U+2 study: Fort Collins occupancy rule probably reduces housing affordability

Fort Collins' U+2 ordinance likely contributes to rising housing costs, according to a city-funded study, but how much is up for debate.

The study by Corona Insights and aU survey found that the ordinance limiting home occupancy to no more than three unrelated people does have a positive effect on neighborhood quality, according to Ginny Sawyer, the city's policy and project manager.

"To the question of, 'Is this impacting the affordability of housing?,' you can read it as 'likely yes', you can read it as 'maybe ...'" Sawyer said at a recent City Council meeting. "A lot of factors are contributing to our overall housing, and the ordinance is one."

The council didn't take direct action or move toward new policy on the housing occupation ordinance. The city worked with the Fort Collins Board of Realtors and the Colorado State University student government to create the study in 2017. It included a review of rental market trends, U+2 enforcement, a mailed survey and other information. The survey was intended to measure the possible effects and efficacy of the ordinance and guide the council on any possible changes.

The study notes that the Fort Collins housing market is a much different beast than it was when the current iteration of the ordinance took effect in 2005. The vacancy rate was 5.4 percent for rental units, and there were about 100 "excess" rental units.

Then the recession hit. Building halted while people still flowed to the Choice City. Between 2010 and 2012, the vacancy rate hit 1.2 percent and at least 1,000 units more rental units were needed for a healthy market, according to the study. Rent was going up by about 4 percent a year.

It improved some through 2017, but not much. The vacancy rate went up to 2.4 percent and the housing deficiency went down to about 800 units. The number of U+2-violating households, which had dipped to about 550 in 2010-12, jumped back to where it was at the start of the modern ordinance: 1,200.

"Right-sized" housing

Mayor Wade Troxell endorsed what he dubbed "right-sized" housing, where four people could live in a four bedroom house as long as concerns about safety, parking and neighborhood quality are taken into account.

"It's incumbent on us to better use all of our housing stock," he said.

It's a position matched by the student body president of Colorado State University, Tristan Syron, and Associated Students of CSU Director of Community Affairs Yuval Rosenthal.

ASCSU has pushed for revisions to U+2 in the past, and that group even helped pay for the $88,000 study, along with the Fort Collins Board of Realtors and the city.

U+2 hurts housing affordability and the study backs that point, Syron and Rosenthal said in a joint interview with the Coloradoan. They're arguing for increasing the cap to allow four unrelated individuals to live together, or U+3. Unaffordable housing isn't a CSU or student issue; it's a citywide problem and one that makes both Fort Collins and the university less inclusive, Rosenthal said.

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The ASCSU leaders pointed to a decline in students receiving violations: Previously they made up 70 percent of violations. Now, undergraduate and graduate students make up less than half of confirmed violators, according to the study.

"This is not a student issue. Yes, it affects students, but it is a Fort Collins issue," Rosenthal said. "... These are things that are inhibiting economic growth in Fort Collins."

Syron and Rosenthal noted the study found 67 percent of over-occupancy allegations were discovered to be unfounded and said this shows Fort Collins isn't facing a overcrowding problem; it's facing a bad neighbor problem. They said CSU already has programs to promote communication and neighborliness — such as the neighborhood welcome walk — and they hope to expand such programs.

Syron said ASCSU backs the U+3 revision because they don't want overcrowded houses or diminished neighborhood quality, either. They hope to continue to work with city leaders and may choose to endorse and campaign for candidates they deem friendly to the cause in the April election. A ballot issue later on isn't off the table, either, Syron said.

What city council members are saying

City Council member Ross Cunniff, a self-described "study skeptic," was unconvinced that the study indicated a need to change the occupancy ordinance. Other market factors, such as the number of people moving here, probably outweigh the ordinance's effect on housing and rental prices, he argued. The ordinance's contribution to prices may even be from heightened neighborhood quality, he said.

"I would hypothesize, but don't have the data here, that the increase in neighborhood quality leads to a market that supports both higher purchase prices of homes as well as higher cost of rentals," Cunniff said. "I don't think that hypothesis was really tested in this study."

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Council member Kristin Stephens noted that three-fourths of survey respondents either approved of or were neutral toward U+2. She read that as most folks being OK with the status quo. She said she's been in situations where overcrowded homes near hers have left out broken glass and yelled expletives — both being particularly troubling in neighborhoods with young children.

"It's not discriminatory. It's lived experience, for some of us," Stephens said. "Homeowners need some protections. It's not that houses can't be rented, it's not that you can't rent to college students, it's if there's five or six people living across the street, it's an issue."

Council member Ray Martinez characterized those issues as good neighbor issues, not too many occupants. He said he's long been skeptical of the ordinance and its effects.

"I think it's a direct attack on college students because people don't want college students living by them," Martinez said. "And I've always said before, if it was seven nuns living by them, no one would complain. But if it's seven college students, it's a whole different story."

U+2 survey results

How the ordinance is viewed by residents

42 percent: Support the ordinance

24 percent: Oppose

78 percent of respondents: Ordinance has no significant impact on their neighborhood

15 percent: Ordinance has positive effect on their neighborhood

8 percent: It has a negative effect

Violations

1,200 households are estimated to be in violation. That is the about the rate before the 2005 ordinance revision. It dropped to an estimated 600 households in 2009 before increasing again.

67 percent of complaints were unfounded in 2017, versus 45 percent unfounded in 2011.

74 percent of violators had three or more vehicles, versus 22 percent of non-violator households.

47 percent of violator households lived in their residence for less than a year.