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HomeMy WebLinkAbout12-05-22 Study Session Agenda PacketSTUDY SESSION AGENDA CITY COUNCIL CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO December 5, 2022 6:30 pm This meeting will be conducted as a virtual meeting, and in person, at 7500 West 29th Avenue, Municipal Building, if allowed to meet on that date per COVID-19 restrictions. Some City Council members or City staff members will be physically present at the Municipal building for this meeting. The public may participate in these ways: 1.Attend the meeting in person at City Hall. Use the appropriate roster to sign up to speakupon arrival 2.Provide comment in advance at www.wheatridgespeaks.org (comment by noon onDecember 5, 2022) 3.Virtually attend and participate in the meeting through a device or phone: •Click here to join and provide public comment •Or call +1-669-900-6833 with Access Code: 861 0325 9137 Passcode: 168519 4.View the meeting live or later at www.wheatridgespeaks.org, Channel 8, or YouTubeLive at https://www.ci.wheatridge.co.us/view Individuals with disabilities are encouraged to participate in all public meetings sponsored by the City of Wheat Ridge. Contact the Public Information Officer at 303-235-2877 or wrpio@ci.wheatridge.co.us with as much notice as possible if you are interested in participating in a meeting and need inclusion assistance. Public Comment on Agenda Items 1.Colorado School of Mines Tabor Lake Trail Presentation 2.Affordable Housing Strategy and Action Plan 3. Staff Report(s) 4.Elected Officials’ Report(s) Memorandum TO: Wheat Ridge City Council THROUGH: Karen A. O’Donnell, Parks and Recreation Director Patrick Goff, City Manager FROM: Brandon Altenburg, Grant and Special Project Administrator DATE: December 5, 2022 SUBJECT: Colorado School of Mines Tabor Lake Trail Presentation ISSUE: Throughout 2022, a Colorado School of Mines Capstone Project student team has conducted public engagement, assessed the area around Tabor Lake, and developed a design proposal for an accessible, safe, and stable trail around Tabor Lake with related amenities. Their final project presentation on 12/5 will provide a concise project overview. BACKGROUND: The School of Mines capstone program is a required course for School of Mines students to graduate. The course covers 2 semesters and prospective “clients” can submit projects to request that a student team be assigned to work on their project. Government entities do not have to pay a fee to participate in the program. The Parks and Recreation Department submitted the Tabor Lake Trail design project in 2021 to this program, and it was selected and assigned to this student team. City staff, industry technical advisors, and faculty have worked with the students throughout the past year. More information is available here: https://capstone.mines.edu/ PROPOSED ACTION: Following the presentation, please ask the student team any relevant questions that you have. In addition to providing valuable work for the City, this program is a learning experience for the students who are about to graduate and enter the workforce. Presenting “real-world” work in front of a City Council is a significant accomplishment and learning experience for the team. Council questions and input can also inform the next steps in the project. NEXT STEPS: The student work cannot be accepted as official engineering plans as certified engineers need to develop and “stamp” the work. The student work can be provided to a professional engineering firm as baseline work and guidance to develop stamped plans. The City has earmarked ARPA funds for the design and construction of the Tabor Lake Trail and recently learned that Jeffco Open Space Trails Partnership Funds will also be awarded to help fund this trail project. In 2023, the Department plans to contract with a design firm to complete the trail design. Trail construction will follow shortly thereafter. Item No. 1 Memorandum TO: Mayor and City Council THROUGH: Kenneth Johnstone, Community Development Director Lauren Mikulak, Interim Community Development Director Patrick Goff, City Manager FROM: Jeff Hirt, Senior Neighborhood Planner DATE: November 25, 2022 (for December 5 study session) SUBJECT: Affordable Housing Strategy and Action Plan PURPOSE: This study session is a follow-up to the August 15, 2022 discussion of the Affordable Housing Strategy and Action Plan. The purpose of this December 5 study session is for City Council to: •Review a draft Affordable Housing Strategy and Action Plan (the “Strategy”); •Provide feedback on the recommended policies, principles, and actions; and •Advance towards City Council adoption of the Strategy (early 2023). BACKGROUND: Addressing affordable housing is one of the City and State’s most pressing issues. The Colorado Department of Local Affairs (DOLA) awarded the City a grant in October 2021 to complete an Affordable Housing Strategy and Action Plan. A contract was awarded to the consultant team czb, LLC on April 8, 2022, to lead the project. More project information can be found at whatsupwheatridge.com/housing. City Council’s extended study session on August 15, 2022, shaped the draft Strategy provided in Attachment 1. The packet for that meeting included project background, results from community input, and a summary of stakeholder discussions (including boards and commissions and developer focus groups). The August meeting included a deep dive on why housing is so expensive, and it evaluated possible City interventions based on varying household incomes. City Council’s feedback and direction included: •Support for the proposed approach allocating City resources based on household profiles.This includes a supportive City role for low-income housing ($50,000 or less householdannual income) and a more proactive City role for households over $50,000 in annual income, with strategies calibrated to the $50-$75k, $75-$100k, and $100-$150k income ranges. •Support for most of the intervention concepts presented, and a request for more details oncertain ideas including inclusionary housing policies, funding sources, and preservation of existing affordable units. Item No. 2 2 Draft Strategy Overview The feedback from City Council on August 15, 2022, regarding the target markets and intervention concepts has acted as the foundation and organizing element of the draft Strategy included as Attachment 1. Key elements of the draft Strategy include: • Part 1 describes housing marking conditions and the resulting affordability impacts on various types of households. • Part 2 recommends Policies and Principles that act as a foundation for future City housing decisions – whether those be zoning code changes, allocation of City resources, or City Council decisions on large redevelopment sites like the Lutheran Legacy Campus. • Part 3 provides an Action Plan that identifies four (4) key opportunities to address affordable housing in Wheat Ridge. Each opportunity has specific action items that are organized by priority and described with respect to household income and next steps. Included among these items are policies and actions related to the Lutheran Legacy Campus and inclusionary housing. Part 3 serves as a workplan for the next several years. • An appendix summarizes additional affordable housing tools, many of which relate to the DOLA grant which funded this Strategy and are required to be evaluated as part of the grant program. Inclusionary Policies in the Draft Strategy At the August 15 study session, City Council had some discussion and questions about the concept of inclusionary housing policies. As a reminder, this is a policy or regulation that would require creation of some number of affordable housing units within an otherwise market-rate housing project or an alternative compliance path such as a fee-in-lieu. City Council’s feedback was that a citywide one-size-fits-all approach may not be appropriate, and any such program would have to be calibrated to Wheat Ridge’s housing market and policy goals. Based on this feedback, czb recommends an inclusionary housing approach that is more targeted and is associated with several potential action steps: • Inclusionary housing requirements should be considered as part of any development project for which the City is a financial parter or is providing incentives (described on pages 40-41 of the Strategy). • Inclusionary housing requirements should be considered as part of the Lutheran Legacy Campus (described on pages 46-47 and 53 of the Strategy). • Inclusionary housing requirements should be considered as part of a retooling of the zoning code, particularly for townhome projects under MU-N, a potential R-4 district (described on pages 42-43 and 50 of the Strategy), and projects in mixed use zone districts. If adopted, the Strategy acts as an advisory document to support future City Council decisions related to affordable housing. The Strategy acknowledges that additional housing-related discussions will be a necessary part of the Comprehensive Plan update, but action need not wait. CITY COUNCIL FEEDBACK REQUESTED The project team is requesting feedback on the following questions from City Council. 1. Do you agree with the Recommended Policies and Principles set forth in Part 2 of the Strategy? 2. Are there any affordable housing tools missing from Part 3 or the appendix that the project team should evaluate or include in the Strategy? 3 3. Do you have any questions about any of the recommended action items? 4. Do you have any other specific topics or questions that need to be addressed before the Strategy is presented to City Council for adoption in 2023? Attachments 1. Draft Affordable Housing Strategy and Action Plan DRAFT Prepared by czbLLC NOVEMBER 2022 Acknowledgements Table of Contents 2 3Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Special thanks to the Wheat Ridge Planning Commission, the board of the Wheat Ridge Housing Authority, the Race and Equity Task Force and members of the development community who provided their insights, questions, and feedback to help shape this Affordable Housing Strategy and Action Plan. The following people made the Affordable Housing Strategy and Action Plan possible: Mayor Bud Starker CITY COUNCIL District I Janeece Hoppe Judy Hutchinson District II Rachel Hultin Scott Ohm District III Amanda Weaver Korey Stites District IV Leah Dozeman Valerie Nosler Beck CITY STAFF Patrick Goff, City Manager Marianne Schilling, Assistant to the City Manager Kenneth Johnstone, AICP, Community Development Director Lauren Mikulak, AICP, Planning Manager Jeff Hirt, AICP, Senior Neighborhood Planner Ashley Holland, Neighborhood Engagement Specialist The Affordable Housing Strategy and Action Plan was supported by funding from the Colorado Department of Local Affairs. Market Conditions and Needs Assessment PART 1 Policies and Principles to Guide Housing Actions PART 2 Taking Action PART 3 10 26 32 Executive Summary Introduction How to Use this Document 4 8 9 60 Appendix Incentives Conditioned on Inclusionary Outcomes City provision of incentives to projects with a residential component requires the project to include affordable housing and a variety of price points to achieve mixed-income outcomes. Full Housing Ladder Wheat Ridge recognizes that its economic and social strength and resilience benefit when households of all types are able to find suitable housing options in the city across the stages of life. Economic and Income Diversity Wheat Ridge embraces economic and income integration citywide and within its neighborhoods. It rejects economic and income segregation that may result from the natural functioning of housing markets. Housing Type Diversity Wheat Ridge places a high value on its diverse housing stocks and seeks to achieve and maintain a well-balanced supply of housing types. Material Support for Affordable Housing Wheat Ridge acknowledges the difficulties of providing affordable housing and supports public, private, and nonprofit organizations developing affordable housing in the city. Executive Summary 4 5Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Challenges in the Wheat Ridge Housing Market Much has changed in Wheat Ridge since the mid-2000s, when the city faced a dearth of economic development opportunities and homeowner investment and community leaders were focused on revitalization. By 2021, the median sale price for a house in Wheat Ridge was nearly $600,000, which meant a new buyer household in Wheat Ridge likely needed an income of at least $150,000 per year (vs the 2020 median owner-occupied household income of $91,000) to afford a house. The number of households who can afford to buy a home and put down roots in Wheat Ridge is shrinking rapidly, inevitably squeezing out many of those who grew up here. Wheat Ridge’s economy also employs thousands of people in education, healthcare, local government, and the management of private sector services that are critical to daily life in the community, and whose wages are less and less sufficient to secure housing in Wheat Ridge each year. In 2022, a renter household needed an income of $56,000 to afford the median priced two-bedroom apartment (vs the 2020 median renter-occupied household income of $42,000) and any renter household with an annual income below $50,000 was at risk of an affordability challenge. As of 2020, more than half of all Wheat Ridge renter households paid 30% or more of their household income toward housing costs. This is the government definition of unaffordability, or a “cost- burdened” household. Target Markets for Affordable Housing Strategy The City of Wheat Ridge has a range of current and potential tools and capabilities to take action in support of affordable housing options across a range of household incomes. But the City can directly impact some more effectively than others. The large affordability gaps facing the lowest-income households—those with annual incomes below $50,000—dictate that the City support other providers who have access to sources of deep subsidy, while somewhat smaller, and thus more manageable, affordability gaps for households with incomes between $50,000 and $149,999 present opportunities for the City to take more direct action. Whether Wheat Ridge’s approach to affordable housing is ultimately opportunistic and flexible, or targeted and rigid, it should operate inside a set of high-level rules that reflect both the community’s values and aspirations, as well as its economic, political, and fiscal realities. The Strategy and Action Plan recommends the City adopt the following principles: • Be action-oriented and embrace incremental progress. • Aim for mixed- income outcomes. • Pursue geographic dispersion. • Get the right project in the right place. • Support other affordable housing developers when possible and lead when necessary. • Act regionally. GIVES GETS Households with incomes below $50,000 Households with incomes $50,000 to $74,999 Policies and Principles The Envision Wheat Ridge comprehensive plan, though a foundational document in terms of setting community vision, deals with housing only at a very high altitude and was adopted in 2009—a vastly different time in the Wheat Ridge housing market. This Strategy and Action Plan recommends policies, pending a new comprehensive plan, to put the City on firm footing to respond to the housing conditions of the early 2020s, and to connect longstanding City goals to action steps specifically crafted for this decade. Households with incomes $100,000 to $149,999 Households with incomes $75,000 to $99,999 Executive SummaryEXECUTIVE SUMMARY 6 7Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PRIORITY LEVEL 1 PRIORITY LEVEL 2 PRIORITY LEVEL 3 Update Development Code and Zoning Map Following the update to the comprehensive plan, update the City’s code and zoning map to reflect the plan. The community- wide discussion of whether, where, and how to accommodate new housing is best suited for the comprehensive plan where public engagement will play an important role. Exploration of Changes to Charter Limits on Height and Density Following the update to the