Unless there is an influx of affordable housing opportunities in Centennial’s future, homeownership rates will likely decrease and in-commuting will increase, according to Root Policy Research, a Denver-based community planning and housing research firm.
As part of its ongoing housing study and effort to address housing issues, the city council narrowed down the list of affordable housing strategies it will consider implementing during its November work session.
Of the nine strategies presented to council, two were removed from further consideration: incentivizing landlords to lower prices of existing units and establishing a dedicated funding source to subsidize infrastructure costs.
The remaining seven strategies, including expedited review, inclusionary zoning and authorizing accessory dwelling units, will be researched more by the city’s housing working group.
This research will be presented to the Planning and Zoning Commission in December, and again to city council on Jan. 17 for evaluation.
What is the housing study?
Centennial’s housing study, formally called the “Housing Study and Policy Development” project, is funded through a planning grant program established by Colorado House Bill 21-1271.
In 2021, Centennial applied for the planning grant and was awarded $200,000 by the Colorado Department of Local Affairs.
The first phase of the study was a housing needs assessment that involved collecting data and community input on housing in Centennial.
According to the assessment report, completed in July, the city’s homeownership rate is estimated to decrease from 82% in 2020 to 77% in 2025 unless there is an increase in ownership affordability.
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Home values in Arapahoe County have increased by nearly 400% since 1980, the report stated, meanwhile average household income growth has increased by 236%.
The median gross rent in Centennial increased by 11% from 2017 to 2020.
“If the residential development in the city does not keep up with the demand for housing in the city, prices will continue to increase,” according to the report, which also noted a constrained housing market negatively impacts economic growth.
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To help address housing needs, the executive summary report recommended Centennial increase its production of housing, accommodate more “missing middle” housing types like condos, and target affordable homeownership and rental strategies toward what Centennial workers can afford.
“If the city’s workers cannot be housed in the city, in-commuting will increase, and homeownership will decline,” the report stated.
Assessing housing affordability strategies
Following the housing needs assessment, the working group began assessing nine housing strategies the city council selected.
According to the Community Housing Strategies Report, through HB 21-1271, the Colorado legislature encouraged cities to look at 14 strategies which aim to promote affordable housing development.
From that list, Centennial City Council identified eight strategies as well as one council-initiated strategy for consideration.
“We picked ones that we thought might work for Centennial. And now, we’ve done a little bit more research and we want to check in and see if that is still the case,” said Melanie Ward, the city’s manager of development foresight and infrastructure readiness.
The goal is to ultimately narrow down the list to four strategies, said Elizabeth Garvin, a member of the working group who works with Clarion Associates, one of the consultants for the study.
“So, this isn’t the last time we’ll have this conversation. This is kind of an initial culling of the strategies and getting feedback from you guys,” Garvin said to council members.
The Department of Local Affairs will offer additional grant funding for affordable housing in 2023, according to the Community Housing Strategies Report.
To qualify for this funding, the city will have to adopt at least three strategies.
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The eliminated strategies
The two strategies the council removed were those the working group did not support.
The first was incentivizing current landlords to lower prices of existing units. Garvin said this strategy could be done by offering direct payment to the landlord to lower rents on some units, with the goal of making them more affordable.
There are a lot of complexities to this strategy, such as deciding how to administer payments and who to offer payments to, explained working group representatives.
“I think if the city decides to go forward with this, you would be, kind of, designing your own program,” Garvin said.
Councilmember Mike Sutherland said he was concerned how the city could establish a steady funding source to provide such incentives.
“If the funding dries up from grants, or money from the federal government or the state government, then the city (is) going to be left with a program that is unfunded — or that we have to make up for it somewhere else in our budget, or think about tax increase,” he said.
As an alternative strategy, the working group recommended the city offer educational assistance rather than subsidies to landlords to reduce rent.
The group found there are “a lot of state and federal programs out there that provide emergency rental help or rental help,” Garvin said.
“Working group thought it would be helpful to think about creating an educational program that can help Centennial residents who need to access that state or federal money — help them work through accessing it,” she said.
According to the working group’s presentation, out of 28 community survey responses, 64% said Centennial should create a rental assistance program, and 60% said the city should create a rental assistance information program.
The second strategy removed from the list is establishing a dedicated funding source to offset or pay for some of the infrastructure costs associated with an affordable housing project, such as road or sewage infrastructure.
Since Centennial works with a lot of partner agencies, the one thing left within the city’s control is roads, Garvin said, meaning the one infrastructure cost the city could offset is road infrastructure.
“In (the) working group, the next question was: Is that enough offset for however many projects we’re talking about, which may not be a ton of projects in Centennial, for what the city would need to go through to get a funding source in place?” Garvin said.
Establishing a funding source could potentially require the adoption of a local tax or fee, Garvin said, which would be a substantial amount of upfront work for the city.
Recommending an alternative, the working group proposed site design flexibility instead of public payment for infrastructure.
For example, perhaps the city could offer some flexibility on how wide the roads have to be on a development, Ward said, potentially reducing the road infrastructure cost for the developer.
According to the presentation, out of 27 survey responses, 56% said Centennial should explore funding options for affordable housing project infrastructure. Approximately 44% said the city should consider flexible infrastructure options.
