09.27.23 IH Ordinance HAB presentationIH Program Update
Ordinance 8601
Housing Advisory Board
September 27, 2023
Image by phc.vector on Freepik
Does the Housing
Advisory Board agree
with the changes to the
Inclusionary Housing
ordinance?
Does the Housing
Advisory Board agree
with the changes to the
Community Benefit
requirements in the
Site Review criteria?
Purpose
Review proposed changes
to the Inclusionary Housing
Program and community
benefit requirements
Make recommendation to
City Council
Consider an ordinance to
revise inclusionary housing
with a focus on increasing
middle-income units
Inclusionary HousingCouncil Priorities 2022-2023
Launch middle-income
down payment assistance
pilot
Downpayment Assistance
Council Direction
Strengthen incentives for
on-site/for-sale middle income
Cash-in-lieu for larger homes
>1,200 sq. ft.
Establish cash-in-lieu for
demolitions/replacement
Project Schedule
Nov -Dec 2022
Initial
EngagementAnalysis
Jan -Feb 2023
Alternatives
Development
Mar-Sep 2023
Evaluate
Issues
Stakeholder feedback
Sep-Nov 2023
Code
Development
Nov -Jan 2024
Implementation
Community Engagement: Sharing of information, options identification, evaluation will be ongoing.
Community Engagement
•Step 6
•All feedback has been evaluated
an incorporated into a draft
ordinance
•Step 7
•Public hearings for Ordinance
Consultant Findings
Larger
Market
Forces
Continued On-Site Challenges
Current Cash-in-Lieu Largely Feasible
Align Cash-in-Lieu to Best Practices
Zoning Reform for Missing Middle Housing
1. Cash-in-Lieu (CIL) Methodology
•Modify to a “per square foot”
structure
•Adopt a feasible range resulting
in ~ CIL revenues
•Feasibility analysis at least
every 5 years
•Best practice & widely used
approach
•Scales with unit size
•Results in a fair burden across
different sized units
•Avoids an incentive for larger
market rate units
2. On-site Rental Units
75%
20%
5%
ON-SITE RENTAL REQUIREMENTS
Market 60AMI 50AMI
•25% requirement = 80% of
required affordable rents set to
households earning 60% of AMI &
20% affordable to 50% AMI
•Consistent with LITEC funding
requirements
•Retain diversity of affordable rents
but include deeper affordability in
IH units
•The current 80% rents compete
with market rents because they
are at or near market rents in older
projects
3. On-site For-Sale Pricing
•Modify unit price requirements to
allow more middle-income priced
homes (up to 120% AMI)
•Affordable units provided on-site
priced for middle income
households
•Based on feasibility analysis on-site
development is infeasible for
developments. Increase in
allowable pricing allows for more
equity between the options to meet
IH
Image by sentavio on Freepik
•Remove requirements that 1/2
of required for-sale affordable
units be provided on-site, and if
not provided on-site CIL is
increased by 50%
4. On-site Incentives & Penalties
•For-sale on-site units are not
feasible or desirable in most
circumstances
•Additional 50% CIL increases
total CIL amount for-sale
developments to an infeasible
level and may disincentivize for-
sale development
Image by storyset on Freepik
5. Community Benefit
•Remove requirement that 1/2
of for-sale IH units be provided
on-site in projects providing
community benefit with height
modifications
•Remove on-site requirement to
be consistent with amended IH
requirements
•Based on direction City Council
from Sept. 7
Additional Code Updates
6. Cash-in-Lieu Deferral
•Remove option for single family homes to defer payment of CIL
7. Land Dedication
•Modify option to include city manager approval of proposed location
•If dedicated land is part of same site review as market rate units - open
space requirements for affordable units on dedicated land must be met
entirely on dedicated land & open space requirements for market rate
units be met entirely within market rate development
•Ensures the dedicated land (i.e., development project) has its own open
space & clarifies that land dedication does not result in shared open
space or amenities with the market rate project
Additional Code Updates
8. Affordable Housing Design Review
•Increase threshold for required design review to 40 or more units in projects not subject to site review or form-based code review
9. Small Projects with < 5 Units
•Remove this category of CIL
•Change in CIL methodology does not require this type of differentiation in development size
10. Housing Inspection Requirement
•Add requirement to code
•Inspector ensures affordable units meet the requirements of all affordable housing agreements, covenants, and livability standards
Additional Code Updates
11. Relationship of Affordable Units to Market Units
•Revise requirements to allow either detached dwelling units or attached
townhomes to meet requirements within a development of detached
single-family homes
•Proposal provides an alternative to single-family homes
12. Number of Bedrooms for Middle Income Units
•Remove requirement that middle income affordable units shall have at
least one bedroom
•This requirement conflicts with other code requirements that on- or off-
site affordable units be proportional in type to market units
Additional Code Updates
13. Rebuilt Dwelling Units
•Add time limit of 10 years for replacement of market unit that is
removed due to an act of nature or calamity
•Clarify who makes determination whether a demolished home is safe
and habitable
14. Conversion of Rental to Ownership Dwelling Units
•Remove requirement for an agreement to assess additional CIL if rental
development converts to for-sale within 5 years
•Requirement is no longer applicable based on the change to CIL
methodology
IH Update Package
•Result in ~ equal CIL revenues
•CIL by sq. ft. applied to larger units = + CIL
•CIL can be leveraged to provide 2-3 rental units off-site
Why does the city IH program
allow developments to pay
cash-In-lieu?
