by Brian J. Connolly

About one-half of Americans now say that housing affordability is a major problem in their local community. Concern is highest in the West, where nearly 70% of the public agrees that housing affordability is a major problem. As planners well know, household income has not kept up with increases in median rent and home values for some time.

The Colorado Housing Affordability Project (CHAP) was formed to research, educate, and advocate for commonsense regulatory reform to address Colorado’s serious undersupply of housing. This group of planners, lawyers, economists, and academics has been working for the past two years to understand the root causes of Colorado’s housing problem, and to build awareness and advocacy around solutions to this problem. Through its research, CHAP has unearthed key data that supports zoning reform to address the state’s affordable housing crisis, and has put forth a policy platform for possible statewide land use reform. This article reviews some of CHAP’s key findings and suggestions. Although CHAP’s work has been Colorado-focused, this research and advocacy work is easily replicable in other Western states facing similar crises.

Housing Unaffordability: The Big Picture

This difference in income growth compared with housing price increases has resulted in higher levels of cost burden among buyers and renters of housing. Households are cost burden if they spend more than 30% of their income on housing costs. In Colorado in 2019, over 40% of renters and 25% of owner households were cost burdened. Whereas cost burden was historically only a problem for low-income households, middle-income households have experienced the greatest growth in cost burden. In a group of Colorado jurisdictions, the percentage of cost burdened households with an income between $50,000 - $74,999 increased dramatically between 2000 and 2019, as depicted in the chart below.

Root Cause: Inadequate Housing Supply

Insufficient housing development—and a mismatch between the types of developed housing and the types that are needed—have worked together to create much of Colorado’s current housing challenge. Between 1996 and 2006, Colorado added approximately 48,000 housing units each year on average, with new development tracking employment growth. Since 2007, the state has averaged 26,500 units per year, far fewer than is needed to meet employment demands. Since 2010, Colorado has gained 273,395 households compared to 249,032 housing units— adding about 24,000 more households than units. Although vacant units created during the higher-producing 2000s has helped accommodate household growth, the overall supply is insufficient to respond to demand.

Demand for second and vacation homes in Colorado has also directly affected the inventory of units for rent and for sale. Half of Colorado’s vacant homes are reserved for seasonal, recreational, or occasional use—up from 40% in 2010. According to the State Demographer, Colorado is projected to add an average of 35,000 households per year between 2020 and 2030, and 29,600 between 2030 and 2040. To keep up with household growth, and accommodate second and vacation home demand, an average of 40,950 new housing units should be built each year until 2030. This will require development volume that is 1.5 times current levels.

Colorado has also failed to produce the types of housing that are most likely to be affordable to middle-income buyers and renters. Research indicates that renters are 50% less likely, and home owners 25% less likely, to be cost burdened if they occupy “missing middle” housing units. This type of housing includes housing types in densities between detached single-family and mid-rise apartment complexes: duplexes, triplexes, fourplexes, townhouses, courtyard buildings, cottage courts, etc. Nonetheless, on average, around 70% of units permitted since 1980 were single-family units and around 26% were multifamily structures of 5 units or more. Very few housing units produced were of the missing middle variety. Between now and 2050, the strongest growth in household types in Colorado will be for adults without children, making up nearly half of all households, and the share of households with more than one adult and children will decline to 23%. These figures point to a dire need to construct missing middle housing.

Zoning Controls Limit Missing Middle Housing Development

Unfortunately, the land available to develop missing middle housing types is very limited because it has not been allowed in many communities since the mid-1940s. In two fast-growing Colorado counties, Jefferson and Larimer, duplexes, triplexes, or fourplexes are permitted on less than 15% of the developable land area, and ADUs generally require a conditional permit.

Zoning reform has the potential to greatly increase the residential land capacity and housing supply in Colorado. Allowing more density and flexibility in housing types by right—and incentivizing or requiring this of planned unit developments (PUDs)—could increase development capacity in Jefferson County and Larimer County alone by nearly 330,000 units—about 65% of what is needed to satisfy the state’s overall supply needs between now and 2030.

