DENVER (KDVR) — Denver is failing to provide sufficient low-income housing for its residents, according to a report from the City and County of Denver’s Auditor Timothy O’Brien.

In a release, O’Brien says the audit shows the government is not doing enough to ensure safe, habitable spaces at affordable housing properties and also failing to ensure taxpayer-funded affordable housing projects are delivering on promised units.

In particular, the audit said that the Department of Housing Stability’s “lack of oversight” has caused the DHA Delivers for Denver Program not to deliver the required units.

Specifically, the audit showed the program fell short by 32 units for very low-income households and 301 units for moderate-income households. Additionally, 203 units have been reported for rent at market rates, which the Denver Housing Authority claimed as part of the agreement to develop affordable housing.

The 203 units were rented for between 60-90% of the area’s median income, the Auditor’s Office reported.

The Auditor’s Office reported that the housing authority counted the 203 units because they are lower than the average rental prices in Denver, which are about 120% of the area’s median income.

“If affordable housing is a priority in the city, leaders need to show a matching responsibility to effective use of resources, accountability to housing goals, and commitment to helping those in Denver who need it most,” Auditor O’Brien said in a release.

The auditor took issue with this because while the apartments are rented to people in the target income with lower-than-average prices, the rent is not guaranteed as market conditions change. This could result in potential rent increases and loss of affordability, the Auditor’s Office reported.

Audit disputed by the Department of Housing Stability

The Auditor’s Office said the Department of Housing Stability said they plan to comply with all requirements for delivery of the DHA Delivers for Denver Program, and disagreed with the recommended improvements for maintenance, safety and sanitation of the department’s affordable housing units.

“We observed issues at 14 of 21 properties, despite recent inspection forms from the city showing no issues at these same properties,” the Auditor’s Office said in the report. “Issues included human or pet waste, broken windows and evidence of pest infestations.”

Affordable housing is largely defined as when residents pay no more than 30% of income to housing costs, including rent or mortgage and utilities.

As of July, the Auditor’s Office said, Denver’s monthly rent averaged $2,105. A household would need to make over $84,000 annually in 2023 to qualify that rent as “affordable,” which is over twice the amount of someone earning minimum wage.

“Although we found the Department of Housing Stability’s strategies generally align with leading practices and other cities for developing and prioritizing affordable housing projects, we found a lack of oversight and are concerned about the department’s commitment to developing and maintaining safe and habitable housing units for people making the lowest
income ranges,” the Auditor’s Office stated in its report.

The Auditor’s Office reported that certain Denver City Council districts — 1, 3, 8 and 9 — received more affordable housing investment funds than allowed. O’Brien called for stronger oversight of the project.

“The city’s team has faced a number of challenges from the COVID-19 pandemic, deployment of the emergency operations center, and fluctuations in the housing market,” O’Brien said in his report. “But going forward, the city must ensure taxpayer dollars are used effectively and the program is helping the people it is intended to help.”

Audit reveals inadequate housing inspections

The Denver Auditor’s Office reported it selected 20 affordable housing projects funded by the Department of Housing Stability and one affordable housing project used for permanent supportive housing (Fusion Studios).

The audit looked only at public spaces in the building and found a wealth of issues, ranging from broken windows to dirty carpets, evidence of pest infestations to exposed or damaged electrical features, missing door handles, standing water in public areas, and inoperable or malfunctioning elevators.

O’Brien noted that property managers must be notified of a general inspection by the city 14 days before the inspection, and residents require 24-hour advance notice for unit inspections. He argued that this gives property managers “plenty of time to hide violations” and will not lead to clean properties.

“The city’s approach to health and safety in affordable housing buildings is not good enough,” O’Brien said in his report.

The Department of Housing Stability told the Auditor’s Office they already have licensed inspectors and follow federal guidelines for inspections. DHS said reducing notice timelines would be an additional burden on residents.

“People living in some of these properties are forming unions because they don’t feel their voices are being heard,” O’Brien said in his report. “That is more than enough evidence that the city needs to take this more seriously.”

Wage violations and other development concerns

The audit report showed other areas Denver could improve affordable housing.

  • Ensure contractors are complying with wage laws on affordable housing development projects
  • Verify income annually for residents, which may require more staff
  • Implement adequate controls over data that is used to populate public dashboards

The Auditor’s Office did commend the city’s “thoughtful design” for a new policy aimed at helping residents at risk of displacement and minimizing lawsuits. The policy applies citywide and gives priority to people who have lived in Denver the longest.

Overall, the Department of Housing Stability agreed to implement 17 of the Auditor’s Office’s 19 total recommendations.

“It is disappointing that the department chose to disagree with two recommendations that would help ensure affordable housing is effectively inspected and that units and buildings are
maintained, safe, and sanitary for the residents they benefit,” the Auditor’s report stated.

The two offices said there will be follow-up on the agreed-upon recommendations.