In October 2022, I participated in an Urban Land Institute Colorado walking tour in Denver’s Capitol Hill neighborhood exploring different types of affordable housing.
The Capitol Hill neighborhood is interesting to me because it is made up of so many types of housing in close proximity to one another: multimillion dollar homes, duplexes, small and large apartment buildings, condominiums, and rowhomes. Very few historic neighborhoods offer a melting pot of housing options like Capitol Hill.
My biggest takeaway from the tour was that affordable for-rent housing comes in all shapes and sizes and definitely does not just include low-income housing tax-credit subsidized (“LIHTC”) real estate developments.
One of the stops on our tour was an old single-family mansion that had been converted into a multi-unit apartment building. In Capitol Hill there are a large number of older “market-rate” apartment buildings and converted single-family mansions that offer reasonably priced apartments for rent. Of course, you have to take the term “reasonable” with a grain of salt—it is 2022 and we are talking about rent in Denver, Colorado, one of the nation’s most desirable cities. That said, if you look at Colorado Housing and Finance Authority’s (“CHFA”) area median income table and related maximum rents for certain CHFA programs, you may be surprised to learn that the maximum monthly rent permitted for a LIHTC one-bedroom apartment unit in Denver for someone earning 60% of Denver’s area median income (“AMI”) ($49,260) is $1,319. Many of the market-rate older, smaller apartment buildings and converted mansions in Capitol Hill charge rents similar to CHFA’s maximum rent. Similarly, many “mom and pop” owners of condominium units in Capitol Hill, who choose to rent their units out, elect to offer their units for rent at similar price points–valuing good tenants and less turnover over higher monthly rents which tends to result in more turnover (and more landlord headaches). You can look at Zillow to see a list of current Capitol Hill one-bedroom apartments for rent for $1,400 or less per month. The results are a pleasant surprise.
Another unique market-rate affordable housing option we explored on our tour was an accessory dwelling unit (“ADU”) located in the backyard of a single-family residence. Click here to see some pictures of this amazing ADU. This specific ADU was designed and built by ADU4U. What I think is so unique about ADUs like the one we toured is that they can offer a market-rate affordable housing option while also offering supplemental income for a family’s “side hustle.” I would love to see more ADUs built throughout the greater Denver area. While I have some concerns that owners of ADUs may opt to list them on short term rental websites like Airbnb, instead of offering them as long-term rentals, I think a lot of ADU owners will find long-term rentals more appealing from safety and management standpoints.
On our tour we were able to walk through the newly completed Capitol Square apartment building located at 13th Avenue and Sherman Street. Capital Square was developed by Mile High Development and Brinshore Development, and is a LIHTC development offering apartments for rent to persons who earn between 30% of Denver’s AMI ($24,630) and 80% of Denver’s AMI ($65,680). What was so impressive about this development (besides its awesome location) is that the building’s finishes and community common space (including an amazing rooftop balcony, parking garage, and recreational room) rival those of brand new market-rate developments. The pictures in the link above do not do this development justice.
While the future of the housing market feels so unknown to me right now, this walking tour was a welcomed breath of fresh air reminding me that affordable housing options in desirable neighborhoods do exist. I would love to see the real estate industry pay more attention to historic neighborhoods like Capitol Hill for influence and examples on how to design and build the successful neighborhoods of tomorrow.