván notes that the voucher program can eventually help the city understand how to achieve other goals like helping lower-income families move into neighborhoods with better access to quality schools and quality jobs.
“Ninety-five percent or more of units we expect to have coming in are going to be in what we call neighborhoods of opportunity,” he says.
Landlord and developer buy-in has been crucial. Soliván says his team along with the Denver Housing Authority and others from the city met with nearly 50 developers, landlords, and property management companies before they put out a public request for units to be part of the voucher program. They did a lot of listening, he says.
One of the ongoing challenges will be matching families that apply to be part of the program with units that meet their needs in terms of number of bedrooms or physical accessibility needs. Families will pay up to 35 percent of their incomes in rent, with the subsidy from the voucher program making up the difference between that and the full rent using federal fair market rent standards. The Denver Housing Authority is administering the program.
Funding for the rental subsidies comes from a combination of local public and private dollars. Denver created the Office of HOPE to administer the $150 million it committed to raise to support affordable housing, in a controversial vote in September 2016. While much of the Lower Income Voucher Equity funding will come out of that, Soliván’s office also went to local foundations and businesses to contribute, giving businesses in particular the option to support housing units targeted at the income levels of their own key employees.
“Say a hospital wants to provide housing options for medical technicians who make $42,000 a year,” Soliván explains. “The hospital provides $100,000, city and foundations can match that at a rate of about 95 cents to every dollar, and the funds combine to provide subsidy to families coming in.”
In that situation, ideally, the housing units receiving support would also be located within walking or convenient transit distance to-and-from the employer who helped subsidize those units. “Instead of them traveling in from outside the city, which creates mobility problems because traffic isn’t the best, they’ll be in the city,” Soliván says.
Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.