Denver Mayor Mike Johnston is aiming to convince middle-income families that the city is “affordable” with a new pilot program seeking to build more units for those with an annual income between $60,000 and $100,000.

He plans to achieve this by offering property tax incentives to interested builders and investors, according to the city.

Johnston, along with Denver Housing Authority (DHA) officials, launched the “Partnership for Middle-Income Housing Pilot Program” on Wednesday. The mayor asserted it will bolster the development of new middle-income rental housing without requiring additional city dollars.

“This middle-class housing is about supporting those working folks who want to stay in the city,” Johnston said. “That means more affordable housing for general workers. It means more neighborhoods you can afford to live in, and it means more people who can call Denver home for a long time.”

For developers and investors, it means tax exemptions for up to five new multifamily developments in 2025.

In return, rental units within those projects must be deed-restricted for 30 years to remain “affordable” to households earning less than 100% of the area median income, which translates to $98,100 for one person and $140,100 for a four-person household.

The city’s Department of Housing Stability (HOST) and DHA will oversee and administer the property tax relief program.

According to city officials, only new construction projects that meet the affordability requirements and demonstrate that they would not be “financially viable” without the property tax relief are eligible.

To make it all work, officials said DHA will enter the ownership structure of a selected project as a special limited partner in order to access the tax exemption.

HOST will then underwrite each proposal to determine the appropriate length of the tax exemption, which officials say will be capped at 15 years and expected to average around 10 years.

On July 15, HOST will begin accepting letters of intent through a portal on its website, with selected projects to be approved by late 2025 to early 2026.

Denver HOST Executive Director Jamie Rife said that, during the first phase, the city hopes to have five development projects, or approximately 500 units, that would otherwise not be “doable” in Denver without the tax incentive.

Denver was named one of the top 10 most affordable metropolitan areas for renting an apartment, according to a report released by Redfin in late January. It was the sixth most affordable in the nation.

The study analyzed median rent and compared it to the income needed to afford an apartment.

It then compared the median renter’s income to what it actually is in the Denver metro area.

Denver follows Austin, Houston, Dallas, Salt Lake City and Raleigh, N.C.

Most renters in the area are earning more than needed to afford the median rent of $1,695, according to the Redfin analysis.

Renters would need to make $67,800 to reasonably afford most apartments in the Denver metro, which is still a higher income than most cities.

However, most renters in the area earn a higher wage, nearly $73,000. It’s about 7% higher than the income needed to be comfortable, according to Redfin.

Denver saw a dramatic drop in rents in the fourth quarter of 2024, according to the Apartment Association of Metro Denver. Rents fell by about $70 a month, the most significant drop recorded since the association began tracking rents in the region, as a surge of new construction hit the market and vacancies rose.

Denver Gazette reporter Bernadette Berdychowski contributed to this story.