Developer sues Denver over requirement to pay into affordable housing fund

As many local governments continue to face challenges in bolstering their housing stock, one developer is taking action against Denver over a requirement to pay into the city’s dedicated affordable housing fund.

The company, redT Homes, states that it’s the Denver area’s “only residential real estate development company […] offering a full suite of services, ranging from land acquisition and entitlement to design, architecture, and construction — along with real estate-focused marketing and sales.”

Core to the company’s identity is a commitment to the construction of environmentally conscious homes. It vows to build all structures to Leadership in Energy and Environmental Design (LEED) Gold Certification standards or better, and to only work with developers, builders and investors “willing to do the same.”

The company also claims that it is “the first homebuilder west of the Mississippi” to develop homes to the standards set by the U.S. Green Building Council (USGBC) to meet LEED Zero Certification.

But the city, which requires payment into a dedicated affordable housing fund upon the commencement of new construction, is stifling the company’s ability to contribute to the area’s housing inventory, the company claims. This is according to local news outlet Denverite and HousingWire‘s review of the federal court complaint.

“Denver reached the remarkable conclusion that its housing shortage is caused by building more homes,” the company said in its federal court complaint filed last week, according to the outlet.

“Thus, it refuses to issue development permits until homebuilders like redT — the very people resolving housing affordability issues adding much-needed supply — pay a fee into Denver’s affordable housing fund.”

The fee at hand for the builder is for $45,000 on two proposed duplexes, along with an additional $25,000 for four single-family homes. The company asked for the fees to be waived, but the city declined both requests.

The lawsuit argues that the ordinance mandating the fees is unconstitutional. The lawsuit is federal, and the constitutionality is federal rather than state-based.

The developer is being represented by the Pacific Legal Foundation on a pro bono basis. the law firm said in an announcement about the lawsuit that a victory will “restore [redT homes’] right to build essential housing without excessive government demands and protect the rights of all Americans to do the same.”

The foundation also recently filed a lawsuit on behalf of a Washington, D.C., homeowner who is suing the district in a case that challenges the constitutionality of its tax foreclosure process.