A federal judge has thrown out a Denver homebuilder’s lawsuit that challenged the legality of city income-restricted housing requirements, finding they do not infringe on property rights.
“Requiring income restrictions on certain units … does not constitute a physical invasion of property,” U.S. District Judge Philip Brimmer explained in a March 3 decision.
The judge’s ruling, which may not be the final word on the matter, is a loss for RedT Homes, which sued the city of Denver last year. RedT, led by CEO Nathan Adams, called the city’s linkage fee “extortion.”
Specifically, RedT objected to a $45,000 fee on two duplexes at 2140-2144 S. Sherman St. in Rosedale and a fee of $25,000 on four homes at 1245-1261 W. Gill Place in Athmar Park.
“As a matter of logic, Denver cannot make housing more affordable by making it more expensive,” argued RedT’s lawsuit, which was filed in Denver’s federal court. “As a matter of constitutional law, it cannot abuse its land use permitting authority to take money or property from applicants in order to address problems that those applicants do not create.”
Brimmer, a Republican appointee of former President George W. Bush, saw it differently.
Noting that federal courts elsewhere in the country have determined that rent control and fees in lieu of affordable housing do not constitute a taking by the government, Brimmer determined that Denver’s fee is “not an unconstitutional condition” on property ownership.
“We are disappointed in the decision, but we are committed to pressing for the constitutional rights of our client and of all Denver property owners,” said David Deerson, a lawyer for RedT with the libertarian Pacific Legal Foundation. “We are considering our next steps.”
Because its case was dismissed without prejudice, RedT can file an amended lawsuit.
The Denver city attorney’s office declined to comment on Brimmer’s decision in its favor. Senior Assistant City Attorney Adam Hernandez represented Denver in the case.
The linkage fee is part of Denver’s Expanding Housing Affordability ordinance, which was enacted in 2022. It requires those building residential projects with at least 10 units to reserve a varying number of units, generally around 10%, for those making less than the area median income, or to pay a large fee.
Those building fewer than 10 units, like RedT, just pay a fee, as do those building nonresidential projects. Those funds are used to support income-restricted housing projects in the city.
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