comprehensive plan, establish a commission to study the possibility of amending the City Charter’s current limits on height and density in order to make a recommendation for a potential ballot question. Update Affordable Housing Strategy and Action Plan Update this document to respond to new conditions and events. Housing Staff Hire a staff person dedicated to housing program management. Comprehensive Plan Update Use the comprehensive plan process to reaffirm community support for affordable housing goals and establish community’s vision for growth and development. Naturally Occurring Affordable Housing (NOAH) Preservation Program A program to make grants from the Wheat Ridge Housing Fund to rental property owners to upgrade aging rental units in exchange for affordable rents. Revise Zoning Scheme for Community Benefit Require mixed-use districts to produce either true mixed-use or affordable inclusionary housing, and create a new “townhouse district” with inclusionary requirements. Wheat Ridge Housing Fund A dedicated fund to receive, hold, and deploy financial resources specifically in support of affordable housing activities. Housing- Supportive Code Amendments Amendments to the City’s code to support affordable housing development in areas such as: process, fees, parking minimums, and “no net loss” to keep redeveloping properties from decreasing the amount of housing. Continue Lutheran Legacy Implementation Efforts Continue preparing for the eventual Lutheran Legacy Campus redevelopment and set clear expectations for substantial affordability. Recommended Action Items Intermountain Healthcare will be vacating its historic 100-acre Lutheran Hospital campus in the heart of Wheat Ridge in the coming years. The potential redevelopment of this site offers ample opportunity to creatively develop new affordable housing. Maximize the potential for the Lutheran Legacy Campus redevelopment to achieve inclusionary, mixed-income outcomes. Attached Ownership with Inclusionary INCLUSIONARY Multi-unit Rental with Inclusionary INCLUSIONARY Existing Affordable Rental Wheat Ridge is awash in aging rental units that are affordable to renter households with incomes below $75,000 and even below $50,000. Age and flagging quality are contributing factors to the relatively low rents. The City could help to upgrade these units while maintaining affordable rents by offering a Naturally Occurring Affordable Housing Rental Rehab Program. Preserve and upgrade existing affordable rental units. With single-unit detached homeownership slipping out of reach for households with incomes below $150,000, attached ownership units offer a relatively affordable option, and opportunities for inclusionary housing. Build more attached ownership units where possible and achieve inclusionary, mixed- income outcomes. #2 Multi-unit rental offers opportunities for inclusionary housing and is the type most economical for affordable housing providers to build and operate. Build more multi- unit rental where possible and achieve inclusionary, mixed- income outcomes. #3 Key Affordable Housing Opportunities #1 #4 OPPORTUNITY OPPORTUNITY OPPORTUNITY OPPORTUNITY Considering the difficulty of closing affordability gaps, the substantial costs of housing development, and the planning context in Wheat Ridge, what are the City’s best opportunities to take action on affordable housing? Realizing Wheat Ridge’s key housing opportunities requires a series of actions, prioritized based on their impact and timing factors. Executive SummaryEXECUTIVE SUMMARY In the mid-2000s, Wheat Ridge faced a dearth of economic development opportunities and homeowner investment. Development opportunities that could improve the community’s quality of life, and its tax base, were regularly choosing other nearby cities instead of Wheat Ridge. The City felt that its need for new investment, by businesses and real estate developers and even the city’s own homeowners, was existential in nature. Wheat Ridge was at a crossroads.Policies and Principles to Guide Housing Actions Part 2 recommends Policies and Principles that give shape to the Strategy and Action Plan. Go here to learn how the City should think about its affordable housing decision making. Market Conditions and Needs Assessment Part 1 describes housing market conditions and the resulting affordability impacts on various types of households. Go here to learn what has been happening with the city’s affordability situation. Taking Action Part 3 identifies Key Housing Opportunities and recommends specific actions the City should take. Go here to learn what the City should do about creating affordable housing. PART 1 PART 2 PART 3 Introduction: A Changing Market and the Costs of Inaction How to Use this Document 8 9Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT It was such a critical issue that the City commissioned the first Neighborhood Revitalization Strategy—known locally as the NRS—which challenged Wheat Ridge to undertake a number of new initiatives and to show its pride by making important investments in itself. With the adoption of the NRS, growing the city’s quality of life and its tax base, and doing so while improving its competitive position within the Denver region, became top priorities. However, by 2022 circumstances had changed in the Wheat Ridge market. The 2021 median sale price for a house in Wheat Ridge was nearly $600,000, which meant a new buyer household in Wheat Ridge likely needed an income of at least $150,000 per year (vs the 2020 median owner-occupied household income of $91,000) to afford a house. If a new buyer household in 2022 was not in the top 20% of the U.S. household income distribution, buying a house in Wheat Ridge was likely to be a stretch. Median rents for one- and two-bedroom apartments in Wheat Ridge exceeded $1,100 and $1,400 respectively by mid-2022. This meant a renter household needed an income of $56,000 to afford the median priced two-bedroom apartment (vs the 2020 median renter-occupied household income of $42,000) and any renter household with an annual income below $50,000 was at risk of an affordability challenge. As of 2020, more than half of all Wheat Ridge renter households paid 30% or more of their household income toward housing costs. This is the government definition of unaffordability, or a “cost-burdened” household. Amongst renter households with incomes below $50,000, 75% were cost burdened. In Wheat Ridge, affordability is now just as hot a topic as revitalization. But why does the strengthening market matter? What’s at stake? If the City does not attempt to intervene, what are the costs to the Wheat Ridge community? These questions can be answered a few different ways, but some are particularly salient for Wheat Ridge residents. One has to do with identity. By outward appearances, Wheat Ridge is an inner ring suburb fully subsumed within the Denver metro area— specifically the west side. To outside observers, the municipal boundaries separating the City of Wheat Ridge from its neighbors mean very little. But Wheat Ridge residents, especially those with deep roots in the community, consider Wheat Ridge to be distinct—a small town with its own character occupying its own space amongst a number of communities, home to families who want to have multiple generations living nearby. When this is the case, local residents prioritize the ability for younger generations to find housing opportunities in the community, and this is becoming more and more difficult. The number of households who can afford to buy a home and put down roots in Wheat Ridge is shrinking rapidly, inevitably squeezing out many of those who grew up here. Another answer relates to both practical self-interest as well as a sense of fairness. Wheat Ridge’s local economy employs thousands of people in education, healthcare, local government, and the management of private sector services that are critical to daily life in the community, and whose wages are less and less sufficient to secure housing in Wheat Ridge each year. It matters to Wheat Ridge that those workers are part of the community—living in town, not just working here and commuting—and it matters that they are able to make their own choice about where they live, given how important they are to the community. Ultimately the most important question is: What kind of community does Wheat Ridge want to be in the future? Will it be a place where a wide variety of people and households can find affordable housing options and contribute their spirit, skills, and talents to the city? Or will it be a place limited only to those fortunate enough to be able to pay the increasingly high price? This is the context within which the City of Wheat Ridge commissioned this document—the Affordable Housing Strategy and Action Plan. Its purpose is to describe housing affordability challenges in the community, identify potential opportunities for the City to encourage affordable housing development, and outline action steps that match the right tools and resources to the City’s opportunities. There is much about the housing market that the public sector cannot control, to say nothing of a single local government in a large, dynamic region. But this document is about what the City can do, and how it can quickly begin taking its first steps to preserve space in the Wheat Ridge community for a variety of households. What kind of community does Wheat Ridge want to be in the future? Market Conditions PART 1 and NeedsAssessment Throughout the 21st century, Wheat Ridge has experienced affordability challenges. The median value of owner- occupied housing units was 40% higher than the U.S. overall in 2000, and 80% higher by 2020, which was in line with the Denver-area market during those years. And although renters historically have found more affordability in Wheat Ridge than elsewhere in the Denver region, there are signs that growing regional rental demand may soon impact Wheat Ridge. Changes in both the ownership and rental markets have effects on both existing and potential Wheat Ridge households. Part 1, Market Conditions and Needs Assessment, provides more detailed information and analysis related to: The homeownership market. The rental market. Affordability for both owners/buyers and renters. Affected household types. Data Note: Much of the analysis in Part 1 relies on data from the Census Bureau’s American Community Survey Five Year Estimates program. Each reported data year, in reality, covers the previous five-year period and the data are sample based. Later data years, especially 2019 and 2020, may not fully reflect the impacts of new units that were built and sold , or rented, in those years. 10 11Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Market Conditions and Needs AssessmentPART 1 Owner-occupied home values rose steadily in the second half of the 2010s. The median value of owner-occupied housing units in Wheat Ridge has grown in recent years. According to data from the U.S. Census Bureau’s American Community Survey (ACS) Five Year Estimates, values grew slowly or not at all between 2010 and 2014 before picking up in 2015 and achieving double-digit annual growth rates above 10% between 2016 and 2020. This pattern is nearly indistinguishable from that of the Denver-Aurora-Lakewood metropolitan statistical area (MSA) (see Fig. 1). (The data reported for each year in Fig. 1 is sample-based data for a five-year period. It may not fully reflect the impacts of new units that were built and sold in 2019 and 2020.) Owner incomes are on the rise, though still lower than the MSA. Between 2010 and 2020, the median owner-occupied household income grew faster in Wheat Ridge than it did in the Denver MSA (44% vs 33%). Despite this rate of increase, in 2020 the median owner income in Wheat Ridge was still lower than in the Denver MSA (see Fig. 2). 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 $15,000 $25,000 $35,000 $45,000 $55,000 $65,000 $75,000 $85,000 $95,000 $105,000 $426,500 $232,200 $63,044 $90,922 Denver MSA Denver MSA Wheat Ridge Wheat Ridge Fig. 1 Median Owner-Occupied Value, 2010-2020 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 $15,000 $25,000 $35,000 $45,000 $55,000 $65,000 $75,000 $85,000 $95,000 $105,000 $426,500 $232,200 $63,044 $90,922 Denver MSA Denver MSA Wheat Ridge Wheat Ridge Fig. 2 Median Owner Income, 2010-2020 Source: ACS Five Year Estimates, 2006-2010 through 2016-2020 Ownership Market Overview When it comes to homeownership, Wheat Ridge, as a fully integrated part of the Denver regional housing market, is now quite expensive by national standards. As of 2020, the median estimated value of owner- occupied housing units in the Denver region and in Wheat Ridge were roughly 80% higher than the national median. New buyers in 2021 were faced with a median sale price of nearly $600,000 for a single-unit detached house (see Fig. 3). Those without a significant down payment, or an income above $150,000, or both, may struggle to be homeowners in Wheat Ridge going forward. Source: ACS Five Year Estimates, 2006-2010 through 2016-2020 Fig. 3 Median Single-Unit Detached House Sale Price by Year, 2017 to 2021, Selected Communities Source: czb analysis of MLS data $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 ARVADA LAKEWOODWHEATRIDGE GOLDEN $4 1 2 , 0 0 0 $5 8 0 , 0 0 0 $800,000 ARVADA LAKEWOOD WHEAT RIDGE GOLDEN Median sale prices confirm a strengthening market. ACS data on the value of owner-occupied units is self-reported and is subject to error for that reason, but it has the added benefit of accounting for all owner-occupied units even if they do not change hands. Data from actual sales, by contrast, offers infor- mation only about houses that are sold, but it paints a more relevant picture of market conditions for would-be homebuyers. Sales data is also more up-to-date than the ACS data. Data from actual home sales, reported here as median sales prices for selected west metro communities, reflect a general upward trend. In 2021 (see Fig. 3), the me- dian sale price for a house in Wheat Ridge approached $600,000. Though a minority of for-sale units, condos offer relative affordability. Median sale prices for townhouses and condos are significantly lower in Wheat Ridge than for single-unit detached houses (see Fig. 4). This was especially true prior to 2020 when the median sale price for a townhouse jumped 56% year over year, likely due to numerous new townhouse units that were built and sold beginning in 2019. The median price for condos has tracked the single-unit detached price, but remains $300,000 below the single-unit detached median and $200,000 below the townhouse median as of 2021. $200,000 $300,000 $400,000 $500,000 $600,000 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 Single-Unit Detached $580,000 Townhouse $464,000 Condo $263,000 Price Percentage of all home sales 2017-2021 77% 12% 11% Source: czb analysis of MLS data Fig 4 Median Sale Price by Housing Type, 2017-2021 12 13Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 DenverMSA WheatRidge $1,164 $1,446 DenverMSA WheatRidge $41,859 $54,529 Fig. 5 Median Gross Rent, 2010-2020 Rental Market Overview Wheat Ridge has had rents generally lower than the region’s since at least 2010, but recent rent trends suggest the rental market is trending upward along with the rest of the area. Any renter households with incomes below $50,000 are at risk of affordability challenges in the very near future, if they are not facing them already. As of 2020, this described an estimated 3,872 renter households out of 6,724 total renter households in Wheat Ridge. Source: ACS Five Year Estimates, 2006-2010 through 2016-2020 Source: ACS Five Year Estimates, 2006-2010 through 2016-2020 Fig. 6 Median Renter Income, 2010-2020 Wheat Ridge rents are generally lower than the region’s. During the previous decade, Wheat Ridge’s median gross rent was consistently lower than that of the Denver MSA (see Fig. 5). The median figure accounts for all rental units in the city, regardless of type or unit size. One possible explanation is the age of the city’s rental stock relative to the region’s. In Wheat Ridge, according to 2020 ACS data, 75% of occupied rental units were built before 1980. Across the Denver MSA, that figure is 48%. 