No Vacancy: Is it too Late for Stapleton to be Integrated?

The Stapleton Development Plan created a vision for Stapleton to be an integrated community and the affordable housing plan ordinance agreed to by Forest City provides a blueprint for achieving housing diversity consistent with that vision.  However, construction to date has been so far off of the goals of the affordable housing plan that it may be time to ask:  Is it even possible for Stapleton to fulfill its vision of an integrated community?

As we discussed in our last post, the City of Denver entered into a specific agreement with Stapleton's master developer, Forest City to achieve specific goals for ensuring a diversity of housing options in 80238.  The following graph shows the specific targets for housing in Stapleton outlined in that plan:

However, as of the end of 2014 the actual distribution looks like this:

It is pretty clear that Stapleton is well behind its projected goals for rental housing and affordable housing in the affordable housing plan. When you combine the current distribution of housing with the fact that over 60% of new construction of for sale units are for homes over $400,000, it is easy to see why Stapleton is in the top 1% of zipcodes in the nation in terms of education and median income. 

The market rate for sale vs. affordable and market rate rental housing distribution is important because it provides middle income and lower income families the opportunity to live in Stapleton.  

So why hasn't SDC and Forest City not kept up with the goals?  It's not because of a lack of demand for rental housing. The current rental vacancy rate in Denver is at near historic lows.  According to the Denver Post, Denver has a rental vacancy rate of only 3.9%.  Consequently, rents are shooting up with the average monthly rent at $1145.00.  At that rate, a household with an annual income of $50,000 per year will need to dedicate somewhere between 35% and 40% of their take home pay to housing.  

These numbers beg a pretty serious question - Can Stapleton even achieve the goals for rental housing and affordable housing?  One thing is for sure - if Stapleton is to reach the goals, new construction is going to have to change drastically. 

According to The Big Picture document on StapletonDenver.com the overall plan is for a grand total of 12,000 homes - both for sale and rental in Stapleton.  With a little over 7,000 homes completed, Stapleton is about 60% of the way to reaching their target. 

If Stapleton is to achieve the goals of the Affordable Housing Plan - future construction will need to look something like this:

56% of new construction has to be rental units and 33% market rate for sale if Stapleton is to achieve the housing diversity goals.  Given current trends, it is hard to believe that this is going to happen. 

There is clearly money to be made building apartments and it goes without saying that there is plenty of demand for affordable for sale and affordable rental.  So the question is, why hasn't SDC and Forest City worked to meet this demand? It may be time to ask if SDC and Forest City can achieve the vision for integrated housing in the Stapleton Development Plan or is it time to declare failure and consider a new goal? 

As always, 80238 welcomes your thoughts.  Also, feel free to follow our facebook page at: https://www.facebook.com/80238blog or on Twitter: @80238blog

Best Laid Plans: How Stapleton Became the 1%

As our first two 80238 posts have pointed out, Stapleton is in the top 1% of zipcodes in the country with regard to income and education and that Stapleton's demographics are in stark contrast to the surrounding Northeast Denver neighborhoods. So how did this happen in a community that was specifically designed to retain middle income families in the city of Denver and be integrated into the fabric of Northeast Denver?

One thing is for sure, it didn't just happen.  While the Stapleton Development Plan was just a plan, the management of the plan was and still is the responsibility of two primary actors, Stapleton Development Corporation (SDC) and Forest City, Inc. It has been the responsibility of these two organizations, one a public entity created by the City of Denver and the other a private company to serve as master developer.   The primary mechanism for creating the diverse community called for in the Stapleton Development Plan is Stapleton Development Corporation's authority to sell land to Forest City, that in turn would be sold to housing developers to build the homes that all Stapleton residents live in today.  Consequently, the diversity (or lack thereof) of housing in Stapleton is a direct result of the selling of land by SDC to Forest City and the extent that these exchanges have achieved the goals set forth in the plan.

The first and most obvious way to assess whether these two entities have achieved the goals of the plan is to look at the market rate sales prices for new houses built in Stapleton since 2002. This data is readily available in a report generated by Forest City for the SDC called A Comprehensive Snapshot: Where Housing and Affordable Housing Stands At Stapleton.   The latest update of the report came out in October, 2014 (the link is to the July, 2014 report - October is not online).

The following graph points out the obvious - it's expensive to live in Stapleton.  However, what the graph also shows is that it wasn't always this way.  In the early days there was a very wide price range - with the vast majority of houses being built between $200,000 and $400,000.  However, as the housing bubble built, prices rose precipitously to the point that today the vast majority of houses today are priced over $400,000.00.  

