DENVER — An affordable housing program to help renters pay for vacant apartment units in Denver is closer to being activated.
Although, Mayor Michael Hancock alluded to it at his State of the City last year.
"We know that many residents need an affordable housing today, not a year from now. We will pilot a new partnership to open 400 existing vacant apartments to low and moderate-income residents struggling to find an affordable place to live," Hancock said at his annual address.
"Now" was July 10, 2017.
"Not a year from now" would be July 2018.
"Anticipated tenants could move in as soon as August," said Laura Brudzynski, Denver's Director of Housing Policy Programs for the Office of Economic Development.
She laid out the timeline in a city council committee meeting on Wednesday morning, as the Office of Economic Development sought approval for more than $1 million to start subsidizing the 400 units.
Ultimately, the committee approved sending the request to the full city council, but not without doubt.
"I do have a concern about this program that we're not combating the unaffordable rents in Denver. We're not really doing anything to mitigate them, what we're doing is we're feeding the beast of unaffordable housing by continuing to meet higher rents," said Denver City Councilman Kevin Flynn. "If we have property owners whose units are vacant because they're not renting at the rates they have now, perhaps the answer is that they should lower their rents."
Councilman Rafael Espinoza had a similar complaint, suggesting apartments in his district in Jefferson Park are getting bailed out because they are struggling to find renters at the prices they're seeking.
"What you will be doing is seeding his development at the elevated lease rates," said Espinoza about one complex owner that he suspects has applied to be part of the program.
9NEWS has requested the applications submitted to the city, seeking which apartments are willing to take part in the program and how much they're seeking for their vacant units.
Here's how the pilot program works.
Property owners submitted potential rental units to the city, along with a 'Reasonable Market Rent' they are seeking.
"This 'Reasonable Market Rent' really focuses on more localized and unique areas in terms of the appropriate rent for that area," said Brudzynski. "It is possible that we may lower some of the rents that are negotiated because there are comparable properties that are more affordable, but it is possible that the rent that is proposed is deemed appropriate by the Housing Authority to utilize for this program."
She said Denver Housing Authority, which will administer the program, will look at rents within a half-mile to determine what the final price would be.
"If other similar properties in the area are actually a lower offered rent than what was proposed by the interested participating landlord, then we would take the lesser of those two rents," said Brudzynski.
As part of her presentation, she included a map that shows the locations where property owners have submitted to be part of the program. The map shows apartments build in the last five years in Jefferson Park, Berkeley, Bear Valley, Green Valley Ranch, Five Points and Union Station.
There are units in apartments older than five years in Capitol Hill, Windsor, Hampden and near Congress Park.
The presentation revealed about 40 properties in 22 ZIP codes, with many in buildings older than 15 years.
"I'm glad you're calling this a pilot because we don't know how this is going to turn out, but it's a new way to approach the subject," said City Council President Albus Brooks.
To apply to rent through this program, tenants will be picked through a lottery after meeting certain criteria. The tenant must have a household income between 40-80 percent AMI (Area Median Incomes) AMI is based on household size. For example, 100 percent AMI for a one-person household is $63,000, $89,900 for a family of four.
To qualify for this pilot program:
- Single person income: $25,200-$50,350
- Family of four income: $35,960-$71,900
- Work full-time (at least 36 hours/week)
- Denver resident when submitting application
The tenant will pay 35 percent of their gross income as their monthly rent. Based on the numbers above, this is the range of potential monthly rents:
- Single person: $735-$1,468/month
- Family of four: $1,048-$2,097/month
The difference will be paid by the city.
During Wednesday's presentation, the following example was provided based on a single person making $37,800:
- Negotiated Reasonable Market Rent: $1,500
- Tenant payment: $1,102.50 (Based on 35 percent of $37,800, divided over 12 months)
- Denver payment: $397.50
One unanswered question asked by multiple councilmembers at Wednesday's meeting was what does success for this program look like.
One of the stated goals of the program is to provide tenants coaching for long-term financial success.
Councilwoman Stacie Gilmore wanted to know how the program would track the tenants after they move out. Tenants would be required to move out after two years in the program.
The Office of Economic Development believes it can help 125 families/individuals within the two years of the pilot program.
The funding will have to be approved by the full city council before the program can start.