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 DenverMSA WheatRidge $1,164 $1,446 DenverMSA WheatRidge $41,859 $54,529 Market Conditions and Needs AssessmentPART 1 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Ma y De c Ja n 2019 20222020 De c De c Ja n 2021 Ja n Ap r $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Denver MSA Wheat Ridge Fig. 7 Median One Bedroom Rent, May 2019-April 2022 Wheat Ridge renter incomes are generally lower than the region’s. The median renter income in Wheat Ridge increased by 39% between 2010 and 2020 (see Fig. 6), which is slower than the Denver MSA’s 65% increase (and slower than the city’s 44% median income increase for owners). 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Ma y De c Ja n 2019 20222020 De c De c Ja n 2021 Ja n Ap r $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Denver MSA Wheat Ridge Fig. 8 Median Two Bedroom Rent, May 2019-April 2022 Recently, rents have been on the rise. More recent data, in the form of median rent estimates from Apartment List (see Figures 7 and 8), suggest that renters in 2022 may be under increased strain if seeking a new lease. Estimated median rents for a one-bedroom unit approached $1,200 per month in the spring of 2022, while the price for a two-bedroom exceeded $1,400. This data, along with the historical ACS data, suggest that rents are on the rise along with the rest of the region, but Wheat Ridge still offers a measure of relative rental affordability. Source: Apartment List Source: Apartment List 14 15Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Wheat Ridge’s housing diversity largely matches the region’s, but the city lags in large-scale rental projects. Wheat Ridge has a housing supply that is no less diverse—arguably it is more diverse—than the region’s. It has a smaller proportion of single-unit detached houses, a higher proportion of single-unit attached units, and relatively more duplex, triplex, and quadplex units. It has relatively more multi-unit properties with ten or more units than does the rest of Jefferson County, though fewer on a relative basis than its neighbor Lakewood. When it comes to ownership units, the breakdown of types is very similar to both the Denver region’s and Jefferson County’s. The mix of rental units is a different story. What stands out is that Wheat Ridge has a much higher proportion of rental units that are attached single-unit, duplex, triplex, and quadplex units. These housing types are considered to exist within a category sometimes called “middle housing”— neither single-unit detached houses nor large multi-unit properties. It does however have a smaller proportion of units in structures of 5-9 units than either Jefferson County or Lakewood, and it lags the entire region in larger multi-unit properties with more than ten units. Existing Housing Supply Key to the functioning of the Wheat Ridge housing market is the nature of the physical stocks themselves. What kinds of residential properties are most prevalent in the city, and how does that compare to the broader region and its neighbors? In the city’s owner- and rental-occupied stocks, what stands out from the pack, if anything? 0% 2-4 units 5-9 units Single Detached Single Attached 10+ units Mobile Home 20% 40% 60% 80% 100% Wheat Ridge Denver MSA Jefferson County Lakewood 53% 13% 9% 5% 20% 60% 9% 4% 5% 21% 66% 9% 4% 5% 14% 50% 12% 6% 8% 23% 2%1%0.7%0.1% Fig. 9 Unit Type Breakdown, by Units in Structure All Units Source: 2016-2020 ACS Five Year Estimates 0% 2-4 units 5-9 units Single Detached Single Attached 10+ units Mobile Home 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Wheat Ridge Denver MSA Jefferson County Lakewood 3%2%2%2% 53% 13% 9% 5% 20% 60% 9% 4%5% 21% 66% 9% 4%5% 14% 53% 13% 9% 5% 20% 2%1%1% 84% 9% 1%4% 81% 9% 21% 84% 9% 75% 14% 2%1%0.7% 19% 17% 16% 10% 37% 21% 7% 8% 10% 52% 21% 10% 10% 12% 44% 14% 10% 11% 16% 50% 1.2%0.8%0.5% 0.1% 0.1% 0.1% 2%2%3%3%5% 3%2%2%2% Units in structures of... Market Conditions and Needs AssessmentPART 1 Ownership Units Rental Units 2-4 units 5-9 units Single Detached Single Attached 10+ units Mobile Home 0% 20% 40% 60% 80% 100% Wheat Ridge Denver MSA Jefferson County Lakewood Wheat Ridge Denver MSA Jefferson County Lakewood 84% 9% 1% 4% 81% 9% 4% 84% 9% 75% 14% 2%1%0.7% 19% 17% 16% 10% 37% 21% 7% 8% 10% 52% 21% 10% 10% 12% 44% 14% 10% 11% 16% 50% 1.2%0.8%0.5%0.1%0.1% 2% 2% 3% 5% 3%2% 2% 2% 3% 16 17Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Wheat Ridge has relatively fewer units in detached houses than the surrounding region. Wheat Ridge has a greater proportion of units in “middle housing” types than the surrounding region. Wheat Ridge’s mix of owner-occupied unit types largely mirrors the surrounding region. Wheat Ridge has a relatively small proportion of rental units in large multi-unit properties. 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Wheat Ridge Denver MSA Jefferson County Lakewood Wheat Ridge Denver MSA Jefferson County Lakewood $400,000$0 $1M$750,000 $1,000$0 $1,500$1,250 $2,000 18% 17% 21% 31% 13% 18% 17% 19% 30% 16% 18% 17% 19% 29% 17% 35% 23% 15% 15% 12% 42% 52% 3%2% 48% 43% 4% 6% 42% 50% 3% 6% 50% 45% 1%3% Fig. 10 Owner-Occupied Value, 2020 Fig. 11 Gross Rent, 2020 Source: 2016-2020 ACS Five Year Estimates Note: Per data note on page 11, these figures may not fully reflect new rental units added to marketplace since 2019. Market Conditions and Needs AssessmentPART 1 Relative to the region, Wheat Ridge has fewer entry-level homeownership options, and a greater proportion of affordable rental options. Median rents and values provide a high-level view of a market, but digging a bit deeper into the distribution of those rents and values begins to shed light on specific challenges and opportunities. The values of owner-occupied housing in Wheat Ridge, as reported in 2020 ACS data, largely mirror the rest of Jefferson County, though entry-level purchase opportunities— defined here as owner-occupied units valued at less than $400,000—are relatively fewer in Wheat Ridge than in the broader Denver region or in Lakewood (see Fig. 10). Lower-cost rental opportunities are substantially greater in Wheat Ridge than elsewhere (see Fig. 11), This is likely due to two factors: first, the age and configuration of many existing rental units from the mid-20th century, and second, the existence of nearly 500 deed-restricted affordable units at Caesar Square, Wheat Ridge Town Center, Town Center North, and Highland West, which together represents 7% of all occupied Wheat Ridge rental units. Source: 2016-2020 ACS Five Year Estimates Wheat Ridge has been a slow development community for decades. From 2000 to 2020, it added approximately 27 new housing units per year, on a net basis. There is little to no greenfield land left, the market is on a strengthening trajectory with land prices rising, and almost all development going forward will be redevelopment of previously occupied sites. The economics of real estate development demand higher densities to deal with total development costs that include high land prices and the price of site preparation. This means that No new market-rate rental units between 1980 and 2019 1980 2019 West End 38 opens with 165 rental units The Edison adds another 150 rental units Market-rate rental units in Wheat Ridge Clear Creek Crossing adds 310 rental units After 2019, three market-rate rental properties added over 600 rental units large-lot single-unit detached housing will be increasingly rare, and when it happens, sale prices will be well out of reach for most households. Between 1980 and 2019, Wheat Ridge saw no new market-rate rental units, meaning the only new rentals built were deed- restricted affordable units. This period ended in 2019 with the opening of the West End 38 rental property with 165 units. Shortly thereafter, the Edison project added another 150 market-rate rental units and Clear Creek Crossing (Phase 1) contributed another 310. The projects offer a mix of studio, one, and two- bedroom configurations with rents that range from roughly $1,700 to nearly $5,000 per month for some exceptional units. Single-unit attached ownership (i.e.townhouses) has also been a product of choice for developers in recent years because the combination of development costs and market demand make it feasible, especially within Wheat Ridge’s charter limits on height and density (see page 35). Sale prices for new townhouses, at the time of this report, range roughly from $600,000 to $800,000. Rents range from $1,700 to nearly $5,000 per month. TODAY Housing development in Wheat Ridge has picked up in recent years. 18 19Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Wheat Ridge has a higher proportion of low-cost rentals than the region. Wheat Ridge has a smaller proportion of entry-level purchase opportunities than the Denver region or its neighbor Lakewood. $40,000 $80,000 $200,000 How much income goes towards housing to be considered affordable? Up to $1,000 Up to $2,000per month Up to $5,000 Up to $12,000 Up to $24,000per year Up to $60,000 Fig. 12 Affordable housing costs for households by annual income 51 % Renters Owners ALL Households Af f o r d a b l e Un a f f o r d a b l e 3, 3 2 0 3, 4 0 4 5, 7 6 0 1, 7 8 0 24 % 36 % 3, 4 0 4 1, 7 8 0 2020 Source: 2016-2020 ACS Five Year Estimates Fig. 13 Percentage of Wheat Ridge Households Spending at least 30% of Income on Housing Costs, 2020 Market Conditions and Needs AssessmentPART 1 What does “affordable” mean when it comes to housing? By federal government definitions, housing is considered “affordable” when it costs less than 30% of a household’s gross income, and those spending 30% or more on housing are considered “cost-burdened” which means housing is no longer affordable. Because the metric is a percentage, and not just an absolute number, affordability is relative. For example, a household with an annual income of $40,000 spending $1,000 per month or more on housing, is considered cost- burdened (see Fig. 12). A household with an annual income of $80,000 spending $2,000 per month or more on housing is considered cost-burdened. A household with an annual income of $200,000 spending $5,000 per month or more on housing is considered cost-burdened. Affordability Impacts and Needs Although Wheat Ridge is a strengthening housing market overall, not all households are impacted the same way, nor do they face the same amount of either current or future affordability risk. Current owners who purchased in years past and qualified for fixed-rate mortgages face less stress than current renters—especially lower- income renters—who risk rents rising faster than their incomes can grow. Many Wheat Ridge households struggle to afford housing. According to the latest available data from 2020, over one-third of Wheat Ridge households paid at least 30% of their annual income toward housing, including over half of the city’s renter households. Owner-occupied households are less likely to face affordability issues because mortgage lenders account for it before loaning to a buyer, and because many long-time homeowners purchased their homes when prices were lower than they are today. However, nearly a quarter of Wheat Ridge owners face their own affordability challenges, which may stem from declines in household income related to retirement, job loss, divorce, or other factors (see Fig. 13). Lower-income renters struggle most in Wheat Ridge. Over half of all Wheat Ridge renters are cost-burdened but this figure rises to 75% for renter households with incomes below $50,000. Extreme cost burdens (paying 50% or more of income toward housing) are common in renter households with incomes below $35,000. This described an estimated 1,606 renter households as of 2020. There are too few rentals for the lowest- and highest-income renters. Gap analysis measures the difference between the number of households in a given income range and the number of units affordable to that income range. A deficit results if there are fewer units than households, and a surplus results if the number of units exceeds the number of households. In Wheat Ridge’s case, as of 2020, there were more rental units priced for households with incomes between $35,000 and $74,999 than there were renter households with those incomes. There were deficits for households with incomes below $35,000. This is a common pattern in which those renters impacted by the shortage at the bottom of the income distribution must “rent up” into the surplus supply which is priced above what they can afford. It is the reason that so many low- income renters are cost-burdened. As of 2020, there were over 1,200 renter households in Wheat Ridge with incomes less than $35,000 for whom there is no corresponding affordable unit (see Fig. 15). At the same time, a shortage of units for the highest-income renters means they “rent down” into the surplus supply, and their demand helps to inflate rents that those in the middle have to pay. Source: 2016-2020 ACS Five Year Estimates Fig. 14Renter Household Cost Burdens, by Income, 2020 Source: czb analysis of data from 2016-2020 ACS Five Year Estimates Fig. 15Renter Household Unit Gaps, by Income, 2020 $35,000 to$49,999 Less than$20,000 $20,000 to$34,999 50% or More Total number of renter householdsHousehold Income $75,000+ $50,000 to$74,999 1,812 1,265 1,001 308 212 Households Paying 795 1,111 1,741 606 554 59 14 405 20 42 318 8 150 23 30% -49%No Cash Rent Less than 30% Cost-Burdened Households $35,000 to$49,999Less than$20,000 0 $20,000 to$34,999 50% or More Number of HouseholdsHousehold Income $75,000+ $50,000 to$74,999 1,8121,2651,001 308 212 Households Paying 795 1,111 1,741 606 554 591440520 42 318 8 150 23 30% -49%No Cash Rent $35,000 -$49,999Less than$20,000 $20,000 -$34,999 $75,000+$50,000 -$74,999Income Range -909 -319 500 1,000 1,500 -500 -1,000 Su r p l u s of A f f o r d a b l e U n i t s Sh o r t a g e of A f f o r d a b l e U n i t s -964 +1,349 +843 1.4857 pt 20 21Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Lower-income renters “rent up” Higher-income renters “rent down” Fig. 16 Renter Affordability, 2010-2020 Fig. 17Owner Household Cost Burdens, by Income, 2020 Fig. 18Income Needed to Afford Median Sale Price by Housing Type, 2017-2021 Fig. 19Wheat Ridge Jobs Paying $40,000 or Less by Industry, 2019 Source: U.S. Census Bureau Center for Economic Studies, accessed via OnTheMap Industry Jobs Retail Trade 1,593 Health Care and Social Assistance 2,682 Accommodation and Food Services 1,238 All Other Industries 3,898 Fig. 20 Selected Household Types Potentially Facing Affordability Challenges, 2020 Se n i o r s L i v i n g Al o n e Wo r k i n g - A g e Li v i n g A l o n e Wo r k i n g - Ag e M a r r i e d Co u p l e s w i t h ki d s Wo r k i n g - A g e Ro o m m a t e Si t u a t i o n s Si n g l e P a r e n t Fa m i l i e s Median Income If headed by woman?$22,000 $31,000 $113,000 $92,000 $39,000 If headed by man?