Government & Politics  November 6, 2022

Tackling affordability

Area cities tackle thorny affordability issues with inclusionary housing policy reviews

The basics of the housing affordability equation in the Boulder Valley are simple.

“The differential between what Boulder households are earning and housing costs is really what’s driving this problem,” Jay Sugnet, senior planner at the city of Boulder’s Department of Housing and Human Service, said last week during a study session with city leaders.

The solution, unfortunately, is not nearly as cut and dried.

With housing — rental and for-sale, single-family and attached — increasingly out of reach for many in the region, due in part to a post-COVID-19 resident development slowdown and the inflationary macroeconomic environment, local government leaders attempt to simultaneously search for a silver bullet and refine their tools used to chip away at the seemingly intractable affordability issue. 

Those efforts were on full display last week as officials in Boulder, Broomfield and Longmont made independent strides in overhauling their municipal inclusionary housing programs.

Highlighting the challenges faced by local leaders attempting to move the needle on housing issues, efforts in those three cities last week were made against the backdrop of September split decision by Louisville City Council to scrap its plans to implement what would have been one of the Boulder Valley’s most aggressive affordable-housing frameworks.

Louisville

Had a single Louisville elected official voted differently, the city would have adopted a requirement that at least 30% of units in certain types of developments be made permanently affordable for those who earn less than the city’s area median income, or AMI. 

Projects that would have  fallen under this new inclusionary-housing requirement were those rezoned from a nonresidential commercial zone district to a residential zone district, approved for residential uses through a general development plan, or approved for residential uses through a special review use in a commercial zone district.

The ordinance would also have required the units to be constructed on-site, with no alternative option, such as the payment of fee-in-lieu. The requirement under current city code, which remains in place now that the inclusionary-housing ordinance is dead, is for all properties to include at least 12% affordable housing, but there are other alternatives such as fees-in-lieu.

Fees-in-lieu have become increasingly controversial as municipalities grapple with the fact that payments made through the process often do not result in affordable housing being built on a scale that puts a dent in the problem. 

City Council members who voted against updates to Louisville’s inclusionary housing program said last month that the proposal developed by city staff wasn’t fully baked enough and could result in developers moving projects planned for Louisville to nearby communities. 

Adam Lankford with Salt Lake City-based Wasatch Residential Group, a developer that’s attempting to win support for a residential project in Broomfield, said as much during a recent public hearing before that city’s elected leaders. 

“I think the developer would just go away” if cash-in-lieu payments were eliminated or raised beyond what the builder deems workable. 

While opponents of the Louisville measure were quick to note their support for the concept of affordable housing, members of the Louisville City Council said the city ought to tackle a housing study and comprehensive community plan update prior to implementing new inclusionary-housing regulations. 

Councilmember Chris Leh said during the September public hearing that city leaders have yet to receive “the data that we could use to be able to make a better choice about how to achieve the affordable housing numbers that we have agreed to achieve,” while Councilmember Caleb Dickinson said Louisville would be sending the “wrong signal” to developers if a package of incentives wasn’t built into an inclusionary-housing ordinance. 

The ordinance did have its defenders among city officials.

Councilmember Maxine Most called on her fellow board members to be “bold” and said, “I think it’s very important to do this.”

Pausing the ordinance approval process will simply delay the implementation of important housing policy, she said. “We could spend the next 10 years looking at data. … Every community is going to have to do some experimentation — we have to be bold, and I would like to see us move ahead with this.”

Broomfield

Arista rendering
Artist’s impression of the planned Crosswinds at Arista affordable housing development. Courtesy Broomfield planning documents.

Officials in Broomfield, on the other hand, did pass an update to the city’s inclusionary housing program, increasing cash-in-lieu fees in hopes that more developers will opt to build affordable homes on site.

Such fees — which, for example, are expected to amount to about $55,000 per unit for a for-rent apartment project in 2023 — will roughly double by 2025.

