Denver Piloting “Granny Flats” Program for Low-Income Homeowners

With the one of the worst home affordability measures in the country, Denver, Colorado, has every reason to be concerned about its lower-income homeowners. According to ATTOM Data Solutions, Denver’s affordability score is a 70 out of 100, with 100 indicating housing affordability even with historic averages. This means that in the metro area, the average Coloradan cannot come anywhere near being able to purchase the average house.

Fannie Mae and the West Denver Renaissance Collaborative (WDRD), are hoping to change this, however. The two entities are partnering on a pilot program that will help low-income homeowners build accessory dwelling units (ADU's), small dwellings adjacent or even attached to single-family houses. These are often referred to as “granny flats” because they often provide a private living space for an older relative. Examples include apartments over the garage, tiny houses with foundations in the backyard, and basement apartments.

Fannie Mae selected the program as one of its three innovative ideas to be addressed using $10 million in funds over the next two years. “We saw lots and lots of proposals that involved ADUs,” said Fannie Mae vice president of Sustainable Communities Partnership & Innovation Initiative Maria Evans. “West Denver was a good solution to help long-term residents fight off that dislocation that comes from gentrification.

The program hinges on local city officials and other community development advocates to educate local homeowners on how to build ADUs and provide designs that have been preapproved by the program in order to expedite permitting. Homeowners will receive landlord training and assistance with securing loans for the construction of the properties. Some locals have concerns about the new landlords’ ability to maintain their new rental units. “You have to maintain [the property]. You have to plan for when things break, have reserves ready,” observed local developer Jeff Martinez.

The success of the pilot program will be evaluated based on how many residents are able to stay in their homes after participating in the program and becoming landlords. Residents must meet certain eligibility requirements, including having lived in the West Denver area for at least five years.

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