$31,000 $36,000 $87,000 $112,000 How many are renters? (85% of all renters accounted for) Source: czb analysis of data from 2016-2020 ACS Five Year Estimates 1,300 1,800 600 900 1,000 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 20 1 5 20 1 6 20 1 7 20 1 8 20 1 9 $0 $10,000 $20,000 $30,000 $40,000 $50,000 20 1 0 $0 20 2 0 Wheat Ridge’s renter household incomes create affordability risk. As of 2020, a renter household needed just over $45,000 in annual income to afford the median-priced rental unit in Wheat Ridge (see Fig. 16). If more recent data is to be believed, the required income is now surpassing $50,000. As illustrated on page 14, Wheat Ridge renter incomes are lower than those in the region, and those low incomes create vulnerability as regional rental demand impacts Wheat Ridge. Affordability Impacts and Needs, cont’d. Relatively few owners struggle with affordability. Overall, fewer than a quarter of existing owners in Wheat Ridge were cost burdened as of 2020. The highest rates of cost burden were amongst households with incomes below $35,000, with rates nearing or exceeding 70% (see Fig. 17). Owner- occupied households are generally at less risk for affordability issues both because mortgage underwriting accounts for it and also because mortgage payments are usually fixed for decades, though insurance and property taxes may increase. When owner incomes decrease due to job loss or retirement, they may fall below a level where house payments are affordable and a cost burden can result. New buyers need significantly higher incomes than current owners. The income required to purchase a home varies, depending on many factors, including down payment, credit score, and interest rates. It is generally understood that a ratio of annual income to purchase price should be 3:1 to be considered affordable. Depending on individual buyer circumstances, down payment, etc., the ratio could go as high as 4:1 while remaining affordable. Using a midpoint of 3.5:1, Figure 18 illustrates how the income needed to become a homeowner in Wheat Ridge changed from 2017 to 2021. The income needed to afford the median priced townhouse or single-unit detached house was well beyond $100,000 as of 2021, and roughly $75,000 for a condo. In 2020, the most recent year for which the median owner-occupied household income was available in ACS data, Wheat Ridge’s median was about $91,000. Homeownership would not be possible for many Wheat Ridge owners today, nor for the 97% of current renter households with incomes less than $150,000. Source: czb analysis of data from ACS Five Year Estimates Income needed to rent the median-priced rental unit $45,000 $41,859 Median renter income $0 2017 2021201820192020 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 Single-Unit Detached $580,000 Townhouse $464,000 $263,000 Condo $0 2017 2021201820192020 $40,000 $80,000 $120,000 $160,000 Single-Unit Detached $165,714 Townhouse $132,644 $75,143 Condo Source: czb analysis of data from MLS Source: 2016-2020 ACS Five Year Estimates $35,000 to$49,999 Less than$20,000 $20,000 to$34,999 $75,000+ $50,000 to$74,999 425 TOTAL HOUSEHOLDS 329 (77%) 532 (68%) 267 (35%) 329 (30%) 323 (7%) 780 767 1,089 4,452 Households Paying at Least 30% of Income for Housing Market Conditions and Needs AssessmentPART 1 There are thousands of low-wage jobs in Wheat Ridge. According to the most recent relevant data, which is from 2019, there were over 9,000 jobs in Wheat Ridge paying wages or salaries of $40,000 or less (see Fig. 19). If a worker in one of these positions is the sole earner in the household, the chances of an affordability problem are very high (see Fig. 12 on page 20). If two low-wage workers live in the same household, they may escape the housing “danger zone” but could still face shrinking options in the rental market as it strengthens over time. A diverse collection of household types are potentially affected. As of 2020, there were a number of household types that were likely to face housing affordability challenges in Wheat Ridge due to low incomes. At the median, those living alone, both working- age and senior citizens, had incomes of less than $40,000 The maximum affordable monthly rent at that income is only $1,000, which was below the city’s median gross rent. Households headed by single mothers were similarly challenged. Generally speaking these are the types of households most likely to struggle to pay the rent and in need of the deepest levels of assistance (see Fig. 20). Single Incomes are a Risk Factor As of 2020, Wheat Ridge had over 3,000 renter households where the occupant was living alone, and hundreds of single- parent renter households. These single- income households had the lowest median incomes among the household types listed in Figure 20, which implied clear affordability challenges. Because the income data is only reported at the median, it is not possible to determine the exact number of single- income households facing affordability challenges, but it is at least the halves below their respective median household incomes—650 seniors living alone, 900 working age people living alone, and 500 single-parent families the majority of whom were female headed. 22 23Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Takeaways: Summarizing Housing Needs and Looking Ahead to Policy Focusing on Target Markets Wheat Ridge’s housing market challenges, and opportunities, can be defined by five income categories around which to organize affordable housing policy and strategy, referred to here as target markets. Based on the City’s current and potential tools and capabilities, it can directly impact some target markets more effectively than others. Household Income Less than $50,000 Sizable affordability gaps for the lowest-income households dictate that the City support other providers who have access to deep subsidy. The City should have a supportive posture toward proposed projects for these households, as described in Parts 2 and 3. Household Income $50,000 to $149,999 Affordability gaps at these incomes are smaller, and thus become more manageable using tools other than deep financial subsidy. These target markets present opportunities for the City to take more direct action as discussed in Parts 2 and 3. Household Income $150,000 and Above Households at these incomes have abundant choice in the Wheat Ridge market and do not require public sector interventions to support housing affordability. Households with incomes below $50,000 Households with incomes $50,000 to $74,999 PART 1 Market Conditions and Needs Assessment Current Own/Rent Split Percent Renters Cost Burdened Deficit/Surplus of Affordable Rental Units Matched to Income Maximum Affordable Rent Maximum Affordable Purchase Rental Risk Assessment Significant current rent burdens, and whatever affordability exists is at risk as housing costs rise. Renters currently enjoy affordable options, but the units are aging and quality in question. As rents rise in the region, currently affordable units are ripe for reinvestment and resulting rent increases. Homeownership Risk Assessment Incomes are too low to support homeownership. Incomes are generally too low to support homeownership. There are virtually no single- unit houses at this price point. Condo ownership may be a possibility, but even that is a challenge at current prices. Policy Implications There is need in Wheat Ridge for a large volume of low-income rental units, but affordability gaps are so large that they demand the kind of subsidy best provided via professional affordable housing developers. Current affordable rentals are an opportunity for preservation and quality should be upgraded. -1,228 for incomes less than $35,000 +1,349 for incomes $35,000 to $49,999 +843 75%32% $1,250 $1,875 $175,000 $263,000 34%66%49%51% Households with incomes $75,000 to $99,999 Households with incomes $100,000 to $149,999 Households with incomes $150,000 or more Affordability unlikely to be a concern, but new rental units are not affordable. The highest-income households may consider leaving the region to find suitable housing options. None. New rental units are affordable to this group. None. New rental units are affordable to this group. As homeownership ceases to be an option, households may consider leaving the region. Increasingly difficult to purchase a home in Wheat Ridge at this income. Households may consider leaving the community. None. This group can generally afford to purchase a home in Wheat Ridge. -13 -764 -210 N/A N/A N/A $2,500 $3,750 $3,750 and up $350,000 $525,000 $525,000 and up 60%40%63%37%90%10% Improving rental options for this group is an opportunity. Improving homeownership options for this group is an opportunity. None. This group has little to no problems in the Wheat Ridge housing market. 24 25Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 2 Principlesto GuideHousingActions Policies and 26 27Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Policies and Principles respond to identified issues and guide the way toward discrete actions. Policies help to define the new set of conditions Wheat Ridge hopes to create in its housing market, while Principles establish “rules of the road” as to how the City will approach its decision making. The Policies and Principles in Part 2 are recommendations, based on the broad set of identified needs in Part 1. They are constructed to provide the City a formal basis for taking future action, beyond a comprehensive plan that is out of date and in anticipation of a new plan yet to be developed. They may therefore be considered “interim” pending validation or revision in a new comprehensive plan. If this Strategy and Action Plan is formally adopted by the City, these recommended Policies and Principles will then become decision-making guideposts alongside Envision Wheat Ridge and other policy documents. PART 2 Principles for Guiding Housing Actions Recommended Policies POLICY A: Full Housing Ladder Wheat Ridge recognizes that its economic and social strength and resilience benefit when households of all types, including but not limited to workers providing critical services to the community, are able to find suitable housing options in the city across the stages of life. The City is committed to supporting the development of a full “housing ladder” to meet this goal. Envision Wheat Ridge signals the community’s desire to address housing both through the plan’s Key Values (“Promote…. an array of housing options.”) and in its Goals (“Goal NH2: Increase housing options.”). Envision Wheat Ridge, though a foundational document in terms of setting community vision, deals with housing only at a very high altitude and was adopted in 2009— a vastly different time in the Wheat Ridge housing market. The following policies are recommended, at least as interim policies pending a new comprehensive plan, to put the City on firm footing to respond to the housing conditions of the early 2020s, and to connect longstanding City goals to action steps specifically crafted for this decade. POLICY B: Economic and Income Diversity Wheat Ridge embraces economic and income integration citywide and within its neighborhoods. It rejects economic and income segregation that may result from the natural functioning of housing markets. The City is committed to taking actions to facilitate economic and income diversity where possible. POLICY C: Housing Type Diversity Wheat Ridge places a high value on its diverse housing stocks and seeks to achieve and maintain a well- balanced supply of housing types to accommodate a wide range of households. The City is committed to maintaining and increasing the diversification of its housing supply where possible, and working within market realities to do so. POLICY D:Material Support for Affordable Housing Wheat Ridge acknowledges the difficulties of providing affordable housing and supports public, private, and nonprofit organizations developing affordable housing in the city. The City is committed to providing material support to projects that align with adopted policies, plans, and design requirements. POLICY E:Incentives Conditioned on Inclusionary Outcomes Wheat Ridge city government is an active participant in important development and redevelopment projects across the community, particularly through its capacity to provide financial incentives. City provision of incentives to projects with a residential component requires the project to include affordable housing and a variety of price points to achieve mixed-income outcomes. Partnership with Renewal WR is crucial to this policy. GIVES GETS 28 29Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 2 Principles for Guiding Housing Actions Be action-oriented and embrace incremental progress Aim for mixed- income outcomes Pursue geographic dispersion Recommended Principles Principles are “rules of the road” that offer guidance for decision making. Whether Wheat Ridge’s approach to affordable housing is ultimately opportunistic and flexible, or targeted and rigid, it should operate inside a set of high level rules that reflect both the community’s values and aspirations, as well as its economic, political, and fiscal realities. Sticking to a handful of key principles can maintain clarity as the City pursues affordable housing goals, or provide it when the path is somehow unclear. Housing markets are complex, powerful, and difficult to affect. This can appear daunting to those who seek different market outcomes. But the City of Wheat Ridge is a forward-thinking and creative local government with a history of rolling up its sleeves and getting to work. There are action items in this strategy that the City can begin working on quickly, with demonstrable results to follow. Wheat Ridge should have no hesitation about getting started right away, and beginning the process of stacking up small but important wins that add up over time. Just as housing monocultures run counter to the need for flexibility for individual households and the community over time, so too do income monocultures. A focus on preserving and increasing affordability citywide will help to maintain income diversity as the market continues to strengthen. Special attention should be paid to new, site-specific, large-scale housing projects where price points should be varied across units sufficient to achieve a mixed- income result. No part of the community should be “off limits” to new housing or affordable housing. Each neighborhood, or Council district, or corridor, should have opportunities for the location of new and affordable housing. This is not to say that every opportunity will be the same, or that a project that is the right fit for one location could easily be relocated somewhere else. But if housing affordability is a citywide challenge, then every part of the city has some role to play in helping to address it. Act regionally Get the right project in the right place Support other affordable housing developers when possible and lead when necessary Although the city has an affordability challenge, it is not Wheat Ridge’s alone. It is a regional phenomenon across the entire Denver area. Wheat Ridge should show leadership by implementing this strategy and the City should also stand ready to collaborate with other regional actors, from neighboring jurisdictions to a region-wide body or consortium, as opportunities present themselves. Affordability is a critical consideration for newly built housing, but it is not the only consideration that matters. Wheat Ridge is a mature community with a well-established existing planning context, and new housing, if not properly designed for its site, block, street, or neighborhood, may fail to contribute positively to the city. Simply being affordable may not be enough to outweigh a poorly planned site, inappropriate architecture, or a shoddily constructed building. The city’s planning system, from the comprehensive plan to the development code, should set rules within which any housing developer, including affordable housing developers, must operate. Housing development, especially affordable housing development, is a difficult and financially complex undertaking. The City cannot provide housing directly, but there are existing organizations that are expert in housing development, and are able and willing to build affordable housing in Wheat Ridge. The City of Wheat Ridge may consider a number of tools to increase affordable housing that no other entity can achieve such as land use designations and development regulations including zoning, potential affordability requirements through inclusionary housing, and allocation of meaningful financial resources to fill financing gaps. 30 31Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 3 TakingAction What should Wheat Ridge do to address its housing market needs and effectuate its policies? There are a number of ways in which the City can begin to tackle affordable housing right away, using its resources and capacities to make the most of current conditions, trends, and events. Part 3, Taking Action, identifies the best affordable housing opportunities facing Wheat Ridge today and the actions that will help take advantage. Part 3 includes information about: Important context related to development costs, land use, and the role of subsidy. Analysis and description of Wheat Ridge’s Key Housing Opportunities Detailed description of discrete action items the City can pursue to activate the opportunities. 