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Seven remaining strategies
With the elimination of two strategies, the working group will continue researching the seven remaining strategies:
- Expedited review for commercial conversion
- Expedited review for affordable housing
- Subsidize/reduce application fees
- Density bonus program
- Inclusionary zoning
- Accessory dwelling units
- Land donation, acquisition and banking
Consideration of location is important, working group representatives noted. Some of the strategies may be more effective in specific areas of Centennial, rather than a one-size-fits-all approach.
For example, permitting accessory dwelling units based on neighborhood preference, or allowing expedited review of commercial conversion near transportation facilities.
“Some of the strategies are probably more effective when they’re grouped, so you might think about doing fee waiver and expedited review together,” Garvin said. “If inclusionary zoning goes forward, (it) will probably work best with density bonus, expedited review and parking reductions.”
Expedited review and fee waivers
Two of the seven remaining strategies focus on an expedited review process.
The first is expedited development review for affordable housing. The goal is to process affordable housing development applications faster to help minimize project delays and costs.
Ward said the working group held interviews with developers and received feedback that the city review process “was a major barrier to building affordable housing, especially for projects that were funded by grants.”
Grant-funded projects often have short timelines developers need to meet, Ward said.
Some ways this strategy can be implemented are: creating an administrative review process, switching from public hearings to public information, and allowing affordable housing projects to be approved quickly with less negotiation, according to the presentation.
The second strategy is expedited development review for converting underutilized commercial and office property to a project that includes affordable housing.
Garvin said there are some significant cost barriers to these conversion projects.
“Working group didn’t see a downside to doing this, but also didn’t see it as, really, something that’s going to jumpstart a lot of project work,” she said about the strategy.
Out of 48 community survey responses, 50% said Centennial should not allow affordable residential developments that meet all of the zoning requirements to be considered administratively.
In another survey, out of 41 responses, 49% said Centennial should not create an option for expedited review of qualifying affordable residential developments, while 51% supported expedited review with some restrictions.
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Sutherland said subsidizing or reducing city application fees could be a “pretty big hit on the city’s revenues” and questioned how much the fee reduction would promote affordable housing.
Building off his comment, Mayor Stephanie Piko said a huge amount of cost for developers is reduced by an expedited review. However, it’s complicated because it also raises questions about public input and setting design standards, she said.
Councilmember Richard Holt asked how an expedited review process would affect the ability for the public to weigh in on proposed developments.
Garvin said public input would come at the front-end of the process to establish standards for expedited review.
“The public would get to say, ‘These are the regulations we want.’ And then you would probably switch to some sort of informational meeting,” Garvin said, noting some communities allow written comments before projects are approved. “There are still places in there to have a conversation about the project.”
“Personally, I think there’s a lot of value in asking for that public feedback earlier in the process rather than when we’re at the end, at that public hearing,” Ward said.
Holt expressed concern about reducing public input opportunities and said he wants to discuss this further if the city council decides to go down this road.
“I am not a big fan of cutting the public off just to make things easier,” he said.
Density bonus and inclusionary zoning
The density bonus strategy allows developers to build more housing on a property than normally would be allowed, as long as the development includes a certain amount of affordable units.
These bonuses can include permitting a larger building height, reducing the required number of parking spaces or permitting a larger number of dwelling units in a building.
This strategy is often used in conjunction with inclusionary zoning, a strategy that aims to create mixed-income communities and increase the amount of affordable housing, Garvin said.
Inclusionary zoning works by requiring that some percentage of affordable housing be included in new residential development.
“There are both mandatory inclusionary zoning programs and voluntary inclusionary zoning programs,” Garvin said.
Councilmember Don Sheehan expressed concerns about whether requiring or incentivizing some units in a building to be priced lower could result in developers raising the prices of the other units in the building.
Garvin said the working group will look further into that and share information with the council.
Out of 125 community survey responses, 88% supported inclusionary zoning in some circumstances, while 12% were against it.
Accessory dwelling units and land banking
Accessory dwelling units are defined in Centennial’s housing study as “small secondary residential structures located behind the primary house or within an existing house.” These units are also referred to as “secondary dwellings,” “granny flats” and “mother-in-law apartments.”
Out of 249 community survey responses, 51% expressed support of allowing accessory dwelling units in Centennial and 19% expressed support with some reservations.
The land banking strategy involves establishing a local government program that can buy, acquire and hold land for later development as affordable housing.
Typically, it is not the city council doing this. Rather, the council will “set up somebody who’s a land bank,” Garvin said.
“In (a) general concept, land banking is a way that you can start knocking down one of the biggest costs of development, which is the cost of land,” Garvin said.
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Community input
As the city council members and members of the Planning and Zoning Commission review these strategies, residents, too, can review the housing study and its progress so far by visiting the city’s website: centennialco.gov/housing.
The project team can be contacted by emailing housing@centennialco.gov.
Those interested in contacting members of Centennial City Council to voice their opinions about housing strategies can email or call their representatives. Their contact information is listed online at centennialco.gov/Government/Mayor-Council/Elected-Officials.
Residents who are unsure which of Centennial’s four districts they live in can use the city’s property search website to find out: centennialco.gov/Online-Services/Property-Search.
Community members can also attend Centennial City Council’s general meetings and voice their opinions during the public comment portion of the meeting.