Denver pilots new granny flat program aimed at solving city housing shortages

Authorities in Denver are initiating a new program in the city that aims to solve housing shortage problems while providing a new income stream for low-earning homeowners.

The program, which is currently just a pilot, involves helping homeowners to build accessory dwelling units, or “granny flats”, which can be rented out for extra income.

Fannie Mae is providing funding for the program, which was one of three “innovative ideas” put forward by city officials earlier this year in order to tackle housing shortages in Denver. The mortgage financing giant has earmarked $10 million over two years for the program.

Maria Evans, vice president of Fannie Mae’s Sustainable Communities Partnership & Innovation Initiative, told U.S. News & World Report that the proposal to use granny flats stood out from the rest.

“We saw lots and lots of proposals that involved ADUs,” Evans said. “West Denver was a good solution to help long-term residents fight off that dislocation that often comes from gentrification.”

One of the main problems city officials are facing is that the cost of housing has grown much faster than average incomes. Between 2011 and 2016, the average rent has climbed by 46 percent, from $941 per month to $1,376 per month. As a result, many homeowners are being priced out of their homes.

The granny flat program, which was proposed by Renee Martinez-Stone, director of the West Denver Renaissance Collaborative, will see city officials and community development non profit organizations work to educate homeowners on how to build ADUs onto their properties. Partners include the Habitat for Humanity organization, which will provide architectural designs and pre-approved plans that can help homeowners to get around the expensive permit application process. Homeowners will also be provided with aid to secure loans for their construction, plus training to help them manage the properties, which would be rented out at below-market rates.

The training will be critical to the success of the program, officials said.

“You have to maintain [the property],” Jeff Martinez, president of Brothers Redevelopment, a firm that builds and manages affordable housing in Denver, told U.S. News & World Report. “You have to plan for when things break, have reserves ready. You’re going to want to have a strong lease agreement. You can’t go in without thinking about all these considerations.”