32 33Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Development Costs, Land Use Regulations, and Subsidy There are a number of tools available to help local governments support the production of affordable housing. Some may provide substantial benefits while others contribute only at the margins. Key to understanding which tools will be most useful in Wheat Ridge’s specific context is first understanding why housing costs what it costs, how land use regulations can impact costs and affordability, and how public subsidy is needed to close affordability gaps. Housing costs begin with development costs. Development costs can be lowered, but within limits. Subsidizing developers or households, directly or indirectly, can fill affordability gaps. Maximizing land utilization provides more units and helps lower per unit development costs. Value created through higher densities can also be extracted for affordability. SOLD Development Regulations Subsidies PART 3 Taking Action Between the costs of construction, the cost of land, and the other costs of developing housing, new residential units are expensive. If the construction cost of a house is $200 per square foot, which is a typical amount in the Denver region at the time of this report, an 1,800 square foot house costs $360,000 to build. If land costs $1,000,000 per acre, which is a typical amount in the Denver region at the time of this report, and eight houses can be built on an acre, then the land for that house costs $125,000. Before any other developer costs, such as the cost of financing, permit fees, design work, etc., the new house costs $485,000, which likely requires nearly $140,000 in annual household income to afford. When it comes to rental projects, costs in the Denver area in 2022 suggest that a rental unit may cost between $350,000 and $400,000 to produce. In some cases, the figure may be higher. As a general rule, monthly rents are about 1% of the cost to develop a rental unit, meaning that average rents for newly constructed projects in the area are in excess of $3,500, which likely requires $140,000 in annual household income to afford. Improving the affordability of newly built housing means either lowering the cost of developing a housing unit, or providing subsidy to fill the gap between what housing costs to build and what a particular household can afford to pay. Sometimes, it means some of both. A number of development costs are outside the control of developers and builders. These include costs for land, materials, labor, public improvement and impact fees, and financing to name a few. There are only a handful of variables a developer can adjust in order to lower the cost of delivering a housing unit. Among them are size, type of materials, and quality of the finishes. At first glance, it might appear that it is in a developer’s interest to build units as small and as cheaply as possible, in order to maximize the number of units and the potential profit. In reality, however, it is not so simple. Just because a housing market may be expensive overall does not mean that the developer’s potential target markets do not have any choice. Missing market expectations or unit size or quality creates risk that the new units will remain vacant for longer than planned, which is a risk no developer wants to face. For the community’s part, it is also wise to think about marketability and the long-term viability of any new housing units. New units that are affordable but with questionable long-term viability in the marketplace could end up being liabilities instead of assets as market conditions change. Housing costs begin with development costs. Development costs can be lowered, but within limits. SOLD 34 35Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT In a housing context, in a land constrained environment like Wheat Ridge, each buildable square inch becomes important. That is true of land that has never been developed and of land that is redeveloped into something new. Each potential site upon which housing might be built is subject to regulations which determine the number of units that can be built there. The more a community wants to add housing, the higher the number of allowable dwelling units per acre (DUA) will be allowed. The number of DUA also impacts housing costs by impacting the land cost that finds its way into the cost of an individual housing unit. Assuming a fixed cost of land for a particular site, the higher the number of allowed DUA, the lower the land cost per unit. As the land cost per unit falls, so too does the total cost of producing the unit. In the examples below, increasing the DUA from 6 to 12, and changing the housing type from single-unit detached to single-unit attached, lowered the land cost per unit by $125,000, which is a substantial decrease. Moving to an even more intense and urban building form, the multi-story rental building with structured parking, lowers the land cost per unit significantly. Maximizing land utilization provides more units and helps lower per unit development costs. PART 3 Taking Action Single-unit detached houses Attached Single-unit townhouses Multi-unit rental building with surface parking Multi-unit rental building with structured parking Land cost per unit on a 4 acre site Number of units on a 4 acre site 24 48 100 160 $250,000 $125,000 $60,000 $37,500 6 units per acre 12 units per acre 25 units per acre 40 units per acre Land cost for 4 acre site $6M As the number of units per acre increases, the land cost per unit falls. Subsidizing developers or households, directly or indirectly, can fill affordability gaps. Boiled down to its bare essence, affordable housing work is about filling the gap between what housing costs to provide and what a household can afford to pay. This requires, in some way, shape, or form, subsidy flowing from somewhere, and this is almost always from the public sector. Even in cases where housing can be built less expensively, through adjustments to allowed units per acre, unit size, or quality, subsidy may still have a role to play because the gaps between what housing costs to provide and what many households can afford is so great. For example, if a typical two- bedroom market-rate rental unit has a total development cost of $400,000, and somehow that cost could be reduced by 25% to $300,000—a significant reduction—through higher density or decreased square footage, the resulting monthly rent of $3,000 would still require $120,000 in annual household income. Public sector funding of affordable housing goes back to the very first public housing projects before the middle of the 20th century. Low Income Housing Tax Credits and Community Development Block Grants have been important sources of subsidy to affordable housing developers for decades. Individual households are also recipients of housing subsidy, via Housing Choice Vouchers for example. Local governments also have the ability to raise and spend their own funds to subsidize affordable housing, whether to developers or to households, or both. As with every other public expenditure, the decision to allocate resources to affordable housing is a matter of political will, prioritization, and trade-offs. A commonly used mechanism to produce affordable housing is inclusionary zoning, a legal mechanism under which developers are required to set aside some percentage of new housing units as affordable, as defined by the regulating jurisdiction, with some means of alternative compliance made available. The alternative means is usually a “fee in lieu.” If the inclusionary housing requirements are calibrated properly, meaning they are not overly onerous, projects of a minimum size can usually meet the requirements while maintaining financial viability for the developer. czb’s analysis suggests that a 10% set aside is likely feasible so long as the qualifying incomes, and the matching affordable rents, are not set too low. To be more specific, the affordable rents should not be set much below those affordable to a household with an income at 80% of the area median. The income limits for homeownership would be higher, in the range of 100-120% of the area median. In a strong housing market with high land values, like that of the Denver region, additional value can be created on a site by increasing the allowed DUA, thus creating financial conditions where some of that additional value can be recaptured by the community to help pay for the income restricted units. This increase in allowed density, or “upzoning,” is a tool that works hand in glove with inclusionary housing requirements. Sophisticated communities understand this approach of “gives” and “gets” is critical to balancing public priorities and meeting community goals. Value created through higher densities can also be extracted for affordability. Development Regulations Subsidies 36 37Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Key Affordable Housing Opportunities The preceding pieces of this analysis are foundational: • Market conditions and housing needs. • Recommended policies that outline at a high level what Wheat Ridge hopes to accomplish. -Recommended principles that guide decision making. • Costs, challenges, and opportunities that development and subsidy create. These foundational components inevitably lead to the most important question of all: At the time of this report, the constraints on the City’s actions are clear. The potential housing need across the community is both wide and deep. Housing development is complex and expensive, and the subsidy needed to fill affordability gaps is substantial. Some of the housing types most likely to facilitate good affordable housing outcomes represent a departure from Wheat Ridge’s historic housing typology and the community-wide discussion of whether, where, and how to accommodate new housing is best suited for a comprehensive plan update that is still in the future. But this document, crafted to be useful to the Wheat Ridge community, is not about what the City cannot do. It is about what the City can do, with an emphasis on what it can begin to do almost immediately. The city has need for affordable rental units. Multi-unit rental projects will be the most economical housing type for affordable housing providers to develop. Multi-unit rental projects are also a housing solution that the private sector is equipped to deliver, and in so doing, can offer the opportunity for inclusionary affordable housing. Perhaps more important than the benefits of new construction, the city is already awash in older, relatively affordable rental units that represent an opportunity for preservation. The city’s Key Housing Opportunities are framed by the following points made clear throughout this document: PART 3 Taking Action The city has need for entry-level ownership opportunities. Attached townhouses have the twin benefit of being recently proven as a marketable product in Wheat Ridge, and come with development economics that make them a potential entry- level alternative to single-unit detached houses, which are not affordable to households defined as target markets in need of assistance. Inclusionary affordable housing is also a possibility here, so the private sector can be a partner in delivering some affordability. Attached Ownership with Inclusionary INCLUSIONARY Multi-unit Rental with Inclusionary INCLUSIONARY Existing Affordable Rental What should Wheat Ridge do? Build more multi-unit rental where possible and achieve inclusionary, mixed-income outcomes. These, therefore, are the Key Housing Opportunities outlined in the following pages: KEY HOUSING OPPORTUNITIES #1 #2 #3 #4 Build more attached ownership units where possible and achieve inclusionary, mixed-income outcomes. Preserve and upgrade existing affordable rental units. Maximize the potential for the Lutheran Legacy Campus redevelopment to achieve inclusionary, mixed-income outcomes. Development Regulations Subsidies Each of these opportunities come with implications for changing development regulations and raising and deploying capital for subsidies. There are short-term opportunities available, and opportunity can be expanded over time commensurate with changes to regulations and funding. 38 39Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Build more multi-unit rental where possible and achieve inclusionary, mixed-income outcomes. The City of Wheat Ridge, relative to the region, has few rental units in large rental complexes. The market for these products has been proven in recent years with a handful of new projects. This housing type, with densities and heights only allowed in areas of the city exempted from specific City Charter-imposed limitations, makes efficient use of land, which is a key variable in development cost per unit and resulting affordability. This housing type offers the following benefits: 1. It is the new housing type most economical to build for affordable housing developers hoping to reach affordable rents for households with incomes below $75,000. 2. Market-rate units of this type, given development costs at the time of this report, are likely affordable, on average, only to households with incomes above $100,000. But czb’s analysis suggests that roughly 10% of units within a new project could be made affordable to households with lower incomes, down to about $75,000. Increasing the number of multi-unit rental projects in Wheat ridge can enable opportunities to create new affordable rental housing. Charter Exception Areas PART 3 Taking Action OPPORTUNITY TARGET MARKETS #1 THE OPPORTUNITY For Affordable Housing Developers: Households with incomes $75,000 to $99,999 Households with incomes below $50,000 Households with incomes $50,000 to $74,999 GEOGRAPHIC FOCUS For Private Sector Market-Rate Developers: The Wheat Ridge City Charter limits maximum residential building heights in the city to 35 feet and maximum density to 21 dwelling units per acre. There are exceptions to these limits, mostly but not exclusively coincident with boundaries for Urban Renewal Areas. The Charter exceptions have been critical to the development of recent multi-unit residential projects, as have mixed-use zoning districts. There are three potential regulatory changes that could encourage more multi-unit residential development with affordable outcomes. All should be explored and are discussed in greater detail later in Part 3: 1. Addition of an inclusionary housing requirement in mixed-use districts when the project is substantially or majority residential. 2. Rezonings, either developer initiated or potentially legislative (following the comprehensive plan update), to mixed-use districts where multi-unit rental projects can be built. 