Citation
Residential conversion in the B-7 district

Material Information

Title:
Residential conversion in the B-7 district
Creator:
Hittleman, Jerome
Publication Date:
Language:
English
Physical Description:
50, [19] leaves : plan ; 28 cm

Subjects

Subjects / Keywords:
Housing -- Colorado -- Denver Metropolitan Area ( lcsh )
Buildings -- Remodeling for other use -- Colorado -- Denver Metropolitan Area ( lcsh )
Buildings -- Remodeling for other use ( fast )
Housing ( fast )
Colorado -- Denver Metropolitan Area ( fast )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Bibliography:
Includes bibliographical references (leaves 55-56).
General Note:
Cover title.
General Note:
Submitted in partial fulfillment of the requirements for the degree, Master of Planning and Community Development, College of Design and Planning.
Statement of Responsibility:
Jerome Hittleman.

Record Information

Source Institution:
University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
10810023 ( OCLC )
ocm10810023
Classification:
LD1190.A78 1983 .H57 ( lcc )

Full Text

RESIDENTIAL CONVERSION Y IN THE B-7 DISTRICT
A+F
LD
1190
A73
1983
H57
Jerome Hittleman September, 19F"5


ABSTRACT
DATE l T
I. Introduction
A. Purpose
B. Methodology
C. B-7 District
1. Background, Purpose/Goals
2. Zoning
3. Reasons for Conversion
II. Conversion Efforts
A. Residential Conversions in Denver
1. Residential
2. Single Room Occupancy
3. Emergency Housing
B. Residential Hotel Conversion in California
1. Background
2. Government Programs
C. Residential Conversion Projects in Massachusetts
1. M.H.F.A.
a. Financing
b. Tax Programs
2. B.R.A. Urban Redevelopment Plan
D. Dallas, Texas Programs
1. Downtown Housing Report
2. Historic Preservation Policies


III. B-7 District Residential Conversion Options
A. C.H.F.A.
B. D.U.R.A.
C. Historic Denver, Inc.
D. Alternatives
1. S.R.O. Housing
2. Special Property Tax Provisions
3. Rehabilitation and Urban Renewal
4. Planning Reports/Housing
5. Historic Preservation
IV. Conclusion


ABSTRACT
The purpose of this thesis is the study of the conversion of industrial buildings, warehouses and old hotels to residential units and lofts as part of the solution to providing affordable housing to lower- and middle-income people in lower Downtown Denver also referred to as the B-7 District. The definition of a loft conversion used in the paper is any conversion of a commercial or industrial building to residential usage. A loft building is defined more specifically by architects and engineers as the type of industrial architecture popular from the mid-1800's to the 1930's. These buildings found in abundance in the B-7 District, can be recognized by their masonry external walls and heavy timber post and beam or steel interior construction. The conversion of hotels deals with their renovation to either apartments or single room occupancy units with shared bathroom and eating facilities.
The thesis examines B-7 District background, land use and purpose/goals. Residential conversions, single-room occupancy hotels and emergency housing are discussed. The recently adopted zoning incentive package for preservation and residential development is examined.


The policies and programs effecting residential conversion projects in three parts of the country are investigated to determine their applicability to Denver's downtown housing problems. California, particularly Los Angeles and San Francisco, are studied for their innovative programs in promoting single-room occupancy housing. The Massachusetts Housing Finance Agency and Boston Redevelopment Authority are investigated for their innovative, mixed income, residential conversion projects that have proved to be a great success. The third is Dallas, Texas, studied because of its similarity to Denver in size and downtown development activity. Dallas has actively sought to improve it's downtown housing and historic preservation through a Downtown Housing Report and Preservation Policy Paper through the Mayor's Task Force.
The paper discusses the options presently available for B-7 District residential conversions and conversions affordable to all income levels. Using the data outlined earlier, comparisons are then drawn between Denver and areas around the country, pointing out the applicability and usefulness of these methods to Lower Downtown affordable residential conversion development. The conclusions set forth at in the paper utilize all of the information gathered to provide workable options or avenues towards stimulating affordable residential conversions in the B-7 District.


I.
INTRODUCTION
A. Purpose
This thesis concerns the conversion of industrial buildings, warehouses and old hotels to residential units and lofts as part of the solution to providing affordable housing in lower- to middle-income people in Lower Downtown Denver, also referred to as B-7 District. The conversion of industrial buildings and hotels to residential use has been taking place in many cities throughout the United State and some foreign countries, offering a way to meet the demand for interesting and inexpensive housing in downtown districts. The thesis will examine the residential conversion activities in selected U.S. cities, the policies that control them and how these examples can be utilized to help Denver's downtown housing situation to improve.
The definition of a loft conversion used in this paper is any conversion of a commercial, industrial, or warehouse building to residential. The conversion of hotels deals with their renovation to either apartments or single-room occupancy (S.R.O.) units with shared bathroom and eating facilities. A loft building is defined more specifically by architects and engineers as the type of industrial architecture popular from the mid-1800's to the 1930's.^
These


buildings can be recognized by their masonry external walls
and heavy timber post and beam or steel interior construction.
The B-7 District and its neighboring industrial areas
have many of the above described industrial and warehouse
structures, plus one remaining single-room occupancy hotel
the Barth. The B-7 District offers the most attractive
buildings for residential conversions in Downtown Denver.
Some isolated conversion projects such as the Blake Street
Racquet Club have occurred in Lower Downtown, but have not had
the impact to stimulate more residential conversions.
One of the major reasons for the lack of residential
conversions is the high price of land in the B-7 District
2
reportedly as high as $260 per square foot. At that price, office and commercial conversions bring in a higher return on investments.
Despite Denver's lack of residential conversions, the appeal of loft living is present and is not limited to artists as the stereotype might suggest. This can be evidenced by national trends which show thousands of successful loft conversions throughout the country since 1970, providing housing for a wide range of people."^ The demand for lofts in Denver can be evidenced by the appearance of illegal loft
4
units near Downtown, whose locations I will not disclose.
The lack of adequate and low-cost parking and rush hour
-2-


traffic problems are factors adding to the Downtown housing demand as well.
B. Methodology
The method used for gathering data on the progress/ policies for selected U.S. cities/states in downtown conversion housing efforts was through a survey. The appropriate government agencies were contacted through letters (see appendix) sent during September of 1982. The following cities and corresponding state housing offices were contacted. These cities/states were chosen for their reputations in housing conversion projects in the past, or because of their potential for loft conversionsuch as Denver's.
Otherwise, a good variation in size and location of cities/ states was aimed at, showing a cross-section of programs/ policies. The response was over 80%, with the offices sending varying degress of pertinent information. The cities/states contacted were:
* Milwaukee , Wisconsin
* Chicago, Illinois
* Atlanta, Georgia
* St. Louis , Missouri
* Los Angeles, California
* Portland, Oregon
* Seattle, Washington
-3-


* Dallas, Texas
* Philadelphia, Pennsylvania
* Cincinnati, Ohio
* Detroit, Michigan
* Boston, Massachusetts
* Baltimore, Maryland
* New York City, New York
* Buffalo, New York
From the varied responses, the following were studied for their compatibility and helpfulness to Denver's B-7 District:
* California State Housing Authority
* Los Angeles
* San Francisco
* Massachusetts Housing Finance Agency (MHFA)
* Boston Redevelopment Authority (BRA)
* Dallas, Texas Planning Office
The California Housing Authority, plus the Housing Offices of Los Angeles and San Francisco, were chosen for their imaginative, innovative and important work involving single-room occupancy housing in hotels. The agencies in Massachusetts were chosen for their important pioneering programs in redevelopment and conversion of older industrial buildings to
-4-


residential. The BRA has had great success in redeveloping specified areas of Boston. The Dallas Planning Office is examined because of its studies on downtown housing strategies and historic preservation. Dallas compares well with Denver because of its lack of downtown housing, ongoing office construction boom, size and age. A good cross-section of location, programs/policies and size of cities was strived for.
The B-7 District is studied for its potential for residential conversions and for the programs and incentives available to stimulate residential conversions. The programs in Denver, Colorado, are then compared to the programs and policies from other parts of the country to draw conclusions on what might be the best alternatives for stimulating residential development in the B-7 District. Consistency with the goals and objectives of the B-7 District examined in the next section is the basis for the conclusion and program alternatives formulated in the conclusion of the thesis.
C. B-7 District
1. Background, Purpose/Goals Lower Downtown Denver's abundance of brick warehouse and commercial structures can largely be attributed to a disastrous fire in 1863 that destroyed most of Denver. The city was quickly rebuilt under a new ordinance that required brick structures in the business district. The new brick
-5-


