A partnership with two real estate nonprofits is allowing a Denver developer to build at least 86 condos in his old neighborhood that will give people earning moderate incomes a chance to own a home steps from the galleries on Santa Fe Drive.
Developer Jeff Shanahan, who grew up in a family of teachers, hopes educators will be among the residents of the Inca Commons condominiums, expected to be ready for sale in late 2020. The condominiums will replace an old warehouse and garage at 801 West Sixth Avenue that has been on the market for some time. Shanahan, who used to live nearby, said he’d been keeping his eye on the Lincoln Park plot, awaiting the right time.
On Wednesday the Urban Land Conservancy announced it had purchased the 18,000-square-foot site for $1.8 million and was working with Shanahan Development LLC and Elevation Community Land Trust to create a mix of commercial space and a total of 92 for-sale condominiums. The site is zoned for five stories.
Elevation is subsidizing the 86 affordable condominiums and expects to sell them for less than $200,000 each. A report on November from the real estate company RE/MAX put the median sales price of a Denver metro home at $390,000, up 5.41 percent from November 2017 in a city where the cost of living has been outstripping wages for years.
The income restrictions on buyers of the subsidized Inca condos target households earning $40,000 to $72,000 a year.
In her recent study of what a family needs to earn just to cover the basics in Colorado, researcher Diana Pearce calculated that a household of one adult, one preschooler and one school-age child in metro Denver would need $65,727 annually. Pearce, who directs the Center for Women’s Welfare at the University of Washington’s School of Social Work, added only four of the top 10 most common occupations in the Denver area have median wages above that level necessary to get by without government or philanthropic help — general and operations managers; business operations specialists; registered nurses; and accountants and auditors. Among those below the median were office clerks and retail salespeople. A first-year Denver Public Schools teacher can expect to start at around $43,000.
Shanahan counts 11 schools near what will be Inca Commons, including West High School. Denver Health’s main hospital is also nearby as is the Golden Triangle neighborhood, where luxury high-rises have been sprouting. Stefka Fanchi, Elevation’s president and CEO, said home prices also have been rising in the neighborhood around Inca Commons.
Rising home prices have built wealth, but from uneven starting points that reflect historic and stubborn inequity. A study by the real estate company Redfin found that the average home equity in Denver’s minority neighborhoods grew by 452 percent from $48,000 in 2012 to $217,000 in 2018. But the average in predominately white Denver neighborhoods started at $103,000 in 2012 and while it grew more slowly was still higher than in minority neighborhoods this year, when it was $250,000.
Shanahan said he hoped to help more moderate-income families move from renting to owning.
“There’s a lot of rental property going up. There’s a need for that,” he said. But “the goal here was to create equity for everybody,” he said.
Fanchi, who came to Elevation from Habitat for Humanity, said high house prices and a scarcity of condos have created pent-up demand for starter homes.
“There’s a rung missing on the ladder,” she said.
Under the land trust model, examples of which can be found across the country, homes are sold for less than they cost to build, making grants necessary. Homeowners can make a profit when they sell, but will still have to keep the price below market rates. In the case of Inca, once the condos are developed and sold initially, Elevation will take on the stewardship of the land in a trust, which makes it affordable for buyers now and for future buyers as the homes are resold. Elevation will operate a 99-year ground lease that is renewable for another 99 years.
“You have the opportunity to get into a home and in return you agree to pass that opportunity on to another family,” Fanchi said.
The six market-rate units and Elevation’s subsidies make it possible to sell 86 affordable condos, or 93 percent of the total. Elevation’s Fanchi said numbers were still being crunched and it might be possible for Inca Commons to be 100 percent affordable. Compare that with the affordable housing plan for River Mile, the development envisioned for what is now Elitch Gardens and its parking lots that got a City Council go-ahead earlier this week.
Rhys Duggan’s Revesco company envisions some 8,000 residential units as part of River Mile, which will also have commercial and recreational facilities. Of the 8,000 anticipated housing units, 15 percent are to be offered at below-market rates and most of those units will be rentals. Only rough calculations are possible because larger affordable homes will be counted as as many as 2.5 units. But it’s possible that only about 70 River Mile units will be available for sale below market prices. And the affordability at River Mile is guaranteed for only 40 years, compared to 198 for Inca.
In a statement welcoming the Inca project, Eric Hiraga, executive director of the city’s Office of Economic Development, said: “Given the shortage of condo development over the past decade, it’s especially exciting to see a project of this scale, with long-term affordability as a prime focus, anchoring in central Denver.”
Fanchi said that when it comes to affordable housing, “no one entity can really do it themselves.
“If we all come together in a coordinated and strategic way, we can make a change.”
Inca is part of the debut of Elevation, which formed earlier this year to expand land trust options across Colorado.
Inca “is a really exciting way to demonstrate the role that Elevation is going to play in our community,” said Christi Smith, the Urban Land Conservancy’s vice president of strategy and communications.
The conservancy, which has incubated Elevation, purchased the Inca property using the newly created Metro Denver Impact Facility. The revolving source of loan capital was created earlier this year for the Urban Land Conservancy in partnership with FirstBank, the Colorado Health Foundation, The Denver Foundation, The Colorado Trust and Colorado Housing and Finance Authority. The Inca purchase is the already third so far to tap the loan facility.
Updates a previous version of this story with figures from November housing report.