Property owners in the City of Boulder are tearing down modest homes and building multi-million dollar houses in their place. This is reducing the city’s supply of attainable housing and driving up demand for more affordable homes, according to a new study commissioned by the city.
The study, authored by the consulting firm Gruen Gruen + Associates, estimates that newly built homes are often worth up to $3.5 million more than the smaller homes they replace. Buyers of these larger homes typically must earn hundreds of thousands of dollars more each year than the residents who lived there before.
The findings underscore a challenge for Boulder as it tries to reign in housing costs in a city where land is so valuable. Each year, dozens of modest homes are bought, torn down and replaced — removing relatively affordable options for first-time buyers from the market.
Even though these redevelopments worsen the city’s affordability crisis, current rules do not require property owners to contribute to Boulder’s Affordable Housing Fund, which the city uses to subsidize homes for low- and middle-income residents. By contrast, developers of multi-unit residential developments often are required to pay into the fund — while teardown-and-rebuild projects almost always receive a waiver.
City officials view this as a gap in the city’s inclusionary housing policy, which requires developers to help provide affordable housing when building new homes. To address it, they commissioned the study to determine whether the city could impose a new fee on demo-and-rebuild projects. Such a fee would need to be tied to a measurable impact on the housing market to be legally defensible, according to city officials.
The study found that while these projects don’t eliminate deed-restricted affordable homes — those set aside for lower-income residents — they are reducing the number of less expensive homes in the city’s housing stock.
It also found that when higher-income residents move into these newly built homes, their increased spending boosts demand for local goods and services. That, in turn, creates jobs — which drives up the need for affordable housing like subsidized apartments and townhomes.
That link is enough to justify a new impact fee, the consultants concluded. They recommend charging $15 per square foot of additional floor space for homes that are rebuilt or significantly expanded, with limited exceptions.
Since 2019, the city has issued 139 waivers to property owners seeking to demolish and rebuild homes that exempt them from paying into the city’s affordable housing program. At the proposed rate, the fee could generate an estimated $1.2 million annually for the city’s Affordable Housing Fund.
Some members of the Planning Board said the fee should go further. They suggested scaling it based on the increase in home size, similar to a progressive tax. Others proposed earmarking the money for middle-income families, many of whom are not eligible for affordable housing benefits.
“I would suggest … that we consider trying to make a dent in middle-income and using this money for something new to attack a problem that we have no tools in our quiver currently,” Jorge Boone, chair of the Planning Board, said during a meeting in March.
The Boulder City Council is expected to discuss the study and proposed fee at a study session on April 10. If councilmembers support the idea, staff plan to bring forward a draft ordinance by October.
These new houses are beautiful. I’m glad to see those old dumps torn down. If the market allows for it, keep it up. The government nor local loud minority opinions should be forcing the land owners or investors to pay penalties (Boulder’s Affordable Housing Fund) to promote an unnecessary agenda. There are buses to lower cost living areas around the state.
Ahh yes….another freedumb rant about how monied interest should be able to do whatever they please. With that kind of entitled and insensitive attitude…I get the sense that “David” is really just anonymously shilling for Goliath here.
Yes, wealthy land owners should rule until they make our city so totally unaffordable they will have to order their morning lattes via Amazon.
David I think you have bad taste. The new buildings are so blocky and uniform they look like they were designed in Minecraft.
Yet it’s perfectly acceptable for the City of Boulder to tear down the old hospital buildings on Broadway without ever a thought for remodeling them for the housing it’s going to build in their place. Think of the carbon footprint of tearing down reusable buildings, hauling off the debris then using thousands of pounds of concrete, steel and wood to build new structures. A bit hypocritical wouldn’t you say?
Excellent that BRL is reporting this. From following “Landmarks” Board (LB) for some time, I have some recommendations on illicit demolitions for you to investigate:
1) 1015 Juniper, a beautiful bungalow, soon to be replaced by a $10 M trophy house argued on the basis of being on the confluence flood zone thereby inhibiting the original house’s addition/expansion.
2) the house on 8th St. (facing west) at the NE corner at Pleasant across from Columbia Cemetery.
3) Western Resource Advocates/ Law and Water fund at SW corner Broadway and Baseline, which first received an increase in housing units from it’s commercial use, which they subsequently used to justify a demolition.
4) 777 Broadway, debated 20 yrs. ago as the location of the homeless shelter, a Hoby Wagener, now being replaced with a four story student housing building with some FIVE bedroom apartments (for greater “affordability”). Mark Russin, now with the County, reversed his decision on 777 two weeks later in a split vote.
5) Marpa House communal housing was replaced with rent-by-the-bedroom (RBTB) apartments at $1700/bedroom (and that was the price 4 yrs. ago).