structures were more secure and stable featuring repetitive
bay construction, brick cornices and brick arches plus post
beam or steel interior construction. Thousands of structures
were constructed in Denver prior to 1911 with over 25,000
still standing today; many of the larger ones being in Lower 5
Downtown.
The present land use in the B-7 District is dominated by office, commercial and warehouse usages. Original indus-trial/commercial land use dominates Wynkoop and Wazee Streets with Union Station being the focal point. Southeast towards Larimer Street the buildings house more retail and office related usage.
The purpose/goals of the B-7 District are consistent with the main thrust of this thesis the conversion of old industrial, warehouse and hotel structures into housing. The aims of the district are best stated in the revised Municipal Code of the City of Denver:
This District is intended to provide for and encourage the preservation and vitality of older areas that are significant because of their architectural, historical and economic value. A variety of land uses will be permitted in order to facilitate the re-use of existing structures without jeopardizing or reducing zoning standards
-6-


promoting the public safety, convenience, health, general welfare and the preservation of the Comprehensive Plan. To preserve the existing scale of buildings in the area, the floor area ratio is minimized. Premiums for additional floor area are provided to encourage new buildings to conform to the style and character of the area.^
Repeatedly, in reports and studies conducted on the B-7 District, the need for historic preservation and residential development is emphasized to make it a vital, thriving area.
A Denver Planning Office booklet on development guidelines for Lower Downtown published in 1978, voices the following development objectives:
1. To provide for cooperation and coordination between the City and County of Denver and the various public and private jurisdictions involved in the urban planning process as it affects Lower Downtown.
2. To encourage and assist redevelopment in the Lower Downtown area through:
(a) promotion of public awareness and involvement in the area.
(b) improvement of physical and economic conditions which effect the climate for the area redevelopment.
-7-


(c) improvement of transportation systems to, and through, the area.
(d) promotion of high quality mixed-use
development which retains and strengthens
7
existing variety within the area.
Other sections in the publication include history, present land use and standards for the rehabilitation of historic buildings recommended by the Secretary of the Interior. The publication and proposed guidelines indicate that the Denver Planning Office is sensitive to the important preservation issues of the B-7 District. Some of the goals outlined in the report, such as improved transportation networks (RTD terminal) and improved zoning regulations have been met. Unfortunately, due to severe budget cuts since 1978, the Denver Planning Office has had to shelve future planning efforts in Lower Downtown to possibly a later date.
2. Zoning
The Denver Partnership, Inc. has fortunately proceeded with planning efforts in the B-7 District, where the Planning Office has been unable to meet the need. In the Lower Downtown Project they sponsored through the endorsement of the Lower Downtown Policy Committee, a set of updated zoning regulations was drafted and adopted in December, 1982.
These new zoning regulations should help to ensure that the original B-7 District goals and objectives are met. The
-8-


most important revisions provide incentives aimed at ensuring both the conservation of existing buildings and encouragement of residential development. The new zoning incentives are discussed starting with the Transfer of Development Rights Provision (TDR).
A transfer of development rights occurs when the unused potential development rights of a designated landmark building are sold to a buyer who can utilize these rights in a new or different project. TDR's were formerly only allowed to be used in Downtown B-5 District Landmarks but are now usable in the Lower Downtown B-7 District with the adoption of the B-7 zoning incentives in December, 1982. TDR's are designed to encourage the owners of designated Denver Landmark Buildings to renovate and not demolish an existing building whose floor area ratio (FAR) does not exceed the 4:1 maximum. Now, a portion of the property investment can be used through a TDR.
An encouraging feature of the zoning revisions for both historic preservation and residential conversion is the concept of "free residential space when using TDR's". This portion of the zoning revisions allows existing buildings, including those that meet or exceed the maximum FAR (4:1), to produce new, additional development rights by providing residential floor area. For every square foot of floor area in an existing structure not utilized because of its Landmark
-9-


designation, one square foot of floor area is produced for use at a different site. The maximum FAR that can be achieved is 7.4:1 by using TDR's, residential floor space bonuses, and
O
street-level commercial usage.
3. Reasons for Conversion
The concept of converting older industrial/warehouse buildings and hotels to mixed-income housing has many advantages over new housing construction. The cost of new multi-family housing is rising rapidly, especially with the increase in condominium conversions. Usually, these condominium apartments are only affordable by upper middle- and upper-income persons. The need is therefore present to maintain existing housing that is either better, or less expensive than newly constructed ones.
Rehabilitated or converted multi-family housing has an edge over new construction because for the same cost, the space gained through rehabilitation is often greater and of superior quality. New apartment units are, on the average, 35-50% smaller than rehabilitated units or space in other types of buildings that have been converted to residential use. Although new construction and rehabilitation/conversion can be similar in total cost per unit, the cost per square foot of rehabilitation is often much less.
Reasons why the re-use or conversion of existing buildings is advantageous to the community and developers are:
-10-


-Maintaining existing buildings saves the cost of purchasing increasingly more expensive vacant land. Land in Lower Downtown Denver can cost as much as $260 per square foot, and this cost is always increasing.
-Rehabilitation of existing buildings is labor-intensive and the costs of large quantities of building materials for new construction is avoided. New construction is very expensive, often due to the high cost of building materials. Labor costs have increased, but not as much as material costs.
-Conversion, renovation, and rehabilitation of existing buildings takes less time than new construction.
-Rehabilitation work usually takes less than one year. New construction is around two years in length, or twice as long as rehabilitation.
-Indoor rehabilitation or conversion with can be done year round.
-Rehabilitation work can be completed in phases; one portion of the structure can be utilized, bringing in revenue, while the remainder of the building can be worked on.
-Due to the quality construction and amenities found in older buildings, competitive rental rates can be obtained. These amenities include;
-11-


*Large windows, high ceilings, large closets and storage space, flexible living space and often dramatic public spaces.
*Such amenities can be especially valuable to specialty users such as artists, who require large spaces with flexible living arrangements.
-Reuse of existing buildings saves the cost of demolition.
-Renovation often provides opportunities for tax advantages such as the Economic Recovery Tax Act of 1981.
*This investment tax credit, effective January 1, 1982, is as follows: 15% for structures at least 30 years old;
20% for buildings at least 40 years old; and 25% for certified historic buildings.
*The donation of an exterior facade easement can qualify the donor or building owner for various tax savings as well.
-Renovation means fewer public and social costs than new construction.
*A blighted area can be improved without changing its original character.
-12-


*Public facilities such as sewer and water
plus road infra-structure are already present thereby saving taxpayers money in public revenue expenditures.
*The soundness of a city's tax base is determined as much by the quality, repair and use of its older buildings as by the amount of new construction generated.
-The re-use of old buildings helps to conserve energy.
*Older buildings required a lot of labor and energy to build at a time when costs were lower. To demolish these buildings would require new energy and labor not including the replacement of building materials.
*New buildings often require great amounts of energy to make then habitable due to their totally controlled environments (HVAC systems). The masonry construction of older buildings can be adapted to retain heat more effectively than glass and steel construction.
*01der buildings often have large windows
that can be opened during the warmer
months, offering natural ventilation often
9
lacking in newly constructed buildings.
-13-


II. CONVERSION EFFORTS
A. Residential Conversions in Denver
1. Residential
There have been many office and commercial/restaurant conversion projects completed and in progress in Lower Downtown Denver. Some of the more notable projects are the Elephant Corral, Larimer Square, the RTD Administration Building and the Market Center. Residential conversion projects include:
-The Blake Street Bath and Racquet Club, 1732-1770 Blake Street. Constructed in 1881, this long two story building was originally created for commercial use on the first floor and railroad worker housing on the second. Mainly various commercial uses followed this original scheme. At present, the building is comprised of ten units with offices on the first level and luxury condominiums on the second. The rear portion of the site is occupied by a tennis court, swimming pool, and common building with locker rooms, conference room and sauna.
The developers of the current project are Peter Dominick, Jr., William Saslow, and Allen Reivers. Work was started in 1974, when, after purchasing the structure, William Saslow renovated one unit for his office and apartment above. Financing for renovating the remaining nine units was obtained from private sources in 1975, and the project was complete by
-14-


