City of Boulder officials are moving ahead with a program that would help cover the cost of a down payment on a home. Credit: John Herrick

City of Boulder officials are gathering feedback on a proposed pilot program that would help subsidize a down payment on a home, the latest attempt to try to rein in the city’s high cost of housing. 

The goal of the program is to give middle-income residents a better shot at buying a home in Boulder, where in the last decade, rising house prices have far outpaced income gains. 

In a presentation to the Housing Advisory Board on Wednesday, city officials proposed a pilot program in which the city would borrow money and then lend it to homebuyers to help cover the cost of their down payment. 

The city’s loan would cover up to 15% of the home purchase price for the down payment. It could be up to $200,000 (for a $1.3 million home) and would have 0% interest — the city would cover interest. The loan would have to be paid back in 15 years. 

To qualify, residents would need to earn no more than 120% the area median income, which is about $105,000 for an individual and more for a family. 

In exchange for the loan, the city would impose a permanent deed restriction on the home, capping its appreciation at 4.2% in perpetuity. In the last year, market rate appreciation in Boulder has been about 7.5%. 

The purpose of capping appreciation is to ensure that affordable housing for middle-income Boulderites stays affordable into the future. The cap would preserve a price point in the market that is “expected to become non-existent in future years,” according to a recent city staff memo, as home prices soar higher. 

The city anticipates spending $40,000 to $112,000 on interest for each home subsidized under the program, depending on interest rates. The money would come from the city’s Affordable Housing Fund. 

This could end up being a larger subsidy than what the city offers under its Permanently Affordable Homeownership Program for people earning less than 80% the area median income. 

How much the city spends to help people who are comparatively well off could generate some debate. 

Even so, in 2019, Boulder voters approved a ballot measure by a vote of 69% to 31% to allow the city to take on $10 million in debt “for a housing assistance program that will include permanently affordable deed restrictions and make loans to middle-income households to purchase homes sold in Boulder.” 

In January 2022, councilmembers made launching the program by the end of 2023 one of their top priorities, after the pandemic paused work on it.

City officials are planning to pitch the proposal to the Boulder City Council on April 20, 2023.

Councilmember Bob Yates, who has been advocating for a downpayment assistance program since 2018 and helped draft the latest proposal, said some of the finer details may change.

“We don’t want to make it so rich that everyone wants to participate and community members are angry because they feel we gave away something,” Yates told Boulder Reporting Lab. “But by the same token, we don’t want to make it so stingy that no one participates. We’re trying to find that Goldilocks point.” 

The down payment program could help meet the so-far elusive goals laid out in the city’s 2016 middle-income housing strategy, which calls for building or preserving 1,000 deed-restricted and 2,500 market rate homes by 2030.

So far, only about 100 homes contribute to this goal, according to an analysis of city data by Boulder Reporting Lab. That number has barely budged since 2016.

Overall, about 8.3% of the city’s housing units are deed restricted as affordable for low-, moderate- and middle-income residents, surpassing the halfway point of meeting its goal of 15%.

To count toward the city’s target, the homes in the down payment program would have to be priced so that someone earning 80% to 120% Boulder’s area median income — approximately $70,000 to $105,000 — spends no more than 30% of their income on housing. 

John Herrick is a reporter for Boulder Reporting Lab, covering housing, transportation, policing and local government. He previously covered the state Capitol for The Colorado Independent and environmental policy for Email:

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