Developers abandon affordable senior housing project at Fruehauf’s property amid rising costs

The developers who planned to build affordable housing units for older adults at the former Fruehauf’s patio furniture store on 33rd Street have pulled the plug on the project, citing a rise in construction and other costs. 

“I think it’s a combination of timing and Covid,” Gary Berg, managing partner and co-founder of the Academy Boulder and a developer of the project, told Boulder Reporting Lab. “It just doesn’t pencil.” 

The 100-unit project had been in the works since at least 2018. That same year, Boulder City Council approved a development plan for a market-rate project — the Academy Mapleton Hill independent living community — in the Mapleton Hill neighborhood at the base of Mount Sanitas. As part of an agreement to gain council’s approval, the developers said they would build an affordable housing project at the Fruehauf’s site, near 33rd and Arapahoe. 

Several councilmembers had cited the affordable housing project as a key factor in their decision to approve the Mapleton Hill development plan. The 91-unit Academy Mapleton Hill project is expected to open as soon as this summer, with membership deposits starting at $1.3 million.

The Fruehauf’s site, meanwhile, sits idle. But that could soon change. 

As part of dropping their plans, the developers agreed to essentially donate to the city the Fruehauf’s property, which was purchased for $4.5 million in 2017, according to Boulder County property records. The developers will also pay $1.7 million into the city’s Affordable Housing Fund that is uses to subsidize housing across the city. The deal comes after months of negotiations with City of Boulder officials, councilmembers and Boulder Housing Partners, the city’s largest nonprofit manager of affordable housing. 

Kurt Firnhaber, the city’s director of Housing and Human Services, said the city will work with Boulder Housing Partners to build permanently affordable senior housing. 

The deal comes as the city grapples with a housing shortage that is particularly acute for low-income older adults. Earlier this year, most of the 33 residents living at the Golden West were forced to leave the City of Boulder when the organization closed its assisted living home for financial reasons. Golden West’s assisted living home, known as the Mezzanine, was the last one in the City of Boulder that accepted Medicaid.

The five-year saga over the Fruehauf’s site highlights the challenges the city faces when trying to get more affordable housing built. 

Cities across Colorado have generally decided not to require developers to build affordable housing without providing a range of options for how they can comply with the requirement. This is largely due to a longstanding interpretation of a 2000 Colorado Supreme Court ruling, which found Telluride’s relatively stringent affordable housing requirements violated the state’s prohibition on rent control. 

As such, the developers of the Academy Mapleton Hill project were not required under the City of Boulder’s law to build the affordable housing at the former Fruehauf’s store. 

The developers were only required to make sure 20% of the housing units at the Mapleton Hill were built as affordable units. Meaning, those units would become deed restricted, ensuring that people earning a lower income would pay a limited amount for housing costs. The developers could also skip that altogether and pay cash instead of building on-site affordable housing. Other options under city code include donating land to the city or building affordable housing at another location. 

Firnhaber said the “cash-in-lieu” payment for the Academy Mapleton Hill project would have been about $3.8 million. But with the recent property transfer deal, he said the city will receive the equivalent of $8.2 million for its affordable housing program.

“I’m actually quite pleased with it,” Firnhaber said. “They could have walked away. I’m very excited that they stayed with us and continued to negotiate for over a year to try to come up with a solution — a voluntary solution — that is similar to what they committed to. So my hat’s off to them.” 

For now, he said, it’s too soon to know when crews will break ground on the project.

Jeremy Durham, the executive director for Boulder Housing Partners, said the organization is still working to determine how many homes it can build at the Fruehauf’s site. 

Jill Grano, a former city councilmember and graduate student researcher at CU Boulder’s Boulder Affordable Housing Initiative, said she voted to approve the Mapleton Hill development plan because the developers promised so much affordable housing. 

“They stood before the community over and over and over and said that they were going to do something that they never lifted a finger to do,” Grano said. “It’s definitely a vote that I regret, in retrospect.” 

Grano, who serves on the Boulder Housing Partners Board of Commissioners, said the deal is a good outcome for the city, given the circumstances. But she said the process for how it came to be might tarnish the relationship between other developers and the city.

“If I was on council, I would forever be more skeptical of developers,” she said. “We need to be careful in the future.” 

Berg said he understands the frustration. He denied the suggestion that he misled the Boulder City Council in order to get the Mapleton Hill project approved. He said he could have saved a lot of money if he just gave the city the Fruehauf’s property in the first place. 

“Nobody expected Covid. Nobody expected construction costs to skyrocket. I mean, look what’s happened to interest rates — the highest in 23 years. And those are real, real numbers,” he said. “I really believed that that would have been a terrific project. And I hope it still happens. I’ll do what I can to support it.”