1978. In 1978, the nine units sold as condominiums for $75,000 each. In 1983, the price of one unit is approximately $250,000. The Blake Street Bath and Racquet Club is unique to Denver in that it incorporates many of the loft living ideas formulated in New York and Massachusetts. The original brick walls are mostly left exposed, as are the old wood beams which are offset by modern appliances and furnishings.^^
-The John LeCoq Studio and Residence, 1836 Blake Street The building was built in 1905 and was used by a coffee pro cessing firm. The building is now being utilized as studio and office space for various artist trades. John LeCoq, a graphic artist, has transformed the top floor into an apart ment for himself.^
-There have been various other residential conversion projects throughout Lower Downtown Denver. At the present time, none of these projects are as large a scale as the Blake Street Bath and Racquet Club.
2. Single Room Occupancy in Denver Downtown Denver and Lower Downtown Denver is providing low-income single room occupancy and emergency housing largely through the efforts of private non-profit organizations, social service groups and church groups. The Ecumenical Housing Corporation is currently attempting to rehabilitate
-15-


the Barth Hotel, Lower Downtown's only remaining residential
hotel.
The Ecumenical Housing Corporation has confronted the problem of housing the elderly and displaced persons in Denver. Around 50% of the elderly population in the region live in Denver, with a high percentage of them choosing to live in the Downtown area. The downtown elderly often reside in S.R.O. hotels and low-rent apartment buildings.
From 1974 to the present, 32 of the elderly housing structures have been closed down or demolished in favor of new commercial or office buildings. Over 2,000 elderly have
12
been displaced in the downtown area during this time period.
The E.H.C. is a non-profit, tax-exempt organization
that develops low-cost housing for elderly and low income
people. It was founded in April, 1979 as an offshoot of
the Colorado Council of Churches, Core City Project Task
Force. The E.H.C. has renovated the Olin Hotel at 1420
Logan Street, which opened on August 6, 1982. The Olin
provides 107 mixed buffet and one-bedroom units, converted
13
from their original hotel room usage since the 1920's.
The Olin Hotel was eligible for and received help from many public agencies, including the Colorado Housing Finance Authority and private non-profit firms such as the Gates Foundation, The Piton Foundation, and the Rotary Club.
-16-


The Barth Hotel was supposed to be completed by the Spring of 1983, however, the Reagan Administration has cancelled H.U.D.'s Section 312 loan program which was approved as a funding source for the Barth's renovation to a residential hotel. Presently, the E.H.C. has received funds from private sources for the Barth Hotel which will provide 64 non-subsidized residential units and 6,250 square feet of retail and commercial space. The Barth Hotel, over 100 years old, is not only an important housing resource, but an important historic site in Lower Downtown. Hotel-style services to be provided at the Barth Hotel upon renovation include furnished rooms, central telephone system, community kitchen and catered meals, linens and maid service, counseling and recreational activities for the elderly tenants.
3. Emergency Housing Conversion Emergency housing is in great demand in Lower Downtown as well. Several non-profit social service groups are currently working in this area. These groups include the Archdiocese of Denver which helps fund projects such as the Samaritan Shelter. These groups are Travelers Aid, Piton Foundation, and the Mile High United Way. Currently, there are little or no public funds available for emergency housing.
The Samaritan Shelter opened its doors in November of 1982, because of the great need to house destitute people,
-17-


especially during the winter months. The shelter, located in the closed Central Catholic High School at 1836 Logan Street, was started and is sponsored by the Basilica of Immaculate Conception and Holy Ghost Churches under the auspices of the Archdiocese of Denver. Archbishop James V. Casey is responsible for authorizing a grant of $50,000 to remodel and renovate the school. Along with an additional expenditure of $10,000 for beds by the Archdiocese, the Samaritan Shelter has received many private contributions upon which its operation depends.
The Samaritan Shelter has space of 164 people and is
equipped with showers, laundry facilities, and a kitchen
area. From November to January the facility has sheltered
700 men, 200 women and 60 families. The shelter estimates
there to be between 1,200 and 1,500 totally homeless people
14
in the Denver Metro Area. The need is great for even more emergency housing leading to more permanent housing for Denver's homeless.
Presently, the Piton Foundation is researching ways of providing more emergency housing services. The Piton Foundation has helped to organize a task force made up of Travelers Aid, the United Way and other groups in the region. One alternative is to provide emergency housing through the conversion of a warehouse or a similar large building. The
-18-


Samaritan Shelter provides an excellent example and hopefully a catalyst for how such a conversion can be accomplished. Perhaps the Piton Foundation can find an appropriate site in Lower Denver where abandoned warehouses are abundant and the need for emergency housing is great.
B. Residential Hotel Conversion Projects 1. Background
The State of California, and more specifically, San Francisco and Los Angeles have made rent advances in providing low-income housing in their older, downtown areas. These advances have been made in single-room occupancy (S.R.O.) housing, which for a long time has been a housing resource for the poor and elderly in our society. This housing source has long been overlooked by planners and housing groups,
causing the occupants of S.R.O. housing to be referred to as
15
the "invisible elderly". Many S.R.O. units have been destroyed by downtown urban renewal projects and many are still in jeopardy due to gentrification, downtown growth and downtown revitalization.
Views on S.R.O. housing and their occupants are changing as community groups are advocating protective legislation, federal housing assistance and affirmative S.R.O. programs.^ S.R.O. housing is comprised of residential hotels, rooming houses or converted apartment buildings in which furnished rooms are rented. Usually, common kitchen and dining facilities are provided, along with shared bathroom facilities.
-19-


Most of the residential hotels in California are old,
as are those in Denver. About 50% of San Francisco's resi-
17
dential hotels were constructed prior to 1910. Although most are in need of repair, the attractiveness of the S.R.O. units is that they are the least expensive source of housing in the private sector. In San Francisco, S.R.O. rent averaged $136/month, while the city-wide average was $490/month in 1980.18
The highest percentage of S.R.O. units are located in or near downtown commercial districts. The tenants are mostly elderly, very poor and not transient. A study in San Francisco of an area where S.R.O.'s comprise 10% of the housing stock found that the average income of S.R.O. residents was $395/month, which is about one-third of the city's
19
median income for single-person households. Elderly often
constitute more than 50% of the S.R.O. population. Denver
has 48% of its S.R.O. residents being at least 60 years of 20
age. The non-elderly persons who reside in this type of housing are either low-income working people or people recently released from institutions.
The tenants of S.R.O. housing are not "transients" as might be suspected. A San Francisco study found that 34% of S.R.O. residents lived in the same building for three years, 46% lived in the same neighborhood for four or more
years, and 66% of all S.R.O. tenants were in the same
21
neighborhood for over one year. These statistics are
-20-


the same, if not better than other residents of San Francisco. The same is true in San Diego, where redevelopment caused the demolition of a large portion of the City's S.R.O. buildings.
A study revealed that the average residency in these hotels was three years, with some tenants residing as long as 20 years in the same building.
It has been found that S.R.O. living is preferred by many of its tenants. A St. Louis S.R.O. study found that the S.R.O. tenant is:
-A unique personality type and lifestyle pattern among S.R.O. residents.
-A clear choice and preference for downtown S.R.O. living and lifestyle.
-A need to preserve the integrity of this lifestyle,
because it provides an important lifestyle option
23
for some people.
Single-room occupancy units can provide a good living environment for people who choose this lifestyle. The best S.R.O. buildings are run by long-term owners or non-profit organizations such as Reality House West of San Francisco and the Ecumenical Housing Corporation of Denver. Studies have shown that S.R.O.'s such as the 181-unit Bush Hotel in Seattle, Washington can be financially successful. The Bush Hotel ensures good security with a 24-hour desk clerk, provides constant and continual maintenance, and helps to maintain
-21-


a sense of dignity and community among its residents, who
. 24
often congregate in the lobby and common rooms. Singleroom occupancy tenants have become the victims of urban renewal efforts instead of benefactors. While S.R.O. housing was being torn down, thousands of tenants were being displaced, never to return to the new apartment housing due to the construction lag time. San Francisco has lost 4,000 S.R.O. units because of the construction of the federally funded Verba Buena urban renewal project. Denver has lost
1,800 S.R.O. units due to the urban renewal projects con-
25
structed since 1974.
Follow-up studies have shown that people displaced by public urban renewal projects relocate into more expensive, equally substandard, and just as crowded units. These displacements have been found to be psychologically damaging, breaking up neighborhood ties which include friends, public services and commercial places the S.R.O. tenants had relied upon and trusted.
Social Service Agency studies show that persons displaced from S.R.O. units turn to institutionalized care, to other hotels usually with higher rents, or to the streets. Many of the elderly residing in S.R.O.'s find them to be better alternatives than nursing homes which often lack in giving one a sense of independence and dignity. In addition, abrupt
-22-


changes to an elderly person's living environment or even a
27
threat of displacement hasten the mortality rate.
2. Government Programs for Single Room Occupancy Hotels. Federal programs are virtually non-existent for single room occupancy housing. The main reason is that S.R.O. hotels do not have kitchens and bathrooms in each room. F.H.A. 223(f) insurance, H.U.D. Section 8 rental assistance and H.U.D.'s Section 312 Low Interest Loan Rehabilitation Program are not usable at the present time. Furthermore, F.H.A. and H.U.D.'s Section 8 programs are not available because the singleoccupancy units do not meet minimum property standards, and Section 8 rental assistance is only available to single persons who are displaced as a result of public action or who are elderly. Section 312 loans have been eliminated by the Reagan Administration due to budget cuts.
California state government, plus the San Francisco and Los Angeles city governments have been the most active in the country in saving S.R.O. units. Both San Francisco and Los Angeles have allocated a portion of their Community Development Block Grant funds for residential hotel preservation. In each city the local codes must be met, but the rehabilitation structures are not required to meet the Housing and Urban Development Federal standards.
-23-