•CIL Provides Significant
Community Benefit
•CIL ensures developments can
go forward when affordable
units are not viable
•Leveraging – CIL results in 3-4
affordable units for every on-site
unit
•Results in a wide variety of
housing including transitional &
senior
•Critical for maintaining the existing
affordable housing stock
•Deed restrictions can complicate
financing, lending, insurance,
equity partners
•Rental - State Rent Control Statute
requires options for rental projects
Cash-in-Lieu
Next Steps
•Oct. 19 – City Council – first reading
•Nov. 2 – City Council – public hearing
•Nov. to Jan. – Update administrative regs, materials
•2024 – Nexus Study for demo & rebuilds
Questions
1. Ordinance Language - CIL
(b1) Cash-in-Lieu Contribution: Developers may satisfy permanently
affordable housing requirements by making cash contributions to the
city’s affordable housing fund. The cash-in-lieu contribution will be
calculated by the city manager annually. The cash-in-lieu contribution
will be based on the residential square footage of the development
creating the inclusionary housing requirement and the applicable rate
will be determined annually by the city manager. The city manager
may consider the number of units in the development, the size and
type of units which created the obligation (including small attached
units and townhomes), the amount that would incentivize on-site
construction of permanently affordable units, and the affordability gap
between market rate and permanently affordable home unit prices
when determining the cash-in-lieu calculation.
2. Ordinance Language – On-site Rental
(3C) Required rental permanently affordable units shall include eighty percent of the
required permanently affordable units as low/moderate income dwelling units and twenty
percent of the required permanently affordable units shall have rents set to be affordable to
households earning no greater than fifty percent of the AMI. In for sale developments a
minimum of fifty percent of the units shall be built on the site of the development, unless
such units are provided for in another manner consistent with the provisions of this chapter.
(a) Maximum Rent: Required rental permanently affordable units shall include eighty percent
of the required permanently affordable units as low/moderate income dwelling units and
twenty percent of the required permanently affordable units shall have rents set to be
affordable to households earning no greater than fifty percent of the AMI Rents charged for
permanently affordable units in any one development must be affordable to households
earning no more than sixty percent of the AMI for low/moderate permanently affordable
rental units and eighty percent of the AMI for middle income permanently affordable rental
units.
3. Ordinance Language – For -sale
(2B) For required for-sale permanently affordable units, townhouses and
single-family homes shall have prices set to be affordable to one hundred
twenty percent of the AMI. All other types of permanently affordable for-sale
units shall have prices set to be affordable to one hundred percent of the AMI
eighty percent twenty percent Twenty percent of the required affordable units
shall be affordable to low/moderate income households.
Five percent of the required affordable units shall be affordable to middle
income households.
i.The city manager is authorized to use rule-making authority to annually
adjust the percentages in A and B to incentivize on-site affordable units.
4. Ordinance Language – On-site
•3C) Required rental permanently affordable units shall include eighty percent of the required
permanently affordable units as low/moderate income dwelling units and twenty percent of the
required permanently affordable units shall have rents set to be affordable to households earning
no greater than fifty percent of the AMI. In for sale developments a minimum of fifty percent of
the units shall be built on the site of the development, unless such units are provided for in
another manner consistent with the provisions of this chapter.
•(4D) As an alternative to providing permanently affordable units on-site Rental developments do
not have a minimum on-site requirement and may provide the permanently affordable units
satisfy the inclusionary housing requirement through any combination of the alternative means of
compliance set forth in Section 9-13-10, “Options for Satisfaction of Inclusionary Housing
Requirement,” B.R.C. 1981.