This rise in prices has essentially priced middle income families out of the market.  To illustrate this point, I found a mortgage qualification calculator online and did some basic calculations.  

I defined middle-income using Median Family Income as outlined by the U.S. Department of Housing and Urban Development (HUD), which is used in the Stapleton Affordable Housing Plan. To create a modest range of income levels I looked at what families could afford who had incomes that were between the median family income for Denver and 80% of the median family income.   Why these numbers? Because in Denver City Ordinance 20010148, passed in February, 2001, Forest City and the City of Denver agreed that 10% of homes for sale would be made available for families that earn no more than 80% of median family income. 

Using these incomes, I entered what a family with good credit could afford with 10% down and an annual percentage interest rate of 4%, property taxes consistent with current rates in Stapleton and modest debt of about $500.00/month.  The results are as follows:

                                                        Family Income                 House Price

80% Median Family Income                $62,240.00                       $234,000.00

100% Median Family Income              $77,800.00                       $333,000.00             

The graph makes clear that the percent of homes put up for sale in this price range is quite small relative to all homes built in 2014.  In fact, The Comprehensive Snapshot Report reveals that the Stapleton Development Corporation (SDC) and Forest City are falling well below their agreed upon target of 10% of homes for sale qualifying as affordable with only 4.67% of homes for sale in the 3rd quarter of 2014 meeting this standard. In addition, only 7% of homes built in 2014 were priced between $200,000 and $300,000.  Meanwhile the percent of homes for sale that are priced above $400,000 has skyrocketed to 64%.  

With these current trends, we are pricing out many people who we all rely on everyday. Among them are people with the following jobs and average incomes according to Indeed.com:

                                            Average Income

Teacher                                  $53,000.00

Fire Fighter                             $43,000.00

Denver Police                          $63,000.00

Registered Nurse                     $63,000.00

Day Care Provider                   $53,000.00

Computer Programmer            $64,000.00

What is most striking is that it is completely within our power and SDC's authority to create more housing diversity in Stapleton.   This very topic was discussed at the last Housing Diversity subcommittee to the Citizen Advisory Board to SDC.  SDC could decide tomorrow to sell Forest City housing sites with smaller footprints, which would necessitate the construction of homes with lower square footage and consequently lower sale prices.  

Nowhere else in Denver does a community have the power to decide who can and can not afford a home in our neighborhood. Market forces rule the day in most of Denver. But because of the SDC, we can choose. Indeed Stapleton is Different.  

We always welcome your comments about this blog - the goal is a community conversation.  Thanks to everyone who as chimed in so far. 

Stapleton - We are the 1%

I will cut right to the chase. If the goal for Stapleton was to retain middle income families in Denver and have them contribute to the social fabric of Northeast Denver, an analysis conducted by the Washington Post examining education and income levels of the nation's zipcodes suggests that Stapleton may not have achieved that goal. In fact, Stapleton may be one of the most exclusive communities in the nation.

http://www.washingtonpost.com/sf/local/2013/11/09/washington-a-world-apart/

When first considering these issues and this blog - this visual from the Washington Post's web page on "Super Zip Codes" definitely caught my eye. Super zip codes are the 650 zipcodes in the country that rank between the 95th and 99th percentile in median income and percent of adults with college degrees. The data are collected from the American Community Survey of the US Census. 

Stapleton, in fact, is one of approximately 130 zip codes that are in the 99th percentile or the top 1% of zip codes in the nation in terms of median income and education level. With a median household income of almost $123,000.00 per year and 78% of adults with a college degree, Stapleton is among some pretty elite company to include the likes of:

Zip___ City            _________                        Median Income____% College Grads 
94707   Berkeley, CA                                     $130,000                             83%
94129   San Francisco (near the Presidio)        $118,000                             82%
02110   Downtown Boston, MA                       $123,000                              78%
10069   Upper West Side of Manhattan            $165,000                              92%

By this measure (and indeed it is just one measure), Stapleton has become one of the most elite zip codes in the nation. A far cry from the original vision in the Green Book of creating a neighborhood that would retain middle income families in Denver.

Despite the best laid plans of the Green Book, we should ask whether having 80238 be one of the most economically and educationally advantaged zipcodes in the nation is necessarily a bad thing for Northeast Denver? Is it possible that the surrounding neighborhoods are benefiting from 80238 or does the contrast in education and income levels exacerbate the very problems Stapleton was designed to remedy?  These are the questions we will explore in this blog.

Next time, we will look beyond the boundaries of Stapleton to the zip codes that border 80238. We will consider how those neighborhoods compare with Stapleton and other similar communities throughout the nation. We will also examine whether the contrast in income and education levels between Stapleton and the surrounding community is common place around the country or an anomaly.