The California Housing Finance Agency has targeted a portion of its Supplemental Bond Security Account for use in preserving residential hotels. CHFA is working closely with the California Department of Housing and Community Development to work out a program to offer below-market financing with these funds. Other funds CHFA may be able to utilize in providing loans to residential hotels are limited to the following situation:
-As much as 10% of the net proceeds of any CHFA industrial development bond issue may be used for non-residential purposes. (Residential hotels are considered not to be a residential usage by the Internal Revenue Service.) This can be accomplished without jeopardizing the tax-exempt status of the issue. The remaining 90% of the proceeds are used to provide "residential real property for family units." [Internal Revenue Code Section 103(b)(4)(A). ]28
California Housing and Community Development has developed a model code for S.R.O. hotel rehabilitation which may be adopted by local governments. The rehabilitation code was drafted to make residential hotels safe while allowing preservation to be economically feasible. C.H.C.D. provides technical assistance in the rehabilitation of residential hotels, plus the Department has committed $1,100,000
-24-


of its Deferred Payment Rehab Loan Program funds to residen-29
tial hotels. The loan program administers a 3% loan with repayment of the principal and interest deferred only if the funds are necessary to maintain post-rehabilitation rents affordable by low-income households. The repayment of principal and interest can be deferred for up to 20 years if the low-income households are maintained. Seven localities and 12 projects were used in this program up to 1981.
San Francisco has utilized many innovating approaches to saving residential hotel units, since over 6,000 units have been lost in the City. In November of 1979, an ordinance imposed a moratorium on demolition or conversions of S.R.O.'s to other uses. The ordinance prohibits such destruction unless a one-for-one replacement can be provided.^ Another innovative policy in San Francisco requires the developers of high-rise office buildings in the downtown district to build or rehabilitate residential units at a rate of 400 square feet for every 250 square feet of office space. The developer has the option of contributing $6,000
to the City's mortgage revenue bond fund or to programs for
31
low-to-moderate income housing. A similar plan or ordinance might be helpful to Denver before the office boom diminishes.
-25-


C. Residential Conversion Project in Massachusetts
1. Massachusetts Housing Finance Agency a. Financing
The Massachusetts Housing Finance Agency (MHFA) was established through legislation in 1966 and was funded in 1968 through a $30,000 loan. The main reason for the formation of the MHFA was to assist and stimulate rental housing through non-profit developers. An important requirement for an MHFA loan is that 25%of the units financed in a single development must be rented to low-income families,
50% to moderate income families and 25% to upper income 32
families. This mixed income aspect of MHFA financed housing has been a great success in many projects throughout Massachusetts.
Overall percentages of MHFA financed housing show that 38% of the apartment units have been occupied by low-income people, 50% by middle-income people, and 12% are occupied by upper-income families. The Agency attributes the great success of their mixed income projects to high design standards, good management and excellent construction and quality standards in the developments. The M.H.F.A. has made a special policy commitment to financing residential rehabilitation projects and the conversion of abandoned non-residential structures to housing. The Agency has been a veritable pioneer and has greatly helped to ease
-26-


the way and set numerous examples for other regions around the country to do the same. b. Tax Programs
An important incentive for the conversion of buildings in Massachusetts has been the Chapter 121A, special property tax provision of the Massachusetts General Laws. Created in the late 1950's, the tax agreement was first used to facilitate the construction of the large-scale Prudential Center Complex. Subsequently, the tax agreement has been utilized to encourage renovation, conversion, and new construction in rundown areas. Basically, a tax agreement is reached between the community and the developer which creates a tax rate that is fixed over a specified period of time. The length varies on each project, with low-to-moderate income housing projects allowed the longest terms
of up to 40 years. Market rate housing projects can qualify
33
for up to 15-year tax agreements. The Chapter 121A tax provision has been an advantageous tool for the redevelopment of the large portions of Boston through the efforts of the MHFA and the Boston Redevelopment Authority (BRA).
2. Boston Redevelopment Authority The BRA has the dual task of land use planning and urban renewal in Boston. The Authority has drafted a "Boston Plan" for the waterfront urban renewal area. The main thrust of
-27-


the plan is to encourage the development of a new mixed-income configuration in this former industrial area close to downtown Boston.
After a careful survey of the waterfront urban renweal
area, a new, comprehensive land use plan for the area was
drawn up specifying new strict zoning restrictions including
height, setback, use and floor area requirements. Importantly,
some significant properties were slated as permissible for
demolition and new construction while others could not be
demolished or remodeled unless approval was secured by the
BRA, who carefully reviewed each project. Over 35 buildings
were identified for public acquisition and resale to developers
34
for new construction and rehabilitation. The property owners were given the option to avoid acquisition by the Authority if they presented development plans for the site that conformed to the specified goals for that site.
The "Boston Plan" was developed to stimulate redevelopment according to good planning and preservation objectives.
The BRA showed excellent foresight by implementing the plan before serious private developer interests occurred, which assured the workability of the plan. As a result of these good planning practices in the waterfront urban renewal area,
more than 500 new residential units have been constructed in
35
former industrial buildings and warehouses. Subsequently,
-28-


the Boston Redevelopment Authority has found other areas in Boston which are being revitalized in a similar manner.
D. Dallas, Texas
1. Downtown Housing Report
In 1982, the City of Dallas put together a report that investigates the potential of the Central Business District as a serious residential area compared to the surrounding inner city neighborhoods. The City of Dallas Planning Department supports the development of housing in the Central Business District, but concedes it will be very expensive.
Dallas expects to have 1,500 to 3,500 new residential units
36
downtown in the next 10 to 15 years.
Dallas and Denver are very similar cities in that both are experiencing a great building boom in the downtown sectors. In one year, from January 1, 1980 to January 1, 1981, downtown Dallas received 2,988,000 square feet of new office
space, 779,000 square feet of renovated office space and
37
100,000 square feet of new retail space. Millions of square feet of office space and other large-scale building projects and renovations are planned for the near future. As in Denver, the Dallas Central Business District is lacking any substantial residential development. Inner city housing is thriving according to the report because it can compete favorably with suburban housing in price and cultural amenities. The
-29-


Dallas report finds that Central Business District housing would be beneficial in the following ways:
-A reduction of peak-hour regional transportation will be noticed, giving people the option of walking to work.
-Will provide a greater housing choice in Dallas.
-Will provide a constant supply of evening and weekend clientele within walking distance of Central Business District retail areas and restaurants.
-Will improve Dallas' image as a cosmopoli-
38
tan, livable city.
The above-stated reasons for Central Business District housing apply equally to both Dallas and Denver.
The Dallas Central Business District Housing Report investigated three prototypical housing projects for cost of development, rental price comparison, and how they compare to surrounding residential neighborhoods. One prototype is a high-rise apartment house, the second is a midrise residential development, and the third project is a warehouse converted to residential apartments or lofts.
The high-rise apartment building consisted of 25 floors, 150 units at an average of 1,500 square feet per unit, with
-30-


a four-level parking garage at ground level. The mid-rise residential project has 520 units, with the average square footage of each building being 960 and the building height four to nine stories. The third alternative, the warehouse converted to residential, has 50 units at an average of 960 square feet per unit. The warehouse was assumed to be an historic structure allowing the owner to utilize a 25% investment tax credit.
A computer was used to determine the economic aspects of each project. The high-rise would cost $37 million, the mid-rise $100 million, and the warehouse conversion $5.2 million when located in the Central Business District.
Rental rate required for the high-rise is $1,020/month, for
^ the mid-rise, $1,292/month, and $470/month in the converted 39
warehouse. The warehouse conversion compares most favorably to the surrounding inner city neighborhoods where rent for similar and usually smaller two-bedroom units are in the range of $300 to $450/month.
The Dallas report concluded that it would be unlikely that the Central Business District would become a neighborhood for single professionals or career-oriented couples who work downtown. Instead, due mainly to the prohibitively
high cost, Central Business District housing will appeal to
40
an elite market of upper-class people. The anticipated
-31-


