By Robert Davis
When Jordan Artach, 24, received notice that her apartment complex in River North would be raising her rent by $500 per month, she knew her days in the neighborhood were numbered.
Even though she works full time, the new rental rate would eat up 55 percent of her earnings, leaving her miniscule savings for an emergency.
“The only thought I had was ‘I guess it’s time to move.’ My roommates and I knew it was coming and we will be finding a place in a completely different neighborhood to get back to where we can afford rent,” Artach said.
Artach doesn’t mince words. She and two friends shared an 1,100-square-foot two-bedroom apartment that would soon be renting for nearly $2,900 a month, forcing them to skip meals and spend less on gas to get to work in order to save for a down payment on a new residence.
Nearly a month later, Artach and her roommates rented an apartment in Villa Park, one of Denver’s neighborhoods most vulnerable to gentrification.
“All of River North is being redeveloped. There’s construction on every street, and businesses surrounding every apartment complex. Not many of them are local either,” Artach said.
Artach is not the only one who has noticed the city’s housing market is becoming increasingly exclusive. Gentrification is the buzzword around town, leaving many wondering: what will Denver look like in 10 years?
The Affordability Crisis
One of the central agents of change in Denver is the housing market. Real estate portal Point2Homes gave Denver a 6.6 affordability rating, the eighth highest in the country, classifying it as a “severely unaffordable” place to live. A study by mortgage site HSH.com recently found that someone looking to purchase a home in Denver needs to earn just under $80,000 in salary to afford it. Meanwhile, median home values skyrocketed by over eight percent to $418,000 in the last year.
Many of Denver’s culturally diverse neighborhoods are rapidly transforming beyond the scope of a normal developing city. This represents a “neoliberal reimagining of cityscape,” according to Laura Conway’s thesis from the University of Colorado Boulder’s Geography Honors Department.
That is “the result of conscious efforts undertaken by actors in the local real estate market to actively create a new space of consumption,” Conway wrote.
The new space Conway references is “abstract space,” a term used by French sociologist Henri Lefebvre to define how powerful interests re-imagine city-space for economic gain rather than the inclusion of residents.
Denver’s River North neighborhood is a prime example. Demand for retail and living space in the neighborhood began after the art community moved in during the early 2000’s, creating the cultural capital associated with early-form gentrification. Once the area had cultural capital, businesses, and investors began moving in, thereby increasing the cost of living in the neighborhood by limiting the supply of space in both volume and function. This creates an exploitable housing market where high rents attract modernized housing developments and businesses who cater to high-income consumers who can afford the rising living costs. These factors essentially priced the artists out of the neighborhood they rebuilt.
“Gentrification disproportionately affects our working class,” said Jeff Martinez, CEO of Brothers Housing, during Denver Mayor Hancock’s gentrification discussion on Facebook Live. “Residents come to us asking, ‘how can I stay in my home when my paycheck hasn’t increased? When my taxes keep increasing?’”
Even though Colorado’s unemployment rate is one of the lowest in the country, wages have not kept pace. Wages grew to $19.09 in real median hourly wage in 2017 according to the Bureau of Labor Statistics. However, since the recession in 2007, Colorado has seen a real median wage decrease of 2.8 percent according to the Occupational Employment Statistics from U.S. Department of Labor. This means that Coloradans are taking home less money, when adjusted for inflation, than they were prior to the recession.
For Denver’s millennial population—the city’s largest demographic—low wages and upward pressure on the median home values, such as low supply of starter homes and condos available for first-time home buyers, are compounding the affordability issue.
Millennials in Denver are making an average salary of just under $30,000 per year, or just under $2,500 per month according to a 2017 study by apartmentlist.com. But, when compared to the city’s average rental price for a one bedroom apartment hovering around $1,300, even these wages make living alone nearly unsustainable. At this rate, many millennials need as much as 16 years of savings to mortgage a home.
No Simple Solution
Denver is combatting the affordability issue by incentivizing businesses which pay living wages to their employees, passing legislation to raise the state minimum wage to $12 an hour by 2020 and offering relief programs to low-income residents.
To many, this stance is evidence that the city’s plan for growth is not evenly distributed among its different classes of residents. Current policies are actively erasing diversity and placing profit and capital gains over people, according to Candi CdeBaca, founder of Project VOYCE, a non-profit organization that provides leadership programs for children in underprivileged sectors of Denver.
“The city’s zoning practices make tax abatement more accessible for areas susceptible to change and involuntary displacement,” CdeBaca said. “These policies divide neighborhoods. We need policies which support and stabilize communities.”
