Demand for affordable condos at Monarch Mills in Denver’s Central Platte Valley was so strong, Patria Lanfranchi reserved hers a year before she moved in.
“They’re very good-looking units, and the price was right,” said Lanfranchi, 28, who at the time of her reservation was unemployed but now works as a software developer.
Lanfranchi paid $185,000 for a one-bedroom unit on the fifth floor. That’s a steal by standards in this valley west of Lower Downtown, where condos average $300,000.
Most homes in Denver sell for what buyers and sellers agree is a fair-market price. But some homes cost less because they’re designated “affordable” under a city ordinance passed in 2002.
And then there’s Monarch Mills, where the majority are deemed affordable.
This is owing to complex arrangements between big and small developers working cooperatively to build homes that are both attractive to buyers and comply with Denver’s law.
The result: Buildings with higher-priced condos, lofts and townhomes are being constructed next to buildings like Lanfranchi’s, which, although designated affordable, feature units with private balconies with sliding glass doors, natural maple or stained cherry cabinets, stainless steel appliances and carpeted or bamboo wood floors.
The project – named for a flour mill destroyed by fire in 1993 – also is adjacent to the future transit hub at Denver’s Union Station. The developer is privately held Urban Ventures LLC of Denver.
Lanfranchi says: “It’s nice to be the cheap property in the neighborhood. I see nothing wrong as long as they don’t mind living next to affordable units.”
Monarch Mills, at 15th and Delgany streets, is next to Art House, 13 luxury townhomes being developed by Denver’s Continuum Partners, also privately held and best known for its Belmar project in Lakewood.
Six of the Art House units – priced from $750,000 to $2 million – have sold, said Dee Chirafisi, a broker/owner at Kentwood City Properties who is marketing the project.
When asked about the project’s proximity to Monarch Mills, Chirafisi said, “In all of the units I’ve sold, I think diversity is attractive to people.”
Another project exceeding the city’s affordable requirement is Zocalo, a 42-unit project with seven affordable condos at West 22nd Avenue and Decatur Street, two blocks north of Invesco Field at Mile High.
Here again, real estate complexities prompted the situation. By contributing three more units than required under the Denver affordable-housing ordinance, Zocalo developer David Zucker lost $250,000 in revenue – but gained access to a low- interest loan.
The Denver ordinance mandates that at least 10 percent of for-sale residential projects of 30 units or more must be affordable to people earning 80 percent of the area’s median income. Monarch Mills has 69 units, with 56 designated affordable.
Most developers need an incentive to include affordable units in their projects, Zocalo’s Zucker said. And some choose to build projects with 29 units or less or pay a fee to dodge the requirement.
“If there’s not an economic benefit to the developer, they’re not going to produce affordable units,” Zucker said.
Monarch Mills owes its existence to hundreds of other market-rate condos, townhomes and brownstones being built by East West Partners, a developer of master-planned communities with five projects in the valley.
To develop those units, East West had to find a way to meet the requirement for building affordable units. It contracted with Continuum, headed by developer Mark Falcone, which had designs on doing the Art House project. Continuum in turn signed on Urban Ventures for the affordable portion.
“Continuum asked us to do that piece, and it gave us the land for free,” said Susan Powers, Urban Ventures’ president.
Free land meant Monarch Mills’ costs were lower, and so units could sell for less.
“Falcone also helped us with the cost of underground parking,” Powers said. “He’s a great partner to have.”
No matter how the affordable homes get built, prospective buyers must be cognizant of an important fact: To continue to keep their homes affordable, deed restrictions prevent their properties from appreciating too rapidly.
While restrictions vary, as a general rule, appreciation is held to 3 percent a year. At Monarch Mills, restrictions are in place for 30 years, while at Zocalo, it’s 20 years.
That’s one challenge facing brokers who market affordable units, said Sarah Harman, broker/owner of Powerhousing Real Estate, who specializes in selling properties priced at $200,000 or less.
“The important thing is to really educate and inform the buyer as to how they are affected as a future seller,” Harman said. “Getting a newer home with more space and more amenities priced below what the true market value home would be are the benefits. In exchange, there is likely going to be a limit on the amount of market appreciation they can experience when they list and sell that home in the future.”
Lanfranchi considered the restrictions when she purchased her unit. After all, a home is an investment that should have a decent return.
“All of our neighbors have spent a significant amount more,” she said. “That just helps with property values.”
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