number of housing units is 1,500 to 3,500 over the next 10 to 15 years, with 500 to 1,500 units priced reasonably for upper middle-income persons. The lowest cost housing will probably be located in renovated warehouses and some new development in the older Farmers Market area, which is similar to Lower Downtown Denver. One thousand to two thousand housing units are anticipated to be for high-income people and corporations. The anticipated average household size is 1.75 per household, which means an additional 2,625 to
6,125 new residents in Downtown Dallas over the next 10 41
years. The City of Dallas Housing Report surveyed 14 cities across the United States to find out their jobs-to-residents ratio in their downtown areas. The lowest ratio was in Boston, with a six-to-one resident-ratio, and the highest was Houston because it is a city of sprawling suburban character. Denver is high, with a ratio of 34:1, and Dallas is even higher at a 45:1 jobs-to-residents. Both Dallas and Denver have similar problems because office buildings construction is being favored instead of housing which is needed as well.
Recommendations from the report for encouraging downtown housing in Dallas are broad, but imply that the City must take an active role in promoting housing. The report points out the great potential for locating residential units above
-31-


parking garages. Another recommendation is to explore housing alternatives in older areas where through the encouragement of City policies and possible tax breaks, existing buildings can be renovated or converted to housing. Public improvements are pointed out as being important for housing. These include road improvements, development of parks and some open space areas.
Zoning incentives such as those recently adopted in Denver, are encouraged in planning for residential conversions. The benefits will be many. Residential benefits include: a decrease in peak-hour traffic and air pollution,
a stronger Central Business District retail and restaurant market, a livelier downtown and safer streets at night. Downtown housing will also lessen the pressure on surrounding
42
neighborhoods to provide all the inner city housing needs.
2. Dallas, Texas Historic Preservation Policies In October, 1982, the City of Dallas published the "Mayor's Task Force Report on Preservation Incentives for Downtown Historic Landmark Buildings". The report pointed out many recommendations and model ordinances that would help to provide incentives for preserving historic Central Business District buildings. The report's recommendations include:
-Tax Relief: to provide provisions through the adoption of an ordinance that allows for temporary abatement from taxes (eight years, at the current
-32-


level). The property must be a designated landmark and must be substantially rehabilitated to qualify for tax abatement.
-Construction and Use Codes; to make provisions for the reduction of code related obstructions for re-habilitation/restoration of historic landmark buildings easier to work on and less expensive, while at the same time keeping them safe.
-Transfer of Development Rights: the City of Dallas believes that the Transfer of Development Rights concept will provide the incentives needed to preserve historic buildings, while allowing property owners to achieve additional income buying and selling development rights above their buildings. Denver has recently implemented this resolution or ordinance to the B-7 District zoning codes.
-Facade Easements: this concerns adopting a resolution providing for acceptance of facade easements for owners of historic landmark properties. The owner of a designated landmark can donate a facade easement to either the City of Dallas or other City Council designated organization as charitable contributions for tax breaks on both Federal Income and City property taxes.
-33-


-Capital Improvement Policies: for provisions that ensure that a Capital Improvement program will be consistent with the City of Dallas historic preservation policies.
-Central Business District Planning Policies: require that a review process to ensure that Central Business District planning is consistent with preservation policy is developed. Encouragement is given to the Lankmark Committee to develop comprehensive Historic Preservation Plan.
-Establish a Landmark Designation Demolition Process: this would create special Central Business District Provisions for the Designation of Landmarks and the demolition of those buildings that are too far deteriorated and do not qualify.^
-34-


III. B-7 DISTRICT CONVERSION OPTIONS
A. Colorado Housing Finance Authority
As stated earlier in the thesis introduction, the three (3) regions studied will be compared to housing programs presently available in Colorado. The first agency studied is the Colorado Housing Finance Authority.
The Colorado Housing Finance Authority (CHFA) was established by the Colorado General Assembly in 1975 as a quasi-governmental corporation. The purpose of forming CHFA was to initiate loans at below market rates for construction and permanent mortgages to provide affordable housing for low- and moderate-income families and individuals. The capital for these loans is raised through the sale of tax-exempt revenue bonds and notes to private investors with no direct costs to the Colorado taxpayers.
In the Authority's enabling legislation (Colorado
Housing Finance Authority Act) it is stated that at least
75% of the rental units financed by any mortgage loan must
be made available for occupancy by low- (20%) and moderate
44
(55%) income families and individuals. A low-income family or individual is defined as those who are eligible for H.U.D. Section 8 Housing Assistance Payment Program families whose adjusted income does not exceed 80% of the median income. Moderate-income people are defined as an annual adjusted income that does not exceed 120% of the Colorado median income.
-35-


Through the Multifamily Loans to Lenders Program, the Authority provides low interest loans to builders. The purpose is to finance the acquisition, construction, reconstruction and rehabilitation of multi-family mixed-income rental housing units.
The Authority has been responsible for financing many mixed-income, multi-family housing projects throughout Colorado. Currently, several downtown area housing projects have been or are receiving CHFA financing. To this date,
CHFA has not financed any multi-family residential conversions projects in Lower Downtown Denver, although this approach is feasible. According to Kevin Marchman of CHFA, the property owners and developers in Lower Downtown do not feel that multi-family housing would bring in the most money for development in Lower Downtown Denver. Perhaps with innovative housing finance and tax programs, CHFA can help to pave the way for residential conversions projects in Denver. B. Denver Urban Renewal Authority
DURA in cooperation with the Denver Planning Office is responsible for executing and planning programs to rehabilitate and renovate areas of Denver that are blighted or substandard. This semi-independent agency was initiated by City Council Ordinance in 1958. The Authority looks into sites to be rehabilitated and works with the owners on needed improvements or changes. The projects are paid for
-36-


by the owners but the renovations are asissted by low interest loans from DURA.
In some cases DURA will purchase property at market value. The buildings are either demolished for new construction or rehabilitated after the occupants are relocated. DURA is required to sell acquired land or buildings to public or private redevelopers.
DURA's largest and most ambitious project to date is the Skyline Urban Renewal Project. This 113 acre project area directly next to Lower Downtown Denver was an effort to renew a decaying section of Downtown Denver. Development costs for the Skyline Project have exceeded $813 million. 930,000 square feet of retail and commercial, 6 million square feet of office space, 2,225 residential units for varied income and 750 hotel rooms have been a result of the project. Many public improvements including improved street, sidewalk and sewer systems and a linear park costing around $5
45
million have been part of the project.
There has been much debate as to whether or not the policies and programs of the Skyline Project gave enough attention to historic preservation and retention of the character of the area. Many older buildings including many residential hotels were demolished. No residential conversion projects were included in the Skyline Redevelopment Project.
-37-


C. Historic Denver, Inc.
The private non-profit agency, Historic Denver, Inc., was founded in 1970 to save the Molly Brown House. Its main purpose is the preservation of Denver's historically and architecturally important neighborhoods and buildings.
In the near future, Historic Denver, Inc. hopes to survey and inventory every significant historic structure in the B-7 District and Platte River Valley with the assistance of the Preservation Alliance. The Preservation Alliance, consisting of concerned members from agencies such as the Denver Partnership, Larimer Square Association and the Denver Planning Office, hopes to develop a master land use plan for saving the historical character of the B-7 District and Platte River Valley. Funds for this project are the State Historical Society and private sources both of which have not been secured at this time.
D. B-7 District Residential Conversion
What is needed to carry out the adopted goals/objectives for the B-7 District is a comprehensive view of Lower Downtown housing through conversion and renovation. Much can be learned from the policies, programs and accomplishments of the various agencies across the country involved in downtown areas.
-38-


1. Single-Room Occupancy
Progress and notable accomplishments at both the state and city government levels have been made in single-room occupancy housing. California housing agencies have recognized this to be a viable, good housing source for low-income and elderly people, since at the same time it can allow the utilization and preservation of older, often significant hotel buildings. Downtown Denver has already lost many S.R.O. units and still has no active policies or programs aimed at assisting this important housing resource.
Fortunately, the Ecumenical Housing Corporation is working very hard to preserve this type of housing through efforts in the private non-profit sector. The Barth Hotel, a current S.R.O. project of the EHC will be very helpful to lower-income and elderly persons residing in the downtown area. This project is vital in that it is consistent with the historic preservation and residential goals of the B-7 District.
Denver public housing agencies and the Colorado Housing Authority need to take a more active role in financing and preserving single-room occupancy housing in this type of housing is to survive in Lower Downtown Denver. As stated earlier in the thesis, little or no support can be expected
-39-


from H.U.D. because of budget cuts and program freezes.
An active, comprehensive and imaginative set of strategies similar to those utilized in California are needed to make Denver and the State of Colorado an advocate of singleroom occupancy housing.
2. Special Property Tax Provisions The Massachusetts Housing Finance Agency is one of the pioneers in stimulating mixed-income housing at the state level. The MHFA is a great advocate of renovation and residential conversion projects, as evidenced in their impressive track record since their formation in 1968. The MHFA attributes its great success in mixed-income housing projects to high standards of design, imagination, good management, construction and quality standards in development. As pointed out earlier, a great incentive for the re-use of old buildings has been the adoption of the Chapter 121A special property tax provision of the Massachusetts General Law.
The Colorado Housing Finance Authority has the same basic goals and finance programs to promote mixed-income housing in Colorado as the MHFA the major difference being that CHFA does not exhibit as strong or really any commitment to the rehabilitation or conversion of older, historic buildings to housing. The CHFA seems to have
-40-