Many localities in the Denver metro area offer business owners tax credits, including waiving up to 100 percent of locally assessed business property taxes, waiving permitting fees, and waiving or rebating local sales/use taxes for construction materials, personal property, and manufacturing equipment.
Reducing taxes on business real estate means raising property taxes on homes, apartments, and condos to make up for lost income. Rising property taxes are used as a justification by landlords for the high rental rates in the city.
Mayor Hancock acknowledged that public government needs to be aware of how gentrification affects its people and make improvements during his Facebook Live discussion.
“We can’t increase the state minimum wage fast enough,” Mayor Hancock said. “We actively recruit businesses that pay living wages to their employees and do not give incentives to those that don’t.”
Stagnant wage growth cannot be wholly attributed to the city’s gentrification problem, however. Some of the state’s fastest growing industries—namely craft beer—offer support function jobs such as bartending or serving tables which pay wages that barely meet the city’s self-sufficiency standard of $21,916 for a single adult if an individual works full time.
Raising the minimum wage has a downside as well. As the cost of labor increases, businesses have to pass the additional costs onto consumers. For construction related jobs, that means developers will be purchasing more expensive materials, leading to a more expensive finished product. For brewers, this could mean offering more expensive beer to customers.
Even though there are more than a dozen programs designed to keep lower-income residents in their homes—an effort dubbed “maintaining” affordable housing—many residents are still leaving. The U.S. Census Bureau’s American Community Survey showed that 193,000 Coloradoans left for new frontiers in 2016 alone.
The Denver Urban Renewal Authority (DURA) has programs which help qualified low income homeowners struggling to maintain their home’s value. DURA loans funds for zero or low percent interest, which then goes toward lowering the cost of energy. They also perform access modifications via their Renter/Homeowner Access Modification Program (RHAMP) Grant program for individuals who need assistance getting into their homes.
“If there’s an emergency that comes up in the house, and an individual has to pay property taxes, buy groceries, or make other expenditures, our programs help take the stress out of worrying about funds,” said Taryn Lewis, housing manager for DURA.
As great as DURA’s programs are, there is one major drawback—repaying the loans. DURA offers homeowners deferred payments which can be taken out of a home’s accrued equity. Doing so essentially minimizes a homeowner’s access wealth generated housing assets by utilizing DURA’s programs.
“Many landowners are realizing that they can’t afford to purchase another home in Denver with their accrued equity,” Lewis said.
Is Denver Doomed?
As the healthcare and technology industries rapidly reshape Colorado’s economy, many hard-working Denverites are now experiencing the personal shock of knowing one’s neighborhood is not economically attainable anymore.
“This issue is not unique to Denver—it is happening in places that have a strong economy, and tracks with the national trend of increasing demand for city living as opposed to rural and suburban living,” Andrea Burns, communications director at Denver’s Community Planning and Development department, said in an email.
Neighborhoods such as Five Points, Globeville, Elyria-Swansea, Cole, and bands of Southwest Denver have been experiencing gentrification since 2000. According to a study by the Thomas B. Fordham Institute, Five Points alone has seen a 27 percent increase in its white population since 2000 and white collar jobs in the area nearly doubled over the same time span.
“What we’re seeing in Denver is a continuous dilution with movement from white neighborhoods into ones of racial and ethnic population centers,” said Jennifer Newcomer, principal researcher at Gary Community Investments, a group which invests in for-profit and philanthropic solutions for Colorado’s low-income children and their families.
A 2016 report from Denver’s Office of Economic Development lists several actions the city is taking to mitigate involuntary displacement. Some include creating robust funding sources for affordable housing, bank land in areas at risk to involuntary displacement, providing technical support to neighborhood businesses to manage changes in their customer bases, and offering training for middle-income jobs to neighborhood residents.
“Denver is still seeing bifurcation where some people are still not able to fully participate in the economy,” Newcomer said.
By 2050, the State Demography Office suggests Colorado’s population will hit 8 million, with over 1 million in Denver County alone. Fourty-nine percent of these residents will be non-white according to estimations by the Colorado Center on Law & Policy (CCLP).
Black and Latino residents are still experiencing significantly higher unemployment rates, and lower wage growth than their white counterparts, according to the CCLP. The persistent “disparities in income, employment and poverty by race and ethnicity in Colorado ultimately threaten the prosperity of these individuals, their families, and the state as a whole,” the report states.
“We need to decide who we are going to be as a city,” CdeBaca said. ■