•(2B) Will address unmet housing needs Will result in additional affordable housing benefits that
are equivalent to or greater than the cash-in-lieu contribution as set forth in Subsection 9-13-9(a)
including any additional cash-in-lieu that is contributed if less than fifty percent of any for-sale
permanently affordable units are not provided on-site; or
5. Ordinance Language
(i) Residential Developments: If the development is residential, it will exceed the requirements of
Subparagraph 9-13-3(a)(1)(A), B.R.C. 1981, as follows:
a. For bonus units, the inclusionary housing requirement under Chapter 9-13, “Inclusionary
Housing,” B.R.C. 1981, shall be increased by eleven percent. The resulting inclusionary
requirement may be satisfied by any option allowed in Chapter 9-13 to meet inclusionary housing
requirements. For example, if Chapter 9-13 requires twenty-five percent of units to be
permanently affordable, for bonus units that requirement is increased by eleven percent so that at
least thirty-six percent of the total number of bonus units must be permanently affordable units.
For bonus units, the inclusionary housing requirement shall be increased as follows: Instead of
twenty-five percent, at least thirty-six percent of the total number of bonus units shall be
permanently affordable units. If the building is a for-sale development, at least fifty percent of all
the permanently affordable units required for the building shall be built in the building; this fifty
percent on-site requirement may not be satisfied through an alternative means of compliance. A
minimum of one bonus unit shall be assumed to be provided in the building if any bonus floor
area is in the building.
. . .
All new residential developments, regardless of size, contribute
a percentage of new housing as permanently affordable
Options: On-site, Off-site, Dedicate Land, Cash-in-lieu
Developers choose which option works best for their project
For-sale units ~ 10% of all units constructed
Current vs Proposed
Current Proposed
For-sale %80% priced @ ~70% AMI
20% priced @ middle income 80% - 120% AMI
All priced @ middle income
100% & 120% AMI
Rental %25%
80% priced @ 60% AMI
20% priced @ 80%
25%
80% priced @ 60% AMI
20% priced @ 50%
4 or fewer units 20%Remove
Few affordable units
directly
Significant affordable
units through cash-in-lieu
contributions
A wide variety of affordable
housing units to be developed
throughout the city to meet
community needs
Funding from IH allows…
Strengthening on-site
incentives, increase program
efficiencies, and closing loop-
holes
Program changes may result in…
Better understand IH Program
potential impacts on units that
are demolished or rebuilt.
Further evaluation needed to…
Current Program Produces…
Affordable Housing Tools
•Tool #1: Annexation
•Tool #2: Local Funding
•Tool #3: Inclusionary Housing Property
Tax
24%
Federal
Funds
14%
Linkage
Fees
11%
Cash-In-
Lieu
51%
Funding Sources, 2015-2022
$94 million
Gap Financing
•New Rental Construction:
Average city subsidy in
affordable rentals: $80,000 -
$110,000 per unit
•Ownership Acquisition: Typical
subsidy through acquisition:
$100,000 – $110,000
•Ownership New Construction:
would require subsidy of
$500,000 – $600,000
Ownership Acquisition
$100,000-$110,000
New Rental
Construction
$80,000-$110,000
New Ownership
Construction
$500,000-$600,000
Average City Subsidy Per Building Type
What is Affordable Housing?
•Permanently Affordable Housing: Deed restricted
for affordability in perpetuity (rental and ownership). )
Produced through Inclusionary Housing (IH), city funding,
or housing partners – or some combination of all three
•Affordable (“Attainable”) Housing: Households pay
no more than 28-30% of income on housing
•Market Rate Modest Sized Housing: Market rate
units that are comparatively more affordable at smaller
sizes compared to other larger market rate units.
Apartments.com
Thistle.us
Definitions
•Area Median Income (AMI)
Determined by HUD for the Boulder MSA
Half of households make less than 100% AMI and half make more
2022 AMI = $125,400 for a household of 3
•HUD low-income limit
Determined annually
Households below this limit may not be able to afford basic needs
2022 HUD low-income AMI = 71.7 % AMI
2022 HUD low-income limit = $81,000 for a household of 3
= $63,000 for a household of 1
Missing Middle Housing
34
Base IH pricing for any for-
sale permanently affordable
units provided on or off-site
80% of units low/moderate
20% of units middle income
All permanently affordable
units may have middle income
prices
Small Developments <20 Units
Half or more provided on-site the
remaining cash-in-lieu reduced by
half
Reduction in Cash-in-lieu
75% or more provided on-site
pricing adjusted to 50/50%
low/mod & MI
Increase Middle Income Pricing
On-site Incentives
For-sale only