taken a passive role in the rehabilitation/conversion area, where the MHFA has more active programs and policies. Important evidence of this is the absence of any statewide tax abatement program in Colorado as is present in Massachusetts.
A strong tax incentive program that can be targeted at specific areas would greatly help to stimulate residential conversions in the B-7 District. Perhaps if special tax agreements can be executed between residential developers in the B-7 District and the City and State, residential developments will become more attractive. These tax programs can be especially effective when used in conjunction with the new zoning incentives.
3. Rehabilitation and Urban Renewal The Boston Redevelopment Agency is very active in rehabilitating and preserving older areas of the City of Boston.
The BRA has taken a very active, aggressive role in preserving the character and historic value of older Boston's Waterfront District. Strong, comprehensive planning has been the key element in improving this area. The plans and strict land use controls have been very successful in making blighted areas vital, well balanced and important again.
The Denver Urban Renewal Authority (DURA) has had a smaller budget and less experience than the BRA in dealing with urban renewal and revitalization since its formation
-41-


in the mid-1950's. Because of the higher urbanization of Boston and the differences noted, it is difficult to compare these two agencies directly. However, DURA can learn from the success and failures of the BRA and other urban renewal agencies around the country. It has been proven that the clearance of slum areas followed by the construction of new housing and related buildings is costly and does not always benefit the low-income people it was to serve. One example is the well documented Pruett-Igo housing project in St. Louis, whereupon a new public housing development failed terribly. If urban renewal agencies follow the example of the BRA in working with existing structures and preserving the basic character of a blighted area, results are likely to be more positive and less costly. The B-7 District or parts of the District are still well suited to benefit by the efforts of DURA. Perhaps with new fundings sources, strong planning objectives, a residential conversion policy and support from related government agencies, similar results as parts of Boston can be evidenced in the B-7 District.
4. Planning Reports/Housing Dallas and Denver have similar downtown districts in thriving western regions. Both are experiencing great office building booms with a lack of supportive residential
-42-


development. Dallas has a good amount of housing available in neighborhoods surrounding the downtown district as does Denver. The major difference in the two cities can be evidenced in the cities commitment to downtown planning, specially in the housing area. The Dallas Planning Office has produced a comprehensive housing study investigating three alternative residential schemes that might work in Downtown Dallas (high-rise, mid-rise, and a warehouse conversion) .
Due to severe budget cuts, the Denver Planning Office has had to put housing plans in Downtown Denver on the back burner. Denver Downtown Incorporated has done a good job of picking up the slack in downtown planning. In addition, Citywest, a private planning agency based in California, has formulated a report outlining different planning strategies for Lower Downtown Denver which includes some residential. The report, which laid some of the framework for Denver's recently adopted B-7 District zoning incentive package, is a good effort. The report does not seem to have the strength or impact needed to stimulate stronger land use controls in Lower Downtown. The free market economy is shaping the destiny of Lower Downtown with limited government controls.
The Denver Planning Office, with support from private agencies like DDI and Citywest can be a vital force in
-43-


shaping the B-7 District's future housing potential. The Dallas Planning Office, with its comprehensive report, is more in touch with the realities and issues affecting its downtown area housing. Although the Dallas Planning Office concedes that a very limited amount of low- and middle-income housing will be present in their downtown, a workable plan or strategy has begun to be formulated. It would be helpful for Denver to follow this example of comprehensive planning.
5. Historic Preservation
The City of Dallas in their "Mayor's Task Force Report on Preservation Incentives for Downtown Historic Landmark Buildings" has shown active interest in preserving historic buildings. The report details a plan for policies and proposals that would help to stimulate preservation activity, rehabilitation and in some cases, conversion in Downtown Dallas.
The B-7 District needs to have a similar investigation conducted that would be geared toward preservation activities for conversion of some of the buildings to residential. The present development climate in the B-7 District is more favorable towards commercial and office conversions. The preservation Alliance is taking positive steps towards a master plan for the district. Hopefully, an emphasis on
-44-


residential developments will be strived for, the B-7 District a vibrant 24 hour segment of
thereby making Downtown Denver.
-45-


IV. CONCLUSIONS
A comprehensive plan combining the powers and knowledge of the public and private sectors in Denver is needed to make residential conversions and single room occupancy housing feasible in the B-7 District and other suitable areas of Denver. This housing can and should be made available to all income levels. The key elements of a comprehensive planning approach to residential conversions can be learned from the three regions studied in this thesis and the publications available concerning conversion housing. The planning elements needed to make residential conversions more of a reality in Lower Downtown Denver are:
-A strong city planning department willing to assist potential residential conversion developers. Specialist with the knowledge of the market who can recognize and promote potential sites which should be utilized. If the B-7 District proves to be infeasible for loft conversions, these specialists can study other potential areas in Denver that might be more feasible for loft conversions.
-The building codes must be carefully examined to determine whether or not they would accommodate
-46-


loft conversions. If the standard codes are applied, the planning and building departments should work carefully with developers to give the most advantageous interpretations. Flexibility and imagination are the keys to applying building codes to residential conversion buildings.
-A carefully planned tax incentive package similar to the Chapter 121A provision in Massachusetts would greatly help to stimulate conversion activity. Subsidies such as tax abatements for the cost of rehabilitation or a change in the method of assessing valuation for loft conversion projects can be considered. The terms for these abatements should be carefully planned in time duration so as not to impact other areas of the city.
-Capital improvements in the B-7 District can greatly help to stimulate residential 24-hour street activity in the B-7 District. Some public improvements include:
Increased pedestrian spaces and small parks. The 16th Street Mall is close by and has great potential for day and night activity. However, small-scale
-47-


pedestrian walkways and spaces similar to those found on Larimer Street are necessary for residential activity.
*Improved parking areas would greatly enhance the all-day activity.
improved streets, sidewalks and benches along streets.
Stimulation of residential-related businesses such as food stores and retail shops are needed.
-Eminent Domain is an alternative in stimulating residential development in the B-7 District. Vacant land for parking, retail and commercial support and open space can be acquired. Compatible existing industrial and commercial buildings can be bought to keep the area mixed in use. Key buildings for residential conversion can be acquired as well when owners are uncooperative with development. The high price and value might make Eminent Domain limited in its usage, but some public acquisition could help to stimulate the private sector.
-The creative use of federal government housing monies, grants and programs can be utilized in the B-7 District. Urban development action grants, community development
-48-


block grants and other federal programs needed to be directed toward Lower Downtown Denver.
The Barth Hotel which is presently undergoing renovation is an important project in that poor elderly and low income people will be housed in the B-7 District while a significant building is upgraded. Perhaps through this example, single room occupancy housing will be stimulated in other areas around Downtown Denver even though many units have been lost. Cooperation between public, private and State legislators is needed to help finance and operate single room occupancy housing. In their conversion of a closed Catholic High School into quality temporary housing, the Samaritan Shelter has shown how the very needy can be placed. Hopefully, an additional site will be found in or near the B-7 District where the need for temporary housing is great.
It has been proven that a conversion project will ultimately cost less than new construction of such a facility.
Mixed income residential conversion projects presently have little potential in the B-7 zoned District. This is due to the high price of land ($200 + per square foot), en-
couraging an atmosphere more suitable for office and commercial developments which are more financially attractive to investors, especially through the parcelization of lots. However, with the influx of easterners and "urban dwellers", the demand for mixed income, downtown housing has swelled.
-49-


Residential conversion projects present an interest and challenge to urban planners, developers, housing agencies and private financers. The B-7 District will present the greatest challenge because of the numerous suitable residential conversion buildings which are being lost to demolition for new construction or are being converted to office and commercial usage. If the residential and preservation goals are to be met, fast action in addition to the new zoning incentives are necessary. The residential conversion projects studied in this thesis are proven examples that through government and private sector cooperation they can be successful and vital for the downtown area, which includes the B-7 District plus the areas surrounding downtown.
-50-


CONTACTS
1. Katie Liske and Robert Yager; Denver Partnership, Inc.
2. Peter Dominick; Dominick Associate Architects.
3. Richard J. Roddewig; Attorney with Shlaes and Company in Chicago.
4. Keith Sutton and Michael Sears; Denver Housing Authority.
5. Lisa Purdy; Historic Denver, Inc.
6. Christine Pfaff; National Register of Historic Places.
7. Janet Day and Sondra Winterhof; Fuller and Company.
8. Doug Goedhart; Denver Planning Office.
9. Lucy Shelby; Larimer Square Association.
10. Ray Finney; H.U.D.
11. Elizabeth Orr; City of Denver Office of Policy Analysis.
12. Jim Kurlish; Colorado Downtown Development Association.
13. Everett Madrigal; City of Denver Community Development Agency.
14. Jean Ackerman; Consolidated Marketing Research.
15. Phil Milstein
16. Bar Chadwick; Ecumenical Housing Corporation.
17. William Saslow; Architect
18. Kevin Marchman; Colorado Housing Finance Authority.
19. Robert Bach; Senior Planner, City of Dallas Planning and Development.
20. Robert Cameron; Denver Urban Renewal Authority.


