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Denver turns to “granny flats” to stave off affordability woes

An urban regeneration coalition in Denver is receiving backing from Fannie Mae to install ADUs in low-income neighborhoods

Auxiliary dwelling units could be the answer to helping low-income households afford to stay in gentrifying areas.

According to a report by Donna Bryson from CNBC, the residents of a West Denver neighborhood are taking the affordability issues facing their neck of the woods into their own hands.

The solution is to help turn low-income homeowners into landlords by installing ADUs on their properties. ADUs come in several forms and go by several different names, including "granny flats," "mother-in-law suites," "guest houses," and more. Basically, it's taking a non-residential space on a residential property and turning it into a residential space.

This initiative is one of three “innovative ideas” Fannie Mae said it would fund this year as pilots for solutions to the affordability crisis.

Denver has been growing at a feverish clip over the last few years, and along with that economic growth came some of the more acute affordability problems in the nation.

According to the report, Denver rents shot up much faster than incomes over the last 7 years.

Average rents rose 46%, from $941 per month to $1,376 per month between 2011 and 2016. Now, average rent is $1,535 per month, according to RentCafé.

The benefit of ADUs in low-income neighborhoods is two-fold: First, implementing wide-spread ADU installation has the potential to double housing inventory in an area which keeps rents reasonable. Second, it prevents displacement by adding a revenue stream to low-income homeowners’ ledgers, a great way to practice “gentlefication” as opposed to gentrification.

When coupled with new affordable housing construction from multifamily developers, this strategy has the potential to flip the script on areas that would have otherwise undergone a rough gentrification process.

According to the report, the West Denver Renaissance Collaborative, an urban regeneration coalition made up of city officials, a community development nonprofit, a public-spirited foundation, a quasi-municipal housing corporation and West Denver residents, will soon be hitting the streets to convince other residents of West Denver that ADUs can help them.

To that end, the coalition will be working with partners to cut construction and permitting costs for interested residents.

West Denver Renaissance Collaborative has designs for ADUs that are cheaper to build because they are pre-approved and partially pre-fabricated.

Homeowners seeking to put up ADUs on their properties will also receive help from the coalition to garner financing for installation and get trained on best practices for being a landlord.

As America continues to try to figure out how to address its affordable housing crisis, good ideas anywhere are good news anywhere. Good luck Denver.

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