DU sues city over $232K affordable housing fee it paid to build dorm

A rendering of the new University of Denver dorm, which has 501 beds across 262 units. (Courtesy of University of Denver)

The University of Denver has sued the city over a fee it paid in connection with the construction of a new residence hall.

The nonprofit private school argues in a lawsuit filed last week in Denver County District Court that it should be exempt from paying the city’s Affordable Housing Linkage Fee, which in its case ran $232,000.

That fee is assessed by the city on projects that are deemed to cause a need for new affordable housing. The university is arguing that its residence hall did not prompt any additional need, and in fact added more housing to the broader market by lessening the amount of DU students living off campus.

“The new residence hall was constructed to enhance the experience for first-year students at the University of Denver and does not in any way affect the availability of affordable housing options for the broader community,” DU said in a statement to BusinessDen.

The city declined to comment on the suit.

The lawsuit relates to the new Dimond Family Residential Village, which broke ground in early 2019 and is named after Navin Dimond, the CEO of Denver-based hotelier Stonebridge Cos., whose foundation donated $5 million. The building, which has 501 beds across 262 units, has since been completed.

DU says in its complaint that it paid the $232,000 linkage fee in February 2019, then submitted an application requesting the fee be waived that March.

In September 2019, the head of Denver’s Office of Economic Development told the school the city would not wave the fee. DU appealed the decision the next month. A hearing was held, and in October 2020 the executive director of Denver’s Department of Community Planning and Development denied the school’s appeal.

Residential developments in the city are often assessed the linkage fee, on the grounds that, while they may add to the housing stock, the pricing of the units increases the demand for so-called affordable housing.

DU argues that its dorm isn’t like most typical market-rate housing projects, because units are small and lack kitchens, and multiple units share central bathrooms. Additionally, the new dorm hasn’t resulted in an increase to DU’s student body. The school says it had 1,375 first-year students this fall, down from 1,400 in 2017.

DU also says that, in connection with the new dorm, “leases on 201 off-campus beds previously rented by DU for students it could not accommodate in on-campus housing were relinquished to the market.”

Rounding out its arguments, DU states that half its undergraduate students receive need-based financial aid, and that its students in general don’t typically have large amounts of disposable income. And the school says that, not counting the temporary construction staff, the dorm hasn’t prompted it to hire a bunch more employees, but rather just one individual, who can live within the building.

Attorneys Martha Fitzgerald, Carolynne White and Angela Hygh of Brownstein Hyatt are representing DU in the litigation.

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