FOOTNOTES
1. Loft Conversions: Planning Issues, Problems and Prospects; Roddewig, Richard; p.l
2. Rocky Mountain News; March 9, 1983
3. Loft Conversions: Planning Issues, Problems and Prospects; Roddewig, Richard; p.l
4. Denver Post Empire Mag azine; October 11, 1982
5. Downtown '83, Denver s New Look; League of Women Voters;
1983 p .15
6. City of Denver Municipal Code; B-7 District November 19,
1982
7. Lower Downtown Development Guidelines; Denver Planning
Office ; 1978; p. 1
8. Lower Downtown Pro iect ; Denver Partnership, Inc., 1982
9. Built to Last; Bunnell, Gene
10. Downtown '83, Denver's New Look; League of Women Voters;
1983; p 15
11. Ibid.
12. Ecumencial Housing Coporation
13. Ibid.
14. Samaritan Shelter; 1836 Logan Street
15. A Guide to the Preservation and Maintenance of S.R.O. Housing; Werner, Frances and Bryson, David; 1981 p.999
16. Ibid.
17. Residential Hotel Rehabilitation Demonstration; State of California Department of Housing and Community Development; 1981; p.l
18. A Guide to the Preservation and Maintenance of S.R.O. Housing ; Werner, Frances and Bryson, David; 1981 p.1000
19. Residential Hotel Rehabilitation Demonstration; State of California Department of Housing and Community Development; 1981; p.l


20.
A Guide to the Preservation and Maintenance of S.R.O. Housing; Werner, Frances and Bryson, David; 1981; p.1004
21. Ibid., p.1001
22. Ibid.
23. Ibid.
24. Ibid., p.1002
25. Residential Hotel Rehabilitation Demonstration; State of California Department of Housing and Community Development; 1981 p.2
26. A Guide to Preservation and Maintenance of S.R.O. Housing; Werner, Frances and Bryson, David; 1981 p.1004
27. Ibid., p.1005
28. Residential Hotel Restoration Demonstration; State of California Department of Housing and Community Development; 1981; p.2
29. Ibid.
30. Ibid., p.5
31. Planning Magazine; July, 1982; p.4
32. Built to Last; Bunnell, Gene; 1977 p.17
33. Ibid.
34. Loft Conversions; Planning Issues, Problems and Prospects; Roddewig, Richard; 1981; p.l
35. Ibid., p.10
36. Central Business District Housing Prospects; Department of Planning and Developemnt, City of Dallas, Texas; 1982; p.4
37. Ibid., p.5
38. Ibid., p.7,8
39. Ibid., p.15
40. Ibid., p.20


Ibid .
41 .
42. Ibid.
43. Mayor's Task Force Report on Preservation Incentives for Downtown Historic Landmark Buildings, City of Dallas; October, 1982
44. Colorado Housing Finance Agency Report; 1982
45. Downtown *83, Denver's New Look; League of Women Voters; 1983, p.15
|



J

BIBLIOGRAPHY
1. Bui 11 to Last; The Massachusetts Department of Community Affairs; Bunnell, Gene; The Preservation Press; 1977.
2. Lofts: Balancing the Equities; City of New York Planning Commission; Herbert Sturtz, Chairman; 1981
3. Loft Conversions: Planning Issues, Problems and Prospects; Roddewig, Richard J.; Planning Advisory Service Report # 362; 1981.
A. Historic Preservation Law: An Annotated Bibliography Robinson, Nicholas A; Real Estate Law and Practice Series #168; 1979; Practicing Law Institute.
5. Lower Downtown Denver; University of Colorado at Denver Design 700 Project; Fall, 1981
6. Lower Downtown Development Guidelines; Denver Planning Office; April 1978.
7. Denver, Lower Downtown Development Strategies; City West; 1981
8. A Guideline to the Preservation and Maintenance of SRO Housing; Werner, Frances and Bryson, David; 1981
9. Residential Hotel Rehabilitation Demonstration: A Progress Summary 1981; State of California Department of Housing and Community Development.
10. Central Business District Housing Prospects; Depart-of Planning and Development, City of Dallas, Texas;
1982
11. Downtown '83, Denver's New Look; League of Women Voters; 1983
12. Mayor's Task Force Report on Preservation Incentives
or Downtown Historic Landmark Buildings, Implementation Recommendations; City of Dallas, Texas Mayors Office; 1982
13. Annual Report for Fiscal Year 1982, Massachusetts Housing Finance Agency
1A. House and Home, the Magazine of Housing; A McGraw-Hill Publication; March 1977; pp. 81-83


Professional Builder, Apartment Business; September, 1977
MHFA Newsletter; August, 1982
Empire Magazine, The Denver Post; October 10, 1982;
pp. 20-21
Adaptive Use; Urban Land Institute; 1977





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APPENDIX
Dear
I am a student at the University of Colorado-Denver working on my thesis project for a masters degree in Urban and Regional Planning. The focus of my thesis is the feasibility of providing affordable housing in Lower Downtown Denver through the conversion and renovation of older buildings. These older buildings can be anything from warehouses and industrial structures to run down hotels.
The major problem in Denver is not so much the potential for renovation, which is present, but how residential units, affordable to low- and middle-income people can be provided.
I would appreciate it greatly if you could send me any information on strategies you have utilized in your City/State to provide affordable housing Downtown through conversions or renovations. I am interested in zoning policies, tax programs, financing incentives, grants and any other information you are able to provide in this area.
Thank you very much for your cooperation and I would appreciate a response by November 15, 1982, due to project deadlines.
Sincerely,
Jerome Hittleman 831 Cherry Street #32 Denver, CO 80220


The Mercantile Wharf Building
The 125 year old Mercantile Wharf Building in Boston was originally used by ship chandlers and sailmakers in the 1800's and food processors and packers in the 1900's. The building was converted into 122 apartments and 12,000 square feet of commercial space by Peabody Construction of Massachusetts. When the building conversion was completed, 1,400 applications were received for the 122 units. The popularity of the building is attributed to the fact that historic buildings sell easily in Boston and the attractive financing package provided by the Massachusetts Finance Agency which stipulates that 50% of the units be subsidized. These rental requirements were met and were subsidized by:
-The Boston Housing Authorities Section 707 subsidies, which amount to one fourth of the renters income on 25% of the units.
-FHA Section 236 subsidies cut rents to $235-$360 a month for the 25% moderate income renters.
-The remainder of the units were rented at market rates from $410 to $650/month for upper income renters.
The project was made feasible because of the low acquisition price of $77,000 from the Boston Redevelopment Authority and because it was within the Waterfront development area.


The market price for similar buildings in the area were going for as much as one million dollars. $4.3 million was spent on construction. In Boston, in June, 1976, the construction cost for this project was $21.50 a square foot compared to $26 to $30 a square foot for new construction.
The interior was completely gutted, but the exterior was left unchanged, because the building was an historic landmark. A central court and atrium was created in the center core, running the entire length of the building.
This creates a dramatic effect that can be viewed from the glass enclosed elevators, commercial spaces and apartments. In addition, the central core design provides more light and cross ventilation for the apartments.


APPENDIX
MERCANTILE WHARF BUILDING
Land Use Information:
Site Area:
Total Dwelling Units:
Gross Density:
Parking:
Building Area :
Residential
Commercial
Atrium
Circulation/Lounges Common Rooms/Office Mechanical
TOTAL
0.88 acres
122
138.64 du per acre
Available at $35/space per
Square Feet Percent
141,243 66.0
13,444 6.3
12,300 5.7
41,400 19.3
2,625 1.3
3,000 1.4
214,012 100.0
Unit Information:
TyPe
Number
Sq. Ft .
Rents
Bdrms Bthrms
A (Studio, Stnrd Duplex)
B (Stnrd Duplex)
C (Duplex, Triplex)
85
31
TOTAL UNITS 122
Economic Information:
Acquisition:
City Improvement Site Construction: Development:
market
subsidy
535-880
$490 $235 1
(19 units) (66 units)
985-1,190 $580 $285 2
(16 units) (15 units)
1,540 $650 $360 3
( 2 units) ( 4 units)
(37)
(85)
$72,600
$100,000
$21.70 per square foot $23.83 per square foot
1 .
SOURCE: Adaptive Use: Development Economics, Process &
Profiles.