3. The expansion of Exception Areas, either through site-specific, limited additions or through broader changes to the Charter’s limits. Site-specific additions may include, but not necessarily be limited to, the Lutheran Legacy Campus. REGULATORY CONSIDERATIONS If the City imposes an inclusionary affordability requirement of about 10%, with the affordability aimed at households down to about $75,000, or roughly 80% of the area median income (AMI— see Appendix for 2022 AMI information) then no subsidy is likely needed. If the City desires deeper affordability aimed at lower-income households, additional subsidy will be needed. Monthly rent is generally 1% of a unit’s total development cost (TDC). Or, TDC is roughly 100 times the monthly rent. So, for example, if the City were seeking a further $500 per month reduction in the rent of an inclusionary affordable unit, it would need to provide the developer an additional $50,000. Affordable housing developers for lower-income units will no doubt be accessing other subsidy sources, like Low Income Housing Tax Credits, and the City may choose to provide additional subsidy to support the project, per Policy D (see page 29). SUBSIDY CONSIDERATIONS Development Regulations Subsidies 40 41Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Build more attached ownership units where possible and achieve inclusionary, mixed-income outcomes. The total development costs for single-unit detached houses make them unaffordable for the households in question. Attached townhouses, however, offer an alternative that could be priced affordably for them. The Mixed-Use Neighborhood (MU-N) zoning district, which was intended to be a true mixed-use district where neighborhood-serving ground floor retail and commercial uses would coexist with residential uses, has instead become a highly effective tool for the development of townhouses in Wheat Ridge. This has been in response to market demand for newly built single-unit ownership product at a more affordable price point than a detached house. MU-N zoning was purposely concentrated along W. 38th Ave. but has also become common in rezoning requests for developers seeking to build townhouses. MU-N, as it exists today, presents Wheat Ridge with two challenges, and opportunities: 1. First, many of the townhouse units that have been built and sold in recent years have not been affordable to households with incomes below $150,000. But they could be, through the imposition of inclusionary requirements, and the possible application of some subsidy. czb’s analysis suggests that roughly 10% of units within a new project could be made affordable to households with lower incomes, down to about $120,000, 2. Second, MU-N has not led to true mixed-use outcomes as the market for first floor retail and commercial spaces has not enticed developers, while residential demand has been seen as a good bet. But this could change. Scattered sites citywide OPPORTUNITY TARGET MARKETS THE OPPORTUNITY GEOGRAPHIC FOCUS #2 Households with incomes $100,000 to $149,999 PART 3 Taking Action Revisions to the existing MU-N district, alongside the creation of a new R-4 residential zoning district, could help address both challenges and opportunities described here. MU-N should be amended to better achieve the mixed-use outcomes for which it was intended while a new R-4 district, keeping with the naming convention of the City’s other residential zoning districts, should become “the townhouse district” while imposing affordability requirements that attached ownership projects at or near 21 DUA should be able to meet. R-4 would effectively become an incentive district, based on “gives” and “gets” as described on page 37. The allowance to the private sector to maximize land and build townhouses up to 21 DUA should be matched to a requirement that the City receive some community benefit. 1. The City should consider requiring MU-N to produce EITHER mixed-use, or inclusionary affordable housing. 2. Maximum allowable density in R-4 could vary based on location. If a site with R-4 zoning is in a location subject to Charter limits, it would be capped at 21 DUA, just as most MU-N sites have been. If it is in an Exception Area, it could exceed 21 DUA. (This report does not recommend any locations where a new R-4 district should apply. It is recommended as a tool for the toolbox.) 3. R-4 development standards would need to be calibrated for context sensitivity. 4. R-4 sites over one acre should be exempted from any requirement to enter a Planned Residential Development (PRD) process. The new district should be designed well enough that its outcomes are predictable for both the developer and the community. REGULATORY CONSIDERATIONS If the City imposes an inclusionary affordability requirement of about 10%, with the affordability aimed at households down to about $120,000, or roughly 100% of the area median income (AMI—see Appendix for 2022 AMI information) then no subsidy is likely needed. If the City desires deeper affordability aimed at lower-income households, additional subsidy will be needed. SUBSIDY CONSIDERATIONS Development Regulations Subsidies 42 43Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Preserve and upgrade existing affordable rental units. Wheat Ridge is home to thousands of aging rental units that are affordable to renter households with incomes below $75,000 and even below $50,000. Age and quality are contributing factors to the relatively low rents. Many of these units are, at the time of this report, in need of investment and upgrades but if the private sector takes on these improvements alone, it will necessarily mean an increase in rents because the investment must be recovered. The properties containing the rental units in question are scattered all over the city, not concentrated in any one location. Improving the quality of older housing is good for the city and its neighborhoods, and good for tenants, but rising rents present an affordability challenge. The City can overcome the dilemma of conditions and affordability by investing directly in private rental properties under the “gives” and “gets” approach. A program that provides grant funding for rental unit upgrades in exchange for preservation of affordable rents creates win/ win outcomes. Scattered sites citywide OPPORTUNITY TARGET MARKETS THE OPPORTUNITY GEOGRAPHIC FOCUS PART 3 Taking Action Households with incomes below $50,000 Households with incomes $50,000 to $74,999 #3 Given rising land costs and the aging of structures, there may be a growing incentive over time to tear down older properties and redevelop them. While it is unlikely that an owner would pursue this path without increasing the number of units, there are plausible scenarios where it could happen. A “no net loss” policy applied strategically under certain conditions could help limit the redevelopment of such properties in such a way that they result in fewer units, and might create an incentive instead to rehab the property. REGULATORY CONSIDERATIONS A high-level estimate at the time of this report for per unit cost to rehab rental units while maintaining affordable rents the $50,000 to $74,999 target market is $50,000. For the lower- income target market, the estimate is an average of $100,000. In reality, the per unit cost will vary not only by target market, but also by property. The City, should it pursue an affordable rental rehab program, should not set firm limits per unit, but rather accept proposals and determine reasonable costs based on the proposals. Developing sufficient funding for a rehab program is critical. Upgrading just twenty affordable units could cost over $1M. Ideally, program funds will flow through a new Wheat Ridge Housing Fund (see page 51) and funds could be derived from: • Community Development Block Grants in partnership with Jefferson County. • City lodging tax revenues from short-term rentals. • New impact fees the City might consider. • State programs, including new resources potentially made available by the passage of Proposition 123 in November 2022. SUBSIDY CONSIDERATIONS Development Regulations Subsidies 44 45Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Maximize the potential for the Lutheran Legacy Campus redevelopment to achieve inclusionary, mixed-income outcomes. SCL Lutheran is building a new facility and will be vacating its historic 100-acre Lutheran Hospital campus in the heart of Wheat Ridge in the coming years. The potential redevelopment of this site offers ample opportunity to creatively develop new affordable housing. Although the details of any future redevelopment proposals are as yet unknown, the City can be assured that its participation will be required. The site will require rezoning, infrastructure investment, potential use of the City’s Urban Renewal authority, and more. The City should look at the future Lutheran redevelopment as a partnership, in which “gives” and “gets” will apply. As a once in a generation redevelopment opportunity, likely to include a substantial amount of new housing, the City should make clear its expectation that a significant amount of affordable housing will be included in the eventual redevelopment. In order to both make best use of the land for residential development, and to lower land cost per unit to support affordability, the City should anticipate and plan for attached housing products. It is possible that the redevelopment, and the resulting public benefit, could be helped by an exemption from the Charter limits on height. Lutheran Legacy Campus OPPORTUNITY TARGET MARKETS THE OPPORTUNITY GEOGRAPHIC FOCUS PART 3 Taking Action #4 Households with incomes $100,000 to $149,999 Households with incomes $75,000 to $99,999 The Lutheran site will require a new zoning designation in order to be redeveloped. It also may possibly benefit from an exemption from the Charter’s limits on height in order to have the flexibility necessary for residential development that can create value in the site and the conditions for a range of inclusionary affordable outcomes. There are two factors at play that could potentially support a residential height exemption on the site: 1. Lutheran already exceeds the existing residential height limit for its hospital use, meaning the site historically is known for greater than normal height. 2. The City is already exploring the use of Urban Renewal for the site, which historically is accepted in the community as precondition and co-existing with height exceptions. The City should continue down the path of exploring Urban Renewal and a height exception for the Lutheran site in order to maximize options for public benefit of the eventual redevelopment. REGULATORY CONSIDERATIONS Until there is a proposal for redevelopment, it is far too soon to know whether financial incentives from the City will have a role to play. The unique nature of the project means the City should not set firm affordability requirements at the outset, nor should it have any firm ideas about its financial participation.. Instead, “gives” and “gets” should flow from the negotiations between the future developer and the City. SUBSIDY CONSIDERATIONS Development Regulations Subsidies 46 47Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT #1 #2 #4 #3 #1 #2 #4 #3 #1 #2 #4 #3 #1 #2 #4 #1 #2 #3 #4 #3 #1 #2 #4 #3 #1 #2 #4 #2 #4 #3 #1 #2 #1 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 PRIORITY LEVEL 1 Action Items: Prioritizing for Progress Realizing Wheat Ridge’s key housing opportunities requires a series of actions, but not all action items will have the same level of impact, and some may be achievable sooner while others will take more time. The combination of these factors helps to establish a logical prioritization of action items. The following pages describe, at a summary level, the recommended action items. More detailed information for each can be found starting on page 50. The proposed timing of action items is tentative and subject to change based on events. PART 3 Taking Action Ac t i o n It e m Revise Zoning Scheme for Community Benefit Wheat Ridge Housing Fund Housing- Supportive Code Amendments Continue Lutheran Legacy Implementation Efforts Housing Staff Comprehensive Plan Update Naturally Occurring Affordable Housing (NOAH) Preservation Program A program to make grants from the Wheat Ridge Housing Fund to rental property owners to upgrade aging rental units in exchange for affordable rents. Update Development Code and Zoning Map Exploration of Changes to Charter Limits on Height and Density Update Affordable Housing Strategy and Action Plan De s c r i p t i o n Require all projects in mixed-use districts to EITHER produce mixed-use or inclusionary affordable housing, and establish a new R-4 district with inclusionary requirements. A dedicated fund to receive, hold, and deploy financial resources specifically in support of affordable housing activities. Amend the City’s code to support affordable housing development in areas such as: process, fees, parking minimums, “no net loss,” etc. Continue preparing for the eventual Lutheran redevelopment and set clear expectations. A staff person dedicated to housing program management. Use the comprehensive plan process to reaffirm community support for affordable housing goals and establish community’s vision for growth and development. Following the update to the comprehensive plan, update the City’s code and zoning map to reflect the plan.The community-wide discussion of whether, where, and how to accommodate new housing is best suited for the comprehensive plan where public engagement will play an important role. Following the update to the comprehensive plan, establish a commission to study the possibility of amending the City Charter’s current limits on height and density in order to make a recommendation for a potential ballot question. Update this document to respond to new conditions and events. Op p o r t u n i t y Im p a c t e d Im p l e m e n t a t i o n St e p s • Strengthen Requirement for Mixed-Use or Inclusionary Affordable Housing in Mixed-Use Districts • Create a New R-4 Residential District • Establish Fund • Identify Initial One-Time Sources • Identify Recurring Sources • Develop Funding Guidelines • Ordinance • Complete Evaluation of Potential Urban Renewal • Consider Exemption for Charter Limits • Negotiations and Plans • Job Description • Recruitment • Evaluation of Need for Additional Staff • Preliminary Scope and Solicitation of Consultants if Appropriate • Project Scoping and Organization • Project Initiation • Plan Completion and Adoption • Identify Funding Sources • Design Program • Solicit Proposals for First Funding Round • Preliminary Scope and Solicitation of Consultants if Appropriate • Project Scoping and Organization • Project Initiation • Code Completion and Adoption • Establish Charter Commission • Commission Findings and Recommendation • Potential Ballot Question • Preliminary Scope and Solicitation of Consultants if Appropriate • Project Initiation • Analysis and Strategy Completion PRIORITY LEVEL 2 PRIORITY LEVEL 3 48 49Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 #2 Revise Zoning Scheme for Community Benefit The City’s existing mixed-use districts do not clearly mandate mixed-use unless the site is over five acres. As a result, districts that were meant to produce true mixed-use outcomes have mostly produced market-rate housing units. The City can adjust its zoning scheme to derive more community benefit either through true mixed-use, with active ground floor uses, or inclusionary affordable housing. As long as the market continues to drive development of housing in mixed-use districts, the City stands a strong chance of getting some affordable units if it implements this recommendation. A new zoning district, called R-4, can become the appropriate zoning tool for production of attached ownership housing, filling the role that the Mixed-Use Neighborhood (MU-N) district has been playing up to the time of this report. Imposing an inclusionary requirement on the district will help facilitate the delivery of some affordable ownership opportunities in a product that has proven successful in Wheat Ridge in recent years. 1PRIORITY LEVEL OPPORTUNITIES IMPACTED Attached Ownership Units with Inclusionary IMPLEMENTATION STEPS TARGET MARKETS Strengthen Requirement for Mixed-Use or Inclusionary Affordable Housing in Mixed-use Districts Existing mixed-use districts should be amended to require EITHER true mixed-use with active ground floor uses, OR inclusionary affordable housing. The exact requirements should be calibrated to market conditions, and the City should consider a “fee-in-lieu” option as an alternative form of compliance. Create a New R-4 Residential District Concurrent with the recommended changes to mixed-use districts, the City should create a new zoning district that accommodates housing types up to 21 DUA as a use by right, with inclusionary housing requirements. The district may have a variant for Charter Exception areas where greater densities are possible. R-4 should offer an alternative to a PRD process for projects larger than one acre and development standards should be calibrated to account for neighborhood context. Households with incomes $100,000 to $149,999 INCLUSIONARY ACTION ITEM PART 3 Taking Action TIMING Wheat Ridge Housing Fund ACTION ITEM There are specific actions recommended in this strategy that will require funding, and potential future projects that may require public subsidy to come to fruition. Having a reliable source of local funds allows the City to be both proactive and opportunistic as it builds programming and contemplates housing investments. Wheat Ridge should establish and provide resources for a Wheat Ridge Housing Fund (WRHF). The WRHF is envisioned as a vehicle for grants and loans to properties and projects that align with the City’s policies and further the development of affordable housing in Wheat Ridge. 