“In order to achieve what we need for affordable housing, in-lieu-of payments need to go away, and more things need to be built,” Broomfield Land Use Review Committee member Fred Weiss said during the aforementioned Wasatch project hearing. While the measure passed by City Council doesn’t go quite that far, it moves the city’s inclusionary housing program in that direction.

Boulder

While affordability is a problem across the Boulder Valley and the Front Range more broadly, Boulder, with median home prices firmly planted north of $1 million for the past several years, is one of the places where that problem is most-acute.

Thanks in large part to projects built with funds from cash-in-lieu payments, Bouder is roughly half-way to the city’s goal of making at least 15% of housing stock permanently affordable. Still, “we aren’t getting the on-site outcomes we were hoping for,” Sugnet said last week. 

By mid-2023, Boulder officials hope to craft an ordinance to update its inclusionary housing program to create more on-site development, more incentives for homes for middle-income earners, and fewer loopholes and red tape.

Specific strategies include allowing a wider income range to qualify for affordable housing, expanding incentives for on-site affordable rental or for-sale housing and for for-sale homes aimed at middle-income earners, bump up the cash-in-lieu fees charged to builders of large homes, and add a similar fee for home demolition and replacement projects. 

Middle-income earners were top of mind among officials’ discussions across the region, as the concept of accessible “starter homes” for young professionals and families fades into memory.

“It’s no longer just Boulder talking about this, or mountain communities,” Sugnet said. “It is almost every community across the country.”

Boulder — and to lesser degrees, the other communities in the region — is somewhat unique in that the salaries earned by workers situated squarely in the meaty part of the city’s income bell curve (more than $100,000 in many instances) would make the upper crust in some parts of the country envious. The concept of providing subsidies of any kind for developers building $700,000 townhomes to be sold to software developers earning six figures is likely to raise eyebrows.

BCH rendering
A rendering of the 3300 Penrose Place development in Boulder shows the original Geological Society of America building on the left and new affordable apartment homes on the right. Courtesy Boulder Housing Partners.

Furthermore, middle-income workers, of course, want to buy homes with cheaper price tags. Who wouldn’t? But are they willing to sacrifice a potential windfall in the future to buy an affordably priced home that comes with deed-restriction that caps the resale price?

“We ought to know what kind of demand is out there for a $600,000 or $650,000 townhouse if you can’t realize a market rate of appreciation,” Boulder City Councilman Mark Wallach said. There’s a decent chance that someone in the position to buy a deed-restricted home in Boulder for $600,000 would simply opt for a slightly smaller home in a nearby, slightly less expensive community that doesn’t come with capped return on investment.

Some Boulder officials appear more apt to support policies that will encourage developers to fill the “missing middle” of the residential real estate market.

A concept that differs from expanding subsidies to include homes for middle-income earners, the missing middle “refers to a building type (for example, duplexes, fourplexes, and bungalow courts) in contrast to what the housing market has mostly provided post World War II (for example, single-family housing, and larger apartments, or condo buildings),” according to a Boulder planning memo. “Missing middle housing in Boulder, particularly new construction, is not affordable to middle income households.”

By finding ways to incentivize construction of these missing middle housing types, leaders hope that eventually there will be a robust market of townhomes, duplexes and the like that are accessible to middle-income families not interested in or unable to qualify for deed-restrictive housing.

Longmont

Staffers in Longmont took a somewhat different approach to the middle-income housing-affordability issue than their peers in neighboring communities.

A proposal presented last week to the Longmont City Council did not include increased cash-in-lieu fees or boosted requirements for on-site development. These omissions baffled some city officials. 

“It’s just hard to imagine — given the cost of everything has gone up — that the fee-in-lieu wouldn’t change,” Councilman Tim Waters said.

Rather, staff brought forth a complex formula that was designed to expand incentive options for middle-tier housing by increasing the maximum price a developer can sell a unit for and still realize certain more favorable project approval terms historically available to builders of homes with lower ceiling prices.

Seeming to sense the potential for political fallout that could result from providing public subsidies to developers to build half-million-dollar homes, Longmont City Council voted unanimously last week to advise staff to move away from the idea. 

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