The Chickering Piano Factory
The Chickering Piano Factory, built in 1853, was used for the manufacturing of pianos until the 1930's. In the 1970's, only a few small commercial tenants were occupying the building which had severely deteriorated. To the advantage of the developers, the building was ideal for residential conversion because of the large inner courtyard that allowed much sunlight and natural ventilation into the apartments. The apartments are very spacious with 10-20 foot ceilings that serve the artist tenants well.
The cost of converting the piano factory to apartments was minimized in the following ways:
-Massive structural members such as pine columns were left in place.
-The floors, beams and walls were structurally sound but were not always perfectly level or new.
-Three existing elevators were renovated for $60,000 as opposed to $150,000 for new ones.
-The exterior brick was repainted for $15,000 instead of exposing the brick for $85,000.
-Piping for the sprinkler system, water and steam were left exposed for about a $200,000 savings.
-Sanding and repair of the existing floor saved $300,000.


The apartments were built specifically for artist tenants by:
-Leaving freight elevators intact for the lifting of heavy art materials.
-Installing large apartment doors, 8' x 3.5" to allow large objects to be moved in and out.
-Placing some electrical outlets at ceiling height for the convenient use of spotlights.
-Using flat white paint as a neutral background for the display of artwork.
This project was part of the Boston Redevelopment Authority Plan for the area which made use of available Federal funds for the relocation of existing tenants. The Massachusetts Housing Finance Agency loaned the developer 3.4 million dollars, 89% of the total cost (40 years at 7.5% interest). Under the MHFA financing terms, 25% of the units must be rented to low income artists, 50% to moderate income artists and 25% to artists who can afford market rate rentals.
The developers sold a 90% interest to a syndicate of limited partners who received a five-year tax write-off based on an assumed 20 percent annual depreciation rate plus an 8% return on their investment. This project is considered a success by the developers who are receiving tax credits plus a profit and the MHFA has helped to save an important Boston building.


APPENDIX
CHICKERING PIANO
Location:
Former Use:
New Use:
Developer: Architect:
General contractor:
Construction schedule:
Total Floor Area:
Cost:
Financing:
FACTORY
791 Tremont Street, South End, Boston Piano factory, built 1853
Piano Craft Guild, 174 apartment-studios for artists and artisans
Gelardin/Bruner/Cott, Inc., Cambridge
Gelardin/Bruner/Cott, Inc., Cambridge Anderson Notter Associates, Boston supervising architects for MHFA
Noram Construction Company, Boston
Begun January 1973; first occupancy February 1974
220,00 square feet(gross)
177,898 square net leasable
$2,300,000 construction $13,218/unit $10.50/square foot $3,500,000 total development $20,115/unit $ 15.91/square foot
Construction and long-term financing from Massachusetts Housing Finance Agency
SOURCE:
Built to Last


APPENDIX
TABLE I
Apartment Rents in the CBD Versus Competitive Submarkets
Average Monthly Rent Annual Household Income for 2 Bdrm Units(l)________Needed to Qualify(2)
Dallas County $ 328
Oak Lawn 394
McKinney/Cole Corridor 387
East Dallas 357
Park Cities 336
Oak Cliff 293
Potential CBD Project s (3)
High-rise 1,020
Mid-rise 1,292
Renovated Warehouse 470
$ 15,744 18,912 18,576 17,136 16,128 14,064
48,960
62,016
22,560
(1) Excludes electricity
(2) Annual rent = 25% of annual household income
(3) Assumes 960 sq. ft. unit
SOURCE: Dallas Housing Report


APPENDIX
TABLE I
Price of Housing in the CBD Versus Competitive Submarkets
Average Sales Price/ SF (2 Bdrm Unit) Average Sales Price for 960 SF 2 Bdrm Unit Monthly Mortgage Pymn t( 1 ) Annual House hold Income Needed to Qualify(2)
Dallas County $ 76 $ 72,960 $ 683 $ 32,784
Garden Units Oak Lawn & Mckinney/
Cole Corridor 78 74,880 701 33,648
East Dallas 81 77,760 728 34,944
Park Cities 138 132,480 1,241 59,568
High-rise Units 161(3) 154,560 1,448 69,504
Potential CBD High-rise Projects 195(3) 187,200 1,753 84,144
Mid-rise 235 225,600 2,113 101,424
Renovated
Warehouse 110 105,600 989 47,472
( 1) 25% down, 15% interest, 30 year term
(2) Annual mortgage payments = 25% of annual household income
(3) The per-square-foot sales price of $195 for the prototypal CBD high-rise unit is substantially higher than the price of $161 for existing high-rise units for three reasons: (1) CBD land values are greater; (2) the existing projects include one conversion project where units sell for less than comparablesized units in new porjects; and (3) some existing projects were completed several months ago, when construction costs were lower; construction loans were committed wel before then, when interst rates were lower.
SOURCE: Dallas Housing Report


APPENDIX
TABLE III
Sales Prices and Rentals for CBD Housing
High- rise Mid-rise Renovated Warehouse
Average Unit Size 1,500 SF 960 SF 960 SF
Sales Price/SF (1) 195 235 110
Unit Price 292,500 225,600 105,600
Monthly Mortgage Payments Plan A (2) 3,834 Plan B (3) 2,740 2,947 2,113 1,384 989
Annual Rent SF (4) 12 . 75 16. 15 5.87
Monthly Unit Rent 1,594 1 292 470
(1) Required for a 15% profit margin on sales.
(2) 10% down, 17.5% interest, 25 year term.
(3) 25% down, 15% interest, 30 year term.
(4) Required for a 20% after tax internal rate of return (ATIRR) over a seven year holding period.
SOURCE: Dallas Housing Report


APPENDIX
TABLE IV
Ratio of CBD jobs to Residents in Selected Cities
City CBD Jobs CBD Residents Jobs/Residents
Boston 310,000 55,000 6 1
Philadelphia 300,000 42,500 7 1
New Orleans 80,000 8,700 9 1
San Diego 32,000 3,500 9 1
Cleveland 120,000 12,000 10 1
Minneapolis 100,000 10,000 10 1
Memphis 70,00 4,000 15 1
Atlanta 90,000 5,950 15 1
Kansas City, M0 47,000 3,000 15 1
St. Louis 90,000 4,500 20 1
Denver 92,000 2,700 34 1
DALLAS 130,000 2,900 45 1
Houston 165,000 2,000 84 1
SOURCE: Telephone survey conducted by the Department of
Housing and Urban Rehabilitation, City of Dallas


APPENDIX
TABLE V
Downtown Resident Hotels Ceasing Operation Since 1974
Census No. o
Hotel Tract Address Status Rooms
Alamo 17.01 1411 17th St. Clsd/78-Demo/80 38
Antlers 27.03 1440 Washington Demo/75 46
Bellevue 26.01 1953 Linclon St. Clsd/76 60
Clarkson 26.02 800 E. 18th Ave. Clsd/78 24
Colorado 17.02 1645 Tremont PI. Demo/7 5 100
Columbia 17.01 1330 17th St. Clsd/77-Convert/80 98
Court Place 17.02 1635 Court PI. Clsd/74 37
Crest 17.02 11 E. 26th Ave. Clsd/78-Demo/80 80
Denham 17.02 609 18th St. Clsd/79 17
Denver 17.01 1700 Market St. Clsd/79-Demo/80 23
Elgin 17.02 1853 Wei ton Demo/7 8 60
First Ave. 21.00 27 W. 1st Ave. Clsd/78 90
Gray stone 17.02 512 15th St. Clsd/79-Dismntl/80 32
Holden 17.02 1821 California Clsd/78-Demo/79 60
Lewiston 17.02 723 18th Ave. Clsd/78-Demo/79
McCloud 17.02 1758 Glenarm Demo/76 42
Presidents 17.02 711 18th St. Demo/7 6 140
York 26.01 243 E. 19th Ave. Clsd/77-Cnvrt/79 56
Jefferson 17.02 1529 Champa St. Clsd/80 20
St. Francis 17.02 411 14th St. Clsd/81 57
Rockland 17.02 1435 Tremont Clsd/81 38
Auditorium 17.02 1406 Stout St. Clsd/81 130
Raylane 26.01 30 E. 20th Ave. Clsd/81 62
Pierce 17.02 1302 California Clsd/81 68
West Court 17.02 1415 Glenarm PI. Clsd/82 141
TOTAL 1,529
SOURCE:
Ecumencial Housing Corporation