DENVER — A Denver-based home builder has filed a lawsuit in federal court against the City and County of Denver for what the company says is unconstitutional “inclusionary zoning.”
Nathan Adams, founder and CEO of redT Homes is challenging “Denver’s permitting scheme, which forces builders to either set aside units to sell at below-market prices or pay huge fees to help create affordable housing,” according to a news release from Pacific Legal Foundation (PLF), a public interest law firm which is representing Adams free of charge.
At issue in this case is Denver’s Linkage Fee ordinance, which was passed in 2022, that Adams’ attorneys refer to as “an exorbitant ransom for permission to build much-needed homes and exacerbates the problem the fee is trying to solve.”
According to the Denver Expanding Housing Affordability Ordinance and Affordable Housing Fee website, to be in compliance with the ordinance builders must meet the following criteria:
Residential developments of 10 units or more may fulfill the ordinance requirements by:
- Building affordable housing on-site, either at baseline requirements with associated incentives, or meet the enhanced requirements that provide enhanced incentives
- Paying a fee-in-lieu
- Negotiating an alternative
- Fulfilling High-Impact Development requirements (if your project qualifies as High-Impact Development, you must select that option in your application)
All other development types are required to pay the updated linkage fee.
That fee currently runs between $1.99 per square foot of housing and $7.22 per square foot, dependent on the type of housing, with the lowest being industrial and the highest being commercial sales. On July 1, those numbers increase to range from $2.50 per square foot to $9.00 per square foot, respectively.
The website justifies the fees to “support permanent housing and supportive services for at-risk residents, low- and moderate-income workforce rental housing and moderate-income for-sale housing.
Builders have long argued that continued increases in development fees only drive up the cost of housing.
“The Supreme Court determined in a quartet of rulings that governments cannot burden homebuilders with costs for problems they do not create,” says a PLF webpage about the case. “Taken together, those cases established that permit conditions for new construction must be proportional and directly related to its impact.”
PLG concludes that anything above and beyond that “is an unconstitutional property taking” and that the Denver linkage fee “fails both prongs.”
Attorneys says Adams was hit with $70,000 in permitting fees for two separate developments that encompass four single-family homes and two duplexes.
“By charging builders like Nathan exorbitant permitting fees that are unrelated to their actual developments, Denver is punishing the very builders who are working to solve the housing crisis,” the news release says. “This isn’t some wild, new frontier in local land use regulations either—the Supreme Court has explicitly ruled that governments cannot burden homebuilders with costs for problems they do not create.”
Complete Colorado will continue to follow the lawsuit. To read more about it click here.