Reform’s Capacity to Address the Crisis

CHAP tested three separate land use reforms in Jefferson and Larimer counties for their potential to address missing middle housing supply shortages by optimizing land use regulations. The impact of those policy proposals is measured through the number of residential units that could have been created if they were in place beginning in 2010 through 2021, and the potential to add units moving forward.

Allowing ADUs by right on large single family lots could have increased housing supply in Jefferson County by 1,224 units between 2010 and 2021—equivalent to 7% of the county’s total unit production—and in Larimer County by 2,317—equivalent to 27% of the county’s total unit production.

Land use reforms that allow duplexes, triplexes, fourplexes, and sixplexes could have increased unit production by between 1,774 and 4,392 units between 2010 and 2021 in Jefferson County—an overall unit production increase of between 11% and 21% (with sixplexes boosting production the most). The potential for unit production is much greater in Larimer County with an increase between 6,304 and 17,118—an overall increase of between 32% and 87%.

A broader regulatory change requiring at least 10% of land zoned for 10 dwelling units per acre (a rowhouse-level density) would unlock the potential for the development of nearly 100,000 new residential units in Jefferson County and 272,000 units in Larimer County. This is because so little of the land in these counties is zoned for this level of density.

CHAP’s Policy Proposals

While providing affordable housing solutions requires several policy responses, reforming land use and zoning regulations would boost the ability of the private market to deliver more affordable forms of housing. Because Colorado’s housing crisis is most evident in its larger jurisdictions (where upward of 80% of the state’s population resides), CHAP’s policy platform is focused specifically on removing zoning barriers to the development of affordable forms of housing in counties with more than 50,000 residents, and only in those cities and towns with more than 10,000 residents. CHAP’s policy reform proposals include as requirements for local governments:

Planning for Realistic Housing Needs: Require local governments to analyze and understand data on housing demand to ensure that their communities are meeting the demand generated by economic development and providing a supply of housing that is affordable to a variety of income levels.
Transit-Oriented Development: Require cities and towns to zone all property within one-eighth of a mile of a fixed transit station to allow residential uses of at least 40 dwelling units per acre.

CHAP also advocates that local governments choose three of the following reforms to implement:

Accessory Dwelling Units: Authorize ADUs by right wherever agricultural or single- or two-family residential units are allowed.
Reforming Single-Family Zoning: Allow four or more primary residential dwelling units per parcel in each residential zoning district that previously permitted only single-family dwelling structures.
Faster Approvals for Affordable Housing: Allow administrative, non-discretionary development approvals to all multi-family dwelling projects that provide at least 25% of units at sales prices or rents affordable to low-to-moderate income households.
Reduced Parking for Affordable Housing: Require local governments to reduce minimum vehicle parking requirements by 50% for any income-restricted affordable housing units.
Reduced Fees for Affordable Housing: Require local governments to reduce utility connection fees and impact fees by at least one-third for projects that provide at least 25% of their units as affordable units.
Medium-Density Housing: Require local governments to zone at least 10% of their land area for development of a minimum of 10 dwelling units per acre.

Conclusion

The conclusion is inescapable: if we want more affordability, we must allow for the development of more moderate-priced housing. The current housing crisis demands that state and local legislators move quickly to enable and encourage the development of missing middle housing. Through commonsense reform and advocacy from the planning profession, we can begin to produce much-needed, more-affordable forms of housing.

References

Colorado Housing Affordability Project

https://cohousingaffordabilityproject.org/

Root Policy Research, State of Colorado Housing Research, November 01, 2021. https://cohousingaffordabilityproject.org/wp-content/uploads/2021/11/Colorado-Housing-Research-Report_November-2021.pdf

Schaeffer, Katherine. A growing share of Americans say affordable housing is a major problem where they live. Pew Research Center, January 18, 2022. https://www.pewresearch.org/fact-tank/2022/01/18/a-growing-share-of-americans-say-affordable-housing-is-a-major-problem-where-they-live/

About the Author

Brian J. Connolly is a land use planner and lawyer at Otten Johnson Robinson Neff + Ragonetti, P.C., in Denver, Colorado, an adjunct professor of law at the University of Colorado School of Law and the University of Denver Sturm College of Law, and a founding member of the Colorado Housing Affordability Project.

Creating Missing Middle Housing Through State and Local Zoning Reform