1PRIORITY LEVEL OPPORTUNITIES IMPACTED IMPLEMENTATION STEPS TARGET MARKETS TIMING #1 Multi-Unit Rental Units with Inclusionary #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus Establish Fund Take necessary steps to establish a Wheat Ridge housing fund under the authority of City Council. Identify Initial One-Time Sources To provide initial seed funding, identify possible one-time sources that can sensibly be linked to housing uses. These may include unrestricted surplus funds, unspent bond proceeds, housing-related grant funds, or other funds. Identify Recurring Sources One-time infusions will always be important to the WRHF, and they are appropriate to such a use because awards to affordable housing projects is not a recurring obligation for the City. But the City would be wise to identify an annual recurring source of funds that can continuously replenish the fund, even if the amount appears relatively small at the beginning. Potential sources might include lodging tax derived from short-term rentals, an annual general fund allocation, or future revenues from a possible housing impact fee or commercial linkage fee (either of the latter would require a nexus study). Develop Funding Policies and Guidelines At minimum, it is recommended that the WRHF be set up to provide funding for the NOAH Preservation Program (see page 56). Beyond that, the City needs to decide what it will fund, and how it will make decisions about what to fund. The following approaches to funding availability should be considered, and are not mutually exclusive: -Rolling basis, subject to proposals. -Annual basis, with proposals solicited and weighed against each other competitively. ALL YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 #1 Multi-Unit Rental Units with Inclusionary Households with incomes $75,000 to $99,999 50 51Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 3 Taking Action Housing-Supportive Code Amendments ACTION ITEM While the logical sequence for a rewrite or update of the zoning ordinance should commence upon completion of the City’s comprehensive plan, there are a number of housing related ‘quick fixes’ that the City could integrate within the current code. 1PRIORITY LEVEL OPPORTUNITIES IMPACTED IMPLEMENTATION STEPS TARGET MARKETS Ordinance Amending Code Craft an ordinance with changes focused on at least the following: -Expedited review for projects with an affordable component. This may include changes to the triggers that cause a residential project to enter the Planned Residential District (PRD) which can create uncertainty and delay (The addition of the R-4 zoning district may also provide an alternative to PRD.). -Fee waivers or reductions for projects with an affordable component. Although City-imposed development fees are a relatively small portion of the total development costs of a housing unit, any City contribution to affordable housing can help to shrink gaps. -“No net loss” requirement for redevelopment projects. The demolition of a residential property and its replacement with a project that has fewer units is not highly likely, but the City can help keep this from happening through a policy that requires one for one replacement of residential units. “No net loss” provisions should be evaluated for application only under specific conditions because there may be other public benefits derived from a redevelopment project (e.g. elimination of nonconforming use, affordable housing, etc). -Reduced parking minimums. Provision of parking represents a development cost and, in areas exempted from the Charter’s limits on density, parking can be an inefficient use of land that reduces a project’s capacity to lower land cost per unit. In cases where unit occupancies are expected to be low, and/or transit availability is sufficient, reducing parking requirements can be a contributor to better affordability. #1 Multi-Unit Rental Units with Inclusionary #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus ALL YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TIMING Continue Lutheran Legacy Campus Implementation Efforts ACTION ITEM 1PRIORITY LEVEL OPPORTUNITIES IMPACTED #1 Multi-Unit Rental Units with Inclusionary #2 Attached Ownership Units with Inclusionary #4 Lutheran Legacy Campus SCL Lutheran has indicated that it will not be seeking redevelopment of its Lutheran Hospital site until it has opened its new facility and transferred all operations there. Until that time, the City should continue to be proactive in planning and discussions around the future of the Lutheran Legacy Campus. IMPLEMENTATION STEPS Complete Evaluation of Potential Urban Renewal At the time of this report, the City is studying the possibility of designating the Lutheran Legacy Campus as an Urban Renewal Area. Enter into and Complete Negotiations and Plans The Lutheran redevelopment has the potential to reshape Wheat Ridge. The City is not just an important stakeholder, but also a partner in the eventual project, controlling many of the levers that will determine what can happen on the site and how valuable it becomes. The City, working from the Lutheran Legacy Campus Master Plan and this strategy, should work in an ongoing manner with SCL Lutheran to make clear expectations for the site, including a substantial amount of affordability. Evaluate the Possibility of Action to Exempt Lutheran Legacy Campus from Charter Restriction on Height As described earlier in the document, maximizing the affordable housing contribution of the site could possibly involve building types that exceed the Charter limits. Due to the site’s size, it is hard to envision a scenario where redevelopment exceeds the density limit, but the height limit is a more obviously limiting factor for multi-unit development. This should be weighed depending on a future redevelopment proposal. TARGET MARKETS TBD Households with incomes $75,000 to $99,999 Households with incomes $100,000 to $149,999 TIMING 52 53Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 3 Taking Action Housing StaffACTION ITEM This strategy recommends specific programming that includes significant management responsibilities, and actions that will produce affordable housing units whose ownership is likely to remain in the private sector. All of this comes with an administrative burden that will fall on the City. Program management is labor intensive, and the maintenance of an affordable housing supply in private hands requires someone to handle the ongoing compliance work. It is therefore recommended that the City appoint a Housing Manager to oversee these efforts. 2PRIORITY LEVEL OPPORTUNITIES IMPACTED IMPLEMENTATION STEPS TARGET MARKETS #1 Multi-Unit Rental Units with Inclusionary #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus Job Description • Identify reporting structure. • Describe responsibilities, which may include but not be limited to: • Managing the NOAH Preservation Program. • Ensuring compliance for privately held affordable rental and ownership units. • Evaluating proposals to the WRHF, and its programs, and working with other staff to make funding recommendations to City Council. • Working with other City staff, including legal staff, to craft housing-related provisions to development agreements and other legal documents as necessary to ensure compliance with affordability provisions. • Managing grant writing and resource development efforts for affordable housing activities. Recruitment and Hiring ALL YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TIMING Comprehensive Plan Update ACTION ITEM The City’s current comprehensive plan, Envision Wheat Ridge, was adopted in October 2009 and has served the City well. But much has changed since its adoption during the height of the Great Recession. Today, Wheat Ridge enjoys the benefits of a thriving Denver area economy with real estate values as a primary indicator. Combined with a gradual demographic shift toward households with higher educational attainment levels and higher incomes, the impacts on housing affordability have been magnified. A new comprehensive plan, tentatively planned to begin in 2023, offers the opportunity to reaffirm community support for affordable housing with outcomes that are measurable and achievable. Much of the work done for this project can and should be used to guide the housing components of the new comprehensive plan. 2PRIORITY LEVEL OPPORTUNITIES IMPACTED IMPLEMENTATION STEPS TARGET MARKETS Preliminary Scope and Solicitation of Consultants if Appropriate Determine a preliminary scope and issues of particular emphasis, if any. Project Scoping and Organization Finalize a scope of work, including schedule and any stakeholder or public engagement needs, and organize staff and consultants into a project team. Project Initiation Kick off planning process and communicate process and schedule to the public. Plan Completion and Adoption Move draft plan through adoption process, including public events, Planning Commission review and recommendation, and City Council approval. #1 Multi-Unit Rental Units with Inclusionary #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus ALL TIMING YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 54 55Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 3 Taking Action NOAH Preservation Program ACTION ITEM PRIORITY LEVEL OPPORTUNITIES IMPACTED Wheat Ridge is home to thousands of aging rental units that are affordable to renter households with incomes below $75,000 and even below $50,000. Age and quality are contributing factors to the relatively low rents. The City can overcome the dilemma of conditions and affordability by investing directly in private rental properties under the “gives” and “gets” approach. It is recommended that the City establish a program for naturally occurring affordable housing (NOAH) that provides grant funding for rental unit upgrades in exchange for preservation of affordable rents creates win/win outcomes. IMPLEMENTATION STEPS Identify Staff Resources A NOAH rehab program will come with an administrative burden, and proper staffing is a prerequisite for the undertaking to be successful (see Housing Staff on page 54). Identify Funding Sources It is envisioned that the the Wheat Ridge Housing Fund will support this program, premised on its establishment per the recommendations on page 51. The rehab program, however, may specifically be a good fit for CDBG or HOME funds from Jefferson County or future Colorado housing implementation funds as well. Design Program A program like this one requires careful design with many details to be worked out, including program budget with sources and uses, eligibility criteria, minimum standards for specifications, etc. Before the program can go live, these items and more must be addressed. Solicit Proposals for First Funding Round When the program has been designed and funds are ready to be deployed, interest must be solicited from local rental property owners. The City should issue a request for proposals with uniform application or proposal forms that property owners can fill out. #3 Preserve and upgrade existing affordable rental units Households with incomes below $50,000 TARGET MARKETS Households with incomes $50,000 to $74,999 2 Households with incomes $75,000 to $99,999 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TIMING Update Development Code and Zoning Map ACTION ITEM #1 The Wheat Ridge zoning ordinance and map have received minor piecemeal text and mapping updates on an as-needed basis over the past decade. The last major rewrite or update to the zoning ordinance was in 2001. Following the adoption of the comprehensive plan, the City should update the zoning ordinance and map to ensure that it is consistent with the comprehensive plan and other City-led planning efforts including this Strategy and Action Plan and the Lutheran Legacy Campus Master Plan and/or successor plans. 3PRIORITY LEVEL OPPORTUNITIES IMPACTED Multi-Unit Rental Units with Inclusionary IMPLEMENTATION STEPS TARGET MARKETS Preliminary Scope and Solicitation of Consultants if Appropriate Based on the results of the comprehensive plan, including policy direction and identified community priorities, determine a preliminary scope and areas of focus for the code update. Project Scoping and Organization Finalize a scope of work, including schedule and any stakeholder or public engagement needs, and organize staff and consultants into a project team. Project Initiation Kick off code update project and communicate process and schedule to the public. Code Completion and Adoption Move updated code through adoption process, including public events, Planning Commission review and recommendation, and City Council approval. ALL #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus TIMING YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 56 57Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT PART 3 Taking Action Exploration of Changes to Charter Limits on Height and Density ACTION ITEM Section 5.10.1 of the City Charter limits residential density to 21 dwelling units per acre and restricts the height for residential structures to thirty-five feet (35’) while nonresidential structures are allowed a maximum height of fifty feet (50’). There are areas within the city where these restrictions do not apply. As described in this document, residential heights and densities beyond the Charter limits are important contributors to facilitating new housing development in a land-constrained community, like Wheat Ridge, and enabling new affordable housing opportunities. If community sentiment reflected in a new comprehensive plan suggests that Wheat Ridge confirms its commitment to affordable housing, is accepting of a greater amount of new development, including new housing at heights and densities above those allowed citywide in the Charter, the existing limits will merit reexamination. 