Affordability Solutions: Lessons from Denver

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We know that cookie-cutter approaches like rent control don’t work, yet more municipalities are embracing these misguided policies. Earlier this year, Oregon passed the nation’s first, statewide rent control regime and, more recently, New York passed a landmark deal to expand rent control protections. There are alternative solutions and our industry needs to do a better job of showcasing them.

To that end, I want to highlight Denver’s Lower Income Voucher Equity Program, also called LIVE Denver. The program is a two-year pilot program that brings together the City of Denver, private apartment providers and local employers in public-private partnership that connect vacant apartment stock with eligible renters while providing subsidies to bridge the gap between market rents and renters’ ability to pay.

We were lucky enough to have Mike Zoellner, managing partner at ZF Capital and mastermind of the program as well as Mark Brown, program coordinator for LIVE Denver, with us at the 2019 NMHC Research Forum in Denver this spring to talk about the program and its initial successes and challenges.

The Program’s Roots

Doug Bibby. Image courtesy of the National Multifamily Housing Council

Denver is a rapidly growing city. Housing is in high demand and prices are on the rise. While there is apartment inventory at the higher end of the pricing spectrum, there is little inventory to serve lower- and middle-income working individuals and families. The result is that companies, those both new to Denver and longtime city stalwarts, are starting to see how housing affordability might transform into an employment problem. Current employees are struggling to afford to live close to work while potential new talent is reluctant to relocate due to affordability fears.

Enter Zoellner and his idea for LIVE Denver. Despite its name, Zoellner and Brown say the program is not actually a voucher program. Instead, it’s a collaboration where the employee, employer and the city all contribute to the rent.

LIVE Denver targets households bringing in 40 percent to 80 percent of area median income. In Denver, there are 13,000 such households who are renters. These particular households spend more that 40 percent of their income on rent. This is where the public-private partnership comes in to fill the gap.

How It Works

A housing provider can list vacant units on the LIVE Denver website while also marketing them elsewhere. For each unit, LIVE Denver calculates a reasonable market rent. If the provider disagrees with the rent offered, they can work with the program coordinator or simply walk away, and the apartment will not be listed.

Once a participating employee picks a unit and successfully completes the property owner’s standard application process, it is a done deal. The program pays any amount of rent beyond 35 percent of the participant’s monthly income for two-years. The funding comes partly from the employer and partly from the city, with additional support provided by foundations.

To guarantee the best experience for both provider and participant, the program ensures that both units and participants meet certain qualifications. Aside from income requirements, participants must work at least 36 hours per week, be a resident of the city and work in the city. They are also required to complete financial coaching to identify financial goals beyond the two-year program.

For the provider, the unit must pass a quality and safety walkthrough as well as any complaint-based inspections during the program. In addition, the unit cannot already have subsidized rents or restrictions. Once the unit is approved, all that is needed is a simple addendum to their standard lease to account for the subsidized portion of the rent.

Incentives for All

Getting LIVE Denver off the ground was a challenge. While the program originally intended to reach 400 low-income and middle-income households, the pilot program will now be available for 125 households,. Moreover, there’s still a lot of work to do to get more households and employers participating in the program.

But LIVE Denver’s champions are optimistic because there so many incentives for all involved. It’s a win-win-win-win. The local government benefits from providing citizens with affordable housing solutions in a collaborative way, reducing their cost and maximizing benefits. Employers of established businesses like hospitals and hotels, meanwhile, can help keep valuable employees onboard by offering assistance amid a rapidly changing city economy. Moreover, businesses new to Denver can attract new talent by helping make relocation more feasible.

Apartment providers also stand to benefit. The program targets older Class A and Class B apartments located across the city. This means that owners of these apartments, who might be struggling to compete with new, luxury Class A apartments, can reduce vacancies while still receiving similar rents to what they would charge a non-LIVE Denver tenant.

I am excited not just for what the program can do in Denver but also for how it can be replicated in other cities facing similar affordability issues. Already, San Antonio and Charlotte are reportedly looking at similar models.

Despite a slow start, LIVE Denver is an example of a creative way to improve housing affordability, adapted to the local context and with minimal downsides, especially when compared to one-size-fits-all solutions like rent control.

Doug Bibby is president of the National Multifamily Housing Council.