Denver Considering Construction Defects Ordinance

DENVER (CBS4) - The Denver City Council is considering an ordinance designed to spur more construction in the city. In the last few years, condominium construction has dropped from 25 percent of the market to just four percent. Critics of the ordinance say it puts the squeeze on homeowners.

City officials say that Denver is number one for millennials moving to the city, and number three in the nation for retirees moving here. All that growth is spurring demand for condominiums priced around $200,000.  For all the new construction in Denver, little of it is affordably priced condos. A problem that keeps renters from becoming homeowners.

"We don't have the supply, primarily, I think, because this law in Colorado has created such a litigious environment. Quite frankly, developers and insurers won't do it," said Denver Mayor Michael Hancock.

The Mayor has introduced an ordinance designed to balance the scales and spur condo construction.

The ordinance calls for:

• A majority vote from all homeowners before a construction defect claim can be filed.
• A requirement that the condominium covenants not be changed once it's written by the developer.
• A limit on how city codes can be used with a construction claim.

Additional Resources: Denver's Construction Defect Claims Ordinance

"We're trying to ease the concerns of the marketplace, " Hancock told CBS4.

Jonathan Harris knows all too well what happens when builders cut corners. He and his neighbors have been embroiled in a construction defect claim for years.

"They admitted during this whole process they were trying to build affordable housing, and they tried to do everything as inexpensively as possible," Harris said about the developer who built Harris's mixed use building in Five Points.

Harris and his homeowners association settled their case in 2012, but they still didn't get enough money to fix all the problems. Now he's among the homeowners and groups that are leading the charge against the Denver ordinance. He believes that developers will write the condominium covenants to protect themselves, forcing homeowners with defect claims into arbitration.

"Arbitration is a private court system. You have to pay for it in advance, you have to put a big deposit down. You pay the judge and everybody by the hour. It can be extremely expensive," Harris explained.

By making claims expensive and difficult to pursue, Harris feels the consumer ends up with the short end of the stick.

"They'll be building a lot of substandard condominiums and they'll be selling them to people who can't afford to fix them. And we'll end up with these blighted areas when they walk away from their condos," Harris said.

"By no means, was the City of Denver or is the City of Denver trying to preempt or take away consumer rights in this at all," Hancock said.

He said the ordinance was carefully crafted to protect consumers, but at the same time encourage developers to get back in the business of building affordable condos.

Libby Smith is a Special Projects Producer at CBS4. If you have a story you'd like to tell CBS4 about, call 303-863-TIPS (8477) or visit the News Tips section.