The Boulder City Council unanimously passed an ordinance last week that tweaks the city’s inclusionary housing program, considered one its most powerful tools for creating more affordable housing.

The main change involves the “cash-in-lieu” payment structure and methodology. Developers building condos, townhomes and other multi-family housing in Boulder are required to make at least 25% of their housing units affordable to lower-income residents. But cash-in-lieu allows them to pay cash instead of building this on-site affordable housing.

These payments are a major funding source for the city’s Affordable Housing Fund, which the city uses to subsidize apartments and homes.

The new ordinance allows the city to calculate cash-in-lieu payment based on square footage rather than the number of units, with the goal of requiring larger cash-in-lieu payments for larger homes. City officials anticipate that the total cash-in-lieu revenue will remain roughly the same as it is now. But this change removes an incentive to build larger homes.

The ordinance wraps up the council’s two-year housing agenda ahead of the Nov. 7 election. During this council’s term, councilmembers made it easier to build accessory dwelling units, or ADUsraised occupancy limits on how many unrelated people can live together, and at least technically, eliminated single-family zoning to allow duplexes and triplexes on larger lots in low-density neighborhoods.

Read: Boulder City Council eliminates single-family zoning. But don’t expect dramatic changes anytime soon.

Councilmembers also launched a down-payment assistance program for middle-income first home buyers. Last month, they rejected a proposal to tweak the city’s cash-in-lieu policy to increase the construction of for-sale homes that middle-income residents can afford to buy. The reason for not making this change was because existing policy allows the city to subsidize more affordable homes for lower-income residents, primarily rental properties. Some councilmembers were concerned that changing the policy would slow down the creation of such affordable rentals. (We reported on councilmembers’ discussion of this tradeoff in September.)

The new inclusionary housing ordinance is likely to take effect in January 2024, city officials said.

Separately, Michelle Allen, the city’s inclusionary housing program manager, is retiring at the end of the year. Allen has been with the city since 2000 and has overseen several updates to the city’s inclusionary housing program.

“It’s a nice way to end my time with the city,” she said at the end of last week’s council meeting.

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