Following a marathon night of legislative negotiating, the Littleton City Council voted unanimously Nov. 1 to approve a new policy that both mandates and incentivizes affordable housing for new developments.
The Inclusionary Housing Ordinance, or IHO, represents a major policy breakthrough for a council that has spent years studying and debating remedies to the soaring cost of housing. According to a 2017 housing study, the city is estimated to need more than 1,000 more units at rents below $635 per month to keep up with demand and has an overall deficit of 6,5000 homes.
Though Littleton joins a list of five other metro area cities with similar laws, for Littleton’s neighbors in the south metro region — including Englewood and Centennial — it is a first.
“We’re making history in Littleton,” said District 4 Councilmember Kelly Milliman. “Hopefully, we’re setting the stage for other communities to follow our footsteps.”
Under the IHO, set to go into effect next week, all new residential developments in the city with five or more units will be required to make at least 5% of those units affordable based on area median income (AMI) data. For rental units, that is set at 60% AMI while for-sale units are 80%.
For an individual, 60% AMI represents a yearly income of about $42,000, while for a family of four it represents $70,000, according to Kathleen Osher, the city’s director of community development. An AMI of 80% for an individual represents an income of $62,000 and $89,000 for a family of four, Osher said.
If developers do not include affordable units, the IHO will levy hundreds of thousands of fees against them to be paid to the city that can then be used on other affordable housing-related projects. The fees are based on the total cost of development and can reach as high as 75% of that cost, though some fees were dramatically reduced for certain developments already in the city’s review pipeline through a late amendment to the policy.
Another key prong of the law is pushing developers to go beyond the 5% mandate to build even more affordable units in exchange for a host of incentives. Depending on the size of the project and amount that is affordable, developers could see a 25% to 35% reduction in parking requirements, 50% reduction in open space requirements on the site, 15% increase in units that can be built per acre, reduction of neighborhood meetings from two to one and an expedited review process from about 12 weeks to 10.
Concerns and praise from developers, residents
Despite these offers, some developers and home builders voiced concern over the timing of the policy, suggesting to council members they were not aware of the law’s specifics and how soon it would be in effect.
“This dramatic change to the requirement for residential developments is being implemented extremely quickly with little time for the market to adapt or respond,” said Tarah Bailey, who represents developers Evergreen and Toll Brothers. She added the city needs an abundance of all types of housing “not just affordable housing.”
Tyler Carlson, a manager for Evergreen, said the IHO would force renters to pay higher costs to “subsidize their neighbors” who live in more affordable units and urged council members to put a pause on the policy debate.
Morgan Cullen, director of government affairs for the Home Builders Association of Metro Denver, said the IHO could stymy new developments with its rules and regulations, adding that any “additional affordable units required by this ordinance will not be built if developers and builders decide that Littleton is not a suitable place to invest in the future.”
Littleton resident Lynn Christensen also opposed the IHO but for different reasons. “In theory I support an inclusionary housing ordinance that would provide affordable and attainable housing options,” she said, “but what I don’t agree with is the way that it would be done.”
Christensen, a frequent critic of large-scale housing developments in the city who has made several attempts to undo the housing plan approved for the Aspen Grove shopping center, said the myriad of incentives under the IHO threaten the environment, traffic and community character of the city.
District 1 Councilmember Patrick Driscoll echoed developers’ concerns, and said, “when these builders are spending thousands upon thousands, maybe upwards of millions of dollars, to get these projects off the ground and we throw something like this at them it really affects their bottom line.”
Still, several Littleton residents endorsed the IHO and urged council to move forward on the policy. Ken Ayars, who also served with the League of Women Voters for Arapahoe and Douglas counties, said “creating more affordable housing is a critical need” in the city.
Eric Veith, a development associate at Gables Residential who also sits on the city’s housing task force, said the IHO is meant to “strike a balance between serving the needs of our community’s lower-income residents and the needs of our city as a whole to continue to support housing production.” He urged council’s support for a policy that, even imperfect, would spur needed development for both affordable and market-rate homes.
Corey Reitz, executive director for Littleton’s housing authority — South Metro Housing Options, said, “while there is a need for all types of housing, the need for affordable housing is especially high.”
Compromises lead to unanimous vote
The comments led to more than an hour of debate between council members who grappled with what some described as a “tough” vote.
At certain points, it appeared some council members were on the verge of pulling their support, with District 2 Councilmember Jerry Valdes saying “there’s just too many holes” in the IHO as originally written and At-Large Councilmember Pam Grove voicing concern with the swath of incentives for developers.
Driscoll attempted to halt the vote by postponing further debate until February, citing a need to give developers more time to digest the policy, but a majority of council members succeeded in continuing conversations. A key concern for Driscoll is the impacts the IHO would have on developers whose plans were already approved or submitted to the city for review.
Multiple efforts to amend the policy, some of which were defeated and some which succeeded with a council majority, led to a grandfathering of several projects currently in or preparing for city review — including Aspen Grove and Riverpark in southwest Littleton and Columbine Square in northwest Littleton.
Taken together, more than 2,500 proposed housing units will now be subject to the IHO, presenting the potential to secure at least 125 affordable units under the law.
But amendments also allow for a 75% reduction in the fees developers of those projects would pay should they refuse to build any affordable housing, a compromise struck between council members who sought to maximize the IHO’s potential while easing the burden on developers already eyeing the city.
Mayor Pro Tem Gretchen Rydin said she understood other council members' umbridge with the extent of some of the incentives, but added: “These are people and families that are in those structures, and that for me is worth a sacrifice.”
District 3 Councilmember Steve Barr said he is “not under any impression that the IHO is going to solve housing affordability in Littleton or south metro Denver,” but that it provides a critical tool for addressing the crisis.
Littleton's council prior to the IHO approved $1 million in federal COVID-relief funds for housing and officials said the city has applied to receive up to $3 million for affordable projects under a state grant created last year. That is in addition to the potential creation of an annual $300 million state fund for affordable housing should voters approve it this election. Littleton council members last month unanimously endorsed the proposal, known as Proposition 123.
“This is going to be a long and slow and painstaking process,” Barr said. “This is a good starting point, but I think the work of us as a council is not going to be done.”