Denver south has the jobs, but where’s the affordable housing?
By Peter Jones
A lack of affordable housing is not just a problem for Aspen anymore.
Earl Wright, chairman of Greenwood Village-based AMG Bank, relocated the business from California in 1978 back in the days when the Denver Tech Center was a new frontier and housing in the south suburbs was as plentiful as it was reasonably priced.
“We left California for the very reason of what’s starting to materialize here,” he said. “In California, the cost of the staff was way out of proportion with regards to the mix of people you needed. You want to have housing that meets the full spectrum of wages.”
Flash forward four decades: A seller’s market, an emerging workforce of millennials, a timid construction industry and a dash of municipal politics have forged a challenge for businesses and their lower-level employees, especially along the south I-25 corridor where a range of tech and financial-service companies—but not necessarily their workers—call home.
“It’s a real issue in my mind,” Wright said. “You have the lower-income folks disproportionately spending their money on housing. It’s backward. I’ve got people who were living in apartments and now they’re living with their parents. These are young professionals.”
Sherri Kroonenberg, general manager and senior vice president of Fidelity Investments, was taken aback at a recent meeting of the Metro Denver Economic Development Corp. when she learned the region had lost its edge in attracting those millennials, an emerging demographic that will comprise 50 percent of the U.S. workforce by 2020.
“It goes back to the basics of economics. We have a supply-demand issue,” she said. “Within the state, we’re still able to attract talent. It’s just that that talent continues to tell us it’s more difficult for them. For the majority, Greenwood Village is not an option.”
Bringing home the bacon … somewhere
Although the city that houses most of the Tech Center has a population hovering around 15,000, its effective daytime count is closer to 50,000, making it effectively impossible—and pointless in a suburban context—for the city to absorb more than a fraction of its workforce. What’s more, the Village has been reluctant to proactively seek “affordable housing,” an ambiguous term that can encompass everything from subsidized apartments to starter condominiums designed for young college-educated couples.
“Affordable is like beauty. It’s in the eye of the beholder.” Greenwood Village Mayor Ron Rakowsky said.
As the Village continues an extended review of its comprehensive plan, builders may have a particular interest in a controversial proposal to allow some form of high-density, ostensibly “affordable” housing near the city’s Orchard Avenue Light Rail Station.
Some say such a plan would be vital to attracting a new generation to a city whose mean 2013 housing price was about $860,000. Others say ensuring those home values would be in potential conflict with bringing high-density neighbors into the municipality.
“Greenwood Village is a very small community. It’s only 8.4 square miles, of which much of it is commercial and already built with single-family homes,” Rakowsky said, noting the city has some subsidized housing. “We always have and always will depend on other areas of the metroplex to provide places for a wide range of people who work in Greenwood Village.”
Among those absorbing sources is neighboring Centennial, a much larger and demographically diverse swath of the south metro area. Although Mayor Cathy Noon concedes the prosperous city of 100,000 is not necessarily known as a haven for low incomes, the city leader says Centennial, stretching from Littleton to Aurora, strives to be a place of diversity.
“Our goal is to have multiple types of housing so that everyone can find a place to live here. I think we find that enriches us,” she said.
Noon points to the city’s recent annexation near Jordan and County Line roads, which will soon be the site of close-by houses. A plot near Jordan and Broncos Parkway and another adjacent the Dry Creek Road Light Rail Station also have high-density plans on the horizon
“We are taking steps to increase more multi-family. These were not controversial when they came before the City Council,” the mayor added.
Although Noon stresses the importance of diversity, Centennial’s efforts ultimately come down in large part to economic development. The mayor says she often hears from business leaders who are concerned about employee housing, or lack thereof.
“If people can’t get workers for their jobs, they may not locate here,” she said of a city that boasts everything from Colorado’s IKEA to major aerospace firms.
An onerous system
Some cities have taken up a shared economic call to ensure housing for everyone. Municipal members of the Metro Mayors Caucus have created a fund that incentivizes landlords across the metro area to rent to lower-income residents.
Aurora recently approved a transit-friendly apartment complex near the Iliff Avenue Light Rail Station, despite the objections of nearby homeowners.
Even when cities get on board, there is no guarantee that builders will take the bait. AMG’s Wright says the problem will not be fully solved until Colorado alters its construction-defect law, which critics say has proven to be an overly onerous disincentive to building high-density for-sale units, especially considering the expensive insurance protections from lawsuits.
Some cities have responded to the law with a patchwork of ordinances designed to entice condominium and townhome construction, but Wright says the construction industry needs the assurance that would only come with a more balanced statewide approach to liability.
“It’s causing people to be timid,” the corporate chairman said. “Even if you don’t want to build in Greenwood, even if you have communities that are open to the idea of the condo building, you’re not going to have it. There are significant projects that have been stopped because of this issue.”
Wright expects some businesses to leave Colorado if the defect-correction process is not made less punitive. A result, in part, has been a seller’s housing market, meaning not only are homes in the $150,000 to $250,000 range harder to find, first-time buyers must often make offers above asking price in order to successfully buy their “affordable” starter home.
Although Fidelity’s Kroonenberg says her associates have so far been able to find houses, many will be commuting longer and farther until Colorado strikes the right balance.
“I look forward to the state taking a hard look at this and truly being able to come up with a solution based on the growth we’ve seen,” she said. “The highly educated talent we have in the state—we want to keep them here and we want to continue to attract them.”