Here’s why one developer says he quit building multifamily market rate apartments in favor of million-dollar houses

He says building market rate housing is too risky, too slow and too mired in bureaucracy.

1291-1235 S. Pennsylvania St. in Platt Park. Oct. 26, 2021.

1291-1235 S. Pennsylvania St. in Platt Park. Oct. 26, 2021.

Kevin J. Beaty/Denverite
kyle harris

Jon Roberts once boasted building market-rate homes families could afford at light-rail stops in Denver. With more than 115,000 newcomers in the city over the past decade and more coming in each day, attainable, dense housing is one fix to the affordable housing crisis, and Roberts was happy to do his part. But no longer. Now, he’s shifted his focus to $1 million houses and duplexes — and he’s not thrilled about the reasons why.

Building affordable housing is too risky, too slow and too mired in bureaucracy, he said.

Roberts built his first townhome project in 2016 at 1238 to 1246 Quitman. There were eight units — what are commonly referred to as “slot homes,” which are now banned in Denver. With a background in architecture, he wasn’t pleased with the aesthetics of the project, which were based on city-approved plans. But the timeline was reasonable and the projects were profitable. He started in March of that year and by mid-May 2017, the project was complete.

1238-1246 Quitman St. in West Colfax. Oct. 26, 2021.

1238-1246 Quitman St. in West Colfax. Oct. 26, 2021.

Kevin J. Beaty/Denverite

His second eight-unit slot-home project at 1277 Quitman Street took longer. He started in April of 2016 and wasn’t finished until February of 2019. His third, at 1274 Perry Street, took from May 2017 through February 2019.

What dragged so long? The city’s permitting process, Roberts said. The process for the first project took six months, the second twelve months and the third eighteen months. And he’s not willing to gamble on a longer and longer timeline.

“I can’t take that risk,” he said. “Developers can’t take that risk…The city makes those projects difficult.”

Even limiting himself to eight-unit builds wasn’t his dream. Hoping to bring attainable housing to more Denverites, he would have preferred building twenty-condo units, but because of construction defect laws at the time, his investors wouldn’t let him entertain the idea, fearing they would be sued if construction wasn’t up to snuff.

“I could have done sixty more attainable homes,” he lamented. In turn, the permitting process for single-family homes is considerably faster. “I can go get a permit on a million dollar home in six months.”

Citywide, that experience isn’t universal. These days, permitting for residential homes and commercial projects should take around four weeks, though new homes are currently taking six weeks, according to the Community Planning and Development website. In September, 82 percent of commercial reviews were being completed on time, while only 10 percent of residential reviews were. Issued permits, as a whole, are down 2 percent from 2020 to 2021.

The trouble for eight-home projects, Roberts said, comes from additional layers of review required in the commercial review process over the residential review process.

“Regarding permitting timeframes, I’m not sure what Mr. Roberts specific circumstance was, but in general, getting a building from design to doors-open takes time,” notes Laura Swartz, a spokesperson for Community Planning and Development, adding some of the factors that could stretch out the process. “New multifamily buildings are reviewed to ensure they meet building and energy codes as well as for traffic impact mitigation, parking, storm water drainage, sanitary sewer capacity, emergency services access, sidewalks, tree protection, and view planes, among other site-specific factors.

1268-1270 Perry St. in West Colfax. Oct. 26, 2021.

1268-1270 Perry St. in West Colfax. Oct. 26, 2021.

Kevin J. Beaty/Denverite

“With the passage of the voter-led Green Buildings Ordinance in 2017, new multifamily and new commercial buildings must also reduce their environmental impact by installing a cool roof and taking additional steps to benefit our neighborhoods, including offering green space or a green roof, significantly reducing energy usage or using renewable energy, or achieving a national green building certification,” she adds.

And all those additional steps slow things down, Roberts said. “The single-family homes where I’m moving towards, they don’t have those extra layers of review.”

But Swartz notes that these policies are in place for a reason.

“Codes like these are how the city ensures that what’s built in Denver continues to maintain a high quality of life for our residents,” she says. “While we strive for efficiency in issuing permits, we also ensure new construction is designed to the standards most people expect.”

For Roberts, a faster turnaround in permitting and inspection is less risky when he sets out to build a project. While the longer permitting and inspection process for his three projects didn’t cost him more in hard expenses, “time is money,” he said. And if the market turned during the building process, he worried he could end up selling the buildings for less than he spent on them.

“If the market changes, I can’t react fast enough because I’m sitting in permits or sitting in construction and waiting for permits,” he said.

Over the years, Roberts’s desire to make housing attainable has brought him to do policy work. He even ran as a Republican for the State Legislature in 2014.  After that, he served on the Legislative Policy Committee for the Colorado Association of Realtors for around five years and chaired the committee for some of that time. He currently chairs the Housing Subcommittee for the Colorado Association of Realtors, where he works on the affordable housing crisis.

“It’s just a passion of mine,” he said. “I think it’s a solvable problem. I think it’s a problem we don’t need to be dealing with like we are.”

His fixes: make it easier to build more multi-family housing, increase density, do away with single-family zoning statewide and strip back the regulations that add costs for developers.

Even as he builds larger houses, he buys standard-sized lots that once fit a single house and turns them into two-unit homes to make them more affordable for buyers — and profitable for him. But he can only do that if the zoning allows.

“I call it low-hanging fruit,” Roberts said of doing away with single-family zoning. “City Council and the Mayor, if they made it a priority they can get it done.”

This story has been updated with a clarifying quote from Swartz.

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