By Steve Zurier. Denver has a new mayor, auditor, and city council, but even though builders lobbied hard during last month's citywide elections to convince the politicians that the city's new inclusionary zoning ordinance was flawed, all signs point to the city moving forward as planned.

The new ordinance, which was passed last August, requires builders to include a 10 percent affordable component for all homeownership projects of 30 units or more. To be eligible, buyers must have incomes below 80 percent of the area's median income, or roughly $55,000 for a family of four.

In return for meeting the plan's affordability goals, the city will rebate builders $5,000 per unit--a number that jumps to $10,000 per unit if the units are affordable to households at 65 percent of the area's median income. Builders complying with the new ordinance receive a 10 percent density bonus and a 20 percent parking reduction, which typically moves the parking requirement down to 1.2 spaces per unit from 1.5. Builders also can expect their permit applications to be processed within 180 days, as opposed to more than a year and sometimes two years.

Jim Mercato, the city's housing programs manager, says the new zoning plan is off to a good start. He says about 14 projects representing 800 units are either under construction or in permitting, with the projects being a mix of condos, townhomes, and single-family units.

Mercato says one real strength of the program is that the city received a $17.5 million line of credit at 3 percent from Fannie Mae for short-term financing. The city plans to loan the money back to builders who meet the set-aside requirements at a low 3 percent rate, a move that should keep costs down and offer added incentive for the builders to commit to developing affordable units.

Builders fought the new ordinance on at least two fronts. One was a state Senate bill that would have overturned the ordinance and prohibited any other municipality in Colorado from passing similar inclusionary ordinances, a measure that was defeated 20 to 15 earlier this spring. The second approach was lobbying the candidates in last month's citywide races, an effort that was largely educational. Despite the lobbying, it could take months if not years for builders to gain the clout needed to roll back the ordinance.

Although the organized builder community still opposes the plan, there are builders who think the new ordinance can work. Jerry Glick, president of Columbia Group Limited, says the 10 percent set-aside is perfectly acceptable and much needed in Denver, where housing costs have skyrocketed. Glick's affordable units start at $108,000, and the market units start at $235,000.

"If you take advantage of the incentives, you can make money," Glick says. "What it boils down to is whether or not we want to live in a diverse city. If we want a city where the police, fire personnel, or museum curators--the people that serve the community--can live there, then we have to provide for affordable housing. Doing it by market forces alone won't produce work force housing."

The HBA of Denver opposes the ordinance on at least three counts. First, the HBA doesn't think it's up to the building industry alone to subsidize affordable housing. Second, builders are concerned that the city will not have sufficient funds to pay for the incentive program. Third, by placing deed restrictions on the affordable units that essentially lock in how much the units can appreciate, new-home buyers would not be able to benefit when the unit goes up in value.

Mile-High Determination

Denver aims to deliver affordable housing through inclusionary zoning. Here are the plan's highlights:

* 10 percent set-aside on all homeownership projects of 30 units or more.

* Units available to families earning less than 80 percent of the Denver area's median income, or roughly $55,000 for a family of four.

* Builders receive $5,000 rebate per unit; jumps to $10,000 if builders make units affordable to households at 65 percent of the Denver area's median income.

* Builders eligible for 3 percent short-term financing loans.

* Web site lets builders market affordable units online.