3PRIORITY LEVEL OPPORTUNITIES IMPACTED IMPLEMENTATION STEPS TARGET MARKETS Complete update to the comprehensive plan The comprehensive plan should provide community-supported direction on Wheat Ridge’s vision for development. Establish Charter Commission with at least the following questions: -Should the Charter control limits on height and density instead of the city’s code? -If so, should the limits, or the geography to which they apply, be changed? Commission Findings and Recommendation The Charter Commission should develop a report including its analysis, findings, and recommendations for public consideration. Potential Ballot Question If the Charter Commission recommends changes to the Charter, a question should be drafted for the next appropriate election. ALL #2 Attached Ownership Units with Inclusionary #4 Lutheran Legacy Campus Multi-unit Rental with Inclusionary Attached Ownership with Inclusionary INCLUSIONARY INCLUSIONARY #1 Multi-Unit Rental Units with Inclusionary YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TIMING Update Affordable Housing Strategy and Action Plan ACTION ITEM Prepared by czbLLC NOVEMBER 2022 3PRIORITY LEVEL OPPORTUNITIES IMPACTED As the data and analysis in this document illustrate, housing market conditions can shift quickly. A number of circumstances affecting the assumptions within and implementation of this strategy are likely to be different within a few short years. It is therefore recommended that the City of Wheat Ridge update this document five years from its adoption. Preliminary Scope and Solicitation of Consultants if Appropriate Determine a preliminary scope and issues of particular emphasis, if any. Project Initiation Finalize scope of work and begin analysis. Analysis and Strategy Completion Present findings and recommendations and consider City Council adoption. IMPLEMENTATION STEPS #1 Multi-Unit Rental Units with Inclusionary TARGET MARKETS ALL #2 Attached Ownership Units with Inclusionary #3 Preserve and upgrade existing affordable rental units #4 Lutheran Legacy Campus TIMING YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 58 59Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Appendix 60 61Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Affordable Housing Tools Analysis Matrix Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Use of vacant publicly owned real property The cost of land is generally about one-third of total development costs. When publicly-owned land can be contributed for affordable housing development, at a cost below its market value, the savings can be passed on to future residents. Wheat Ridge does not have any City- owned land available for this purpose. YES Program to subsidize or otherwise reduce local development review or fees Fees are one cost of many in development. Reducing fees can lower total development costs with savings passed on to future residents. In most cases, development fees are not a major percentage of costs and reducing them provides marginal benefit for affordability. In Wheat Ridge, city-imposed development fees are less than $10,000 per unit on total development costs that are generally at least $250,000 per unit. Water- and sewer- related fees are not directly controlled by the City. Waiver or reduction of development fees may contribute to improving affordability, but on their own provide minor affordability benefit. YES Expedited review process for affordable housing Expedited development review process for acquiring or repurposing underutilized commercial property Expediting review processes entices developers to take on projects by making it easier to move from project application to project approvals and ultimately to construction. It can also decrease project costs if fewer hours are required from engineers, architects, and lawyers who support developers through review processes. While speed of review processes is a net positive for developers, the real key is predictability of process. Uncertainty and unpredictability make it difficult to know what to plan for or how long things will take. The potential for negative domino effects resulting in delays dissuades developers from the already inherently risky development process. Wheat Ridge should work toward fast and predictable review processes but, if it must choose only one, it should focus on predictability. YES APPENDIX Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Density bonus program Density bonuses are an incentive that allow developers extra market- rate units above and beyond what the base zoning allows, in exchange for the inclusion of affordable housing units. Density bonuses have a mixed record of success, because achieving the bonus often means building to heights requiring much more expensive steel frame construction. The increased expense offsets the bonus benefit to the developer. Between market demand and community tolerance for height, Wheat Ridge is likely to remain a city where prevailing building heights will not support density bonuses. (Also see later discussion of Inclusionary Housing.) YES Sub-metering of utility charges for affordable housing projects In most multi-unit buildings, utility costs such as water, sewer, electric, and gas are common to the building and the operator’s costs are passed on to tenants via the rent. Sub- metering each individual unit allows the tenant to control the usage and remove the utility cost from the rent. Cutting back on utility usage then becomes an option for a tenant hoping to reduce costs. The City of Wheat Ridge is not a utility provider, including for water and sewer, so this would be an issue requiring engagement by other entities. It is plausible that sub- metering could help a tenant pay less for utilities than would otherwise be included in the rent, but in most new projects where utilities are included in rent, the general uniformity of unit sizes and household sizes, and the correlation of rent with both of those, should mean that sub-metering would not reveal much of a meaningful difference in utility usage between a commonly-metered or sub-metered unit, and thus would not result in much cost savings. YES Subsidies for infrastructure costs incurred by affordable housing development Infrastructure costs are project- specific, depending on the type of project, its setting, availability of existing infrastructure, etc. In cases where a project may need substantial new or upgraded infrastructure, the costs can be substantial. The City of Wheat Ridge has powerful tools, such as Urban Renewal and Tax Increment Financing, that allow it to assist projects under certain circumstances. It could also provide financial subsidies from general funds or dedicated housing funds. Either of these options could be critically important in supporting projects on a case-by-case basis, depending on needs. YES 62 63Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Granting duplexes, triplexes, or other appropriate multi- family housing options as a use by right New single-unit detached houses in any strong market are generally not considered to be affordable options. Other housing types, from duplexes to high-density multi-unit rental are assumed to have lower per unit development costs resulting in less expensive options than single-unit detached houses. Duplexes and triplexes are allowed by right across much of the city already, and there are a variety of sites across the city where townhouses and multi-unit properties are also feasible. Given land and construction costs, housing development in Wheat Ridge’s land-constrained setting generally becomes feasible at 15 units per acre, and the zoning designations within which this is achievable are the mixed-use districts. Substantially increasing available housing opportunity sites likely means expanding the areas covered by mixed-use districts. YES Classification of a proposed affordable housing development as a use by right when it meets density and design standards of a given zoning district Zoning does not make any use distinctions between affordable housing and market-rate housing, nor can it. So long as a community has one or more zoning districts where housing can be built, affordable housing projects should be subject to all the same rules as market-rate projects. Wheat Ridge development code does not discriminate against affordable housing. Affordable housing must meet density and design standards just as market-rate projects must. YES Authorizing Accessory Dwelling Units (ADU) as a use by right in single- family zoning districts ADUs are small secondary units on an otherwise single-unit detached property. There is no guarantee that a newly constructed ADU will meet a local definition of “affordable.” It is, however, one method of increasing the housing supply on existing land. ADUs are allowed in all residential, agricultural, and mixed-use neighborhood zone districts as an accessory use to a single-unit home. ADUs are newly allowed in Wheat Ridge, so it is too early to know how widely they might be adopted and built, how many will be used as long- term vs short-term rentals, and what their rents might be. YES Allowing (or better supporting) Planned Unit Developments (PUD) with integrated affordable housing Planned Unit Developments are a tool to facilitate development projects that are difficult to achieve under regular zoning but which the community wants to approve. There may be some projects that include affordable housing that would benefit from such an approach, depending on the regulations in the community. Wheat Ridge already uses planned developments in different forms. Planned residential development (PRD) and planned mixed-use development (PMUD) designations are used to help facilitate housing projects that otherwise are difficult to achieve under base zoning districts. YES APPENDIX Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Allowing (or better supporting) the development of small square footage residential unit sizes Because each square foot of floor area in a unit comes at a cost, shrinking the square footage in a unit can decrease its cost. In recent years, some cities have allowed the construction of what are called “micro-units” which may be as small as 200 square feet, and sometimes offer more common amenities than are found in standard rental properties. The production of such small units assumes a market that will pay to live in them. Small units will be difficult or impossible to achieve anywhere except in the Charter exception areas because they inevitably will exceed the 21 DUA limit. Small units, however, face a potential marketability challenge despite the relative affordability that may result from their small size. A single person can live in a unit meant for three, but three people will struggle to live in a unit built for one. Very small units do not have the broadest potential market. Developers, owners, and financiers of rental housing know this and factor it into their decision making. Land use controls are but one factor in determining whether such projects get built. Another is whether the project represents an acceptable risk for the private sector. YES Lessened minimum parking requirements for new affordable housing The cost of a parking spot can be tens of thousands of dollars per unit. In addition, reducing the space used for parking may allow for additional density that helps lower the cost per unit, with savings passed on to future residents. Parking requirements in mixed-use districts, where affordable housing opportunities are most likely to be found, are one space per unit. In locations and situations where transit service is deemed to be sufficient for reducing parking further, the City should explore possibilities for doing so. YES Creation of a land donation, land acquisition, or land banking program The cost of land is a substantial portion of total development costs. Any suitable land for affordable housing that can be procured for less than market value helps lower development costs and the savings can be passed on to future residents. If the City finds itself in a situation where it can somehow acquire and bank land for future housing development, it would be wise to consider doing so. These opportunities may be few and far between, however, given the value of land in the region. YES 64 65Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT APPENDIX Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Calibrate and Allow Sufficient Densities for Affordable Opportunities In expensive markets where land costs are a major factor in housing production and affordability, simply increasing densities does not always solve affordability problems. Certainly a 2,000 square foot house on a quarter acre lot will almost always cost more than an attached townhouse, but that does not automatically make the latter affordable to the desired target markets. That said, understanding local development conditions can help local governments align land use policy and regulations with their desired affordable housing goals, especially when other tools are used to augment land use approaches. Under the prevailing development conditions—cost of land and construction costs are the main culprits—at of the time of this report, it is challenging to develop housing in Wheat Ridge below 15 dwelling units per acre (DUA) that can approach affordability for households with incomes below $150,00. As the allowed units per acre increases, the necessary economies of scale begin to take effect and make entry level ownership options more feasible. These densities are only achievable in the city’s mixed-use zoning districts, some of which only exist in parts of the city that are not subject to City Charter’s limits on height and density. Those particular districts, including MU-C and PMUD, have recently accommodated the City’s first new market-rate rental units since 1980, which are largely the same building type that a fully affordable rental housing project would also take. The mixed-use district that is largely outside the exception areas, and thus subject to Charter limits, is MU-N, and it has been highly successful in facilitating new townhouse development. czb’s analysis suggests that these kinds of projects—attached ownership units at or above 15 DUA and rental projects above 20 DUA—offer development economics that enable inclusionary housing outcomes. NO Tool General Applicability Applied to Wheat Ridge Included in HB 21- 1271 Inclusionary Housing Inclusionary housing is a legal mechanism under which developers are required to set aside some percentage of new housing units as affordable, as defined by the regulating jurisdiction, with some means of alternative compliance made available. The alternative means is usually a “fee in lieu.” If the inclusionary housing requirements are calibrated properly, meaning they are not overly onerous, projects of a minimum size can usually meet the requirements while maintaining financial viability for the developer. czb’s analysis suggests that a 10% set aside is likely feasible so long as the qualifying incomes, and the matching affordable rents, are not set too low. To be more specific, the affordable rents should not be set much below those affordable to a household with an income at 80% of the area median. For ownership units, a 10% set aside should be paired with affordability targets in the range of 100-120% of the area median. In a strong housing market with high land values, like that of the Denver region, inclusionary housing can be a valuable tool to get the private sector to produce some affordable housing. When combined with zoning changes that create more potential value for landowners and developers, inclusionary housing can become even more workable. NO Financial Subsidy Boiled down to its bare essence, affordable housing work is about filling the gap between what housing costs to provide and what a household can afford to pay. This requires, in some way, shape, or form, subsidy flowing from somewhere, and this is almost always from the public sector. This is the reason for public housing, Low Income Housing Tax Credits, and Housing Choice Vouchers, to name a few subsidy tools. Wheat Ridge could raise and deploy financial capital for a number of housing initiatives, including but not limited to: direct assistance to housing developers, grant and/or loan funding for naturally occurring affordable rental properties in need of upgrades, direct assistance to renters or first- time homebuyers, and land purchases for future affordable housing opportunities. Potential sources of revenues include, but are not limited to: surplus or one-time funds, housing related grants from other levels of government, general revenues, and impact fees. YES, but only for infrastructure related to affordable housing development. 66 67Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT APPENDIX Denver-Aurora-Lakewood, CO MSAFY 2022 Income Limits FY 2022 Income Limit Area Median Family Income FY 2022 Income Limit Category Persons in Family 1 2 3 4 5 6 7 8 Denver-Aurora-Lakewood, CO MSA $117,800 Very Low (50%) Income Limits 41,050 46,900 52,750 58,600 63,300 68,000 72,700 77,400 Extremely Low (50%) Income Limits ($)* 24,650 28,150 31,650 35,150 38,000 40,800 43,600 46,630 Low (80%) Income Limits ($) 62,600 71,550 80,500 89,400 96,600 103,750 110,900 118,050 Note: Jefferson County is part of the Denver-Aurora-Lakewood, CO MSA, so all information pre- sented here applies to all of the Denver-Aurora-Lakewood, CO MSA.This page intentionally left blank 68 69Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT This page intentionally left blank This page intentionally left blank 70 71Wheat Ridge Affordable Housing Strategy and Action Plan Wheat Ridge Affordable Housing Strategy and Action Plan DRAFT DRAFT DRAFT Prepared by czbLLC NOVEMBER 2022