The Millennium is converted from 250 hotel rooms to housing 930 high-end students by the bedroom with a flood height amendment to 4 story. Hill Housing property manager John Kirkland even tried to turn the dining room at the Marpa House conversion into an extra bedroom after completion, but was actually pulled over, credit to Karl Guiler, city staffer, even after he had to open the wall and remove the door in the original plans as it was obviously intended to be a bedroom before it was even built.
The impact fees Planning Board discussed preceding council at 10 April of $15/ sf should be upwards of $100/ sf. “Compromise’s” like these are precisely how the housing crisis originated. Too little too late. This solution is grossly inconsequential to counter affordable housing demand, based on gains of $1100/sf demolition replacements. These unconscionable subsidy demolitions parallel Trump global tariffs here at the local level and compound the destabilization of the entire economy.
And BTW, across the street (on the south side) and a little west on 1015 Juniper, a retired sociology professor waited a little longer and sold his intact house to a family that could , as a result, afford it.
What’s more, much of this is done under the radar, in Landmarks Design Review Committee (LDRC) on Wed. mornings, which they persistently refuse to record.
thankyou Lynn
David, bussing to accommodate service demand for this high-end is not acceptable and will be entertained soon in the BVCP update to balance jobs/housing, the very root of the housing crisis.
May those “old dumps” look attractive to you as the economy collapses real-time.
But developers are rolling in it. And older people well too bad. And affordable? I can’t laugh hard enough
Reading stories like this feels like being in somekind of 1984 newspeak outcome in which good is bad and victim is perpetrator, etc. First, it seems obvious that when someone takes the time and capital to tear down an old building and to create a new one under modern codes the resulting house will be significantly expensive than the one it replaces. Why would that even be worth describing? Second, the entire cost of that choice falls on the owner or investor. We have building codes, restrictive usage aklready for some properties, etc. Perhaps most importantly: these properties have taxes that make the investment a significant benefit to the community. Within these bounds, owners have liberty to decide. This town will bend over itself to protect liberties of the groups they like (homeless camping along public areas for example) but then penalize the ones they don’t like (people putting money into their home I guess).
But finally, I find it bizarre how adverse this community is to peoplewho have succeeded at something in their life deciding to make a nice home here. Every one of the examples the article listed falls into a category where I say “great improvement for the community, wish we had more of that”.
The irony of your “1984 newspeak” claim is that contrived diatribe about liberty and freedom..a thinly-veiled populist sentiment only meant to launder sympathy for corporate interests, speculative investment, and deregulation. Nevermind, of course, those laughably conflated claims of persecution of the wealthy versus those unpunished homeless. Because it’s far easier to attack this story and the strawmen you’ve trotted out through a grand rhetorical narrative than admit the crux of it; that a study affirmed the glut of monolithic mansions being built thought Boulder are directly coming at the expense of affordable housing and at significant profit to Developers. As apparently community by the metrics you seem to “value” most, is one that worships Capital above all else….Orwellian indeed.
Did you ever consider that the residents of Boulder overwhelmingly don’t want the city becoming yet a more extensive playground for the wealthy? That not taxing the building of mansions creates a “magnet effect” that continues to draw those wanting obscenely large homes from other more expensive regions of the country? Ever consider that our current lax approach is destructive to the ability of businesses to hire and retain workers for all our customer-facing businesses? That constantly increasing the area AMI due to the proliferation of mega mansions and the wealthy folks who flock here to build them is making the city unaffordable for everyone else? Didn’t think so.
How about the monstrosity at 1375 Meadow on the corner of Norwood that demolished a lovely ranch almost 7 years ago and has been sitting unfinished with a 7000 sq ft home for the last 5 years?
Let’s tax everyone to punish the wealthy… says the city leadership and staff. Can anyone see that an across the board tax on additions and remodels punishes the existing middle income too? Sometimes people aren’t rich and still need an extra bedroom or bathroom, etc. This city is so dumb in their building policy in their rush to eat the rich. This is sorta like a tariff – a sledgehammer. We push the existing middle to sell with policies like this. The rich can and will pay them, the middle cannot. Regressive policy from a ‘progressive’ city – Boulder’s trademark at this point.
I read the package linked in this article. The recommendation was to apply one (modest in my opinion) impact fee to single-family home teardowns and “significant” additions that increase livable square footage on an existing lot by at least 500 square feet. This wouldn’t apply to remodels or the vast majority of home additions. In other words – No, you have it backwards, this isn’t an “across the board” tax that hurts middle-income workers and families in Boulder. The ship has long sailed on single-family home affordability, attainability, middle-income-ability – whatever you want to call it – in Boulder. The types of projects that could be subject to this fee (if the city pulls the lever) usually cost well over $1,000,000, and that doesn’t even include the other $1,000,000 you first need to purchase one of those “little old dumps.” The Bottom 10% of single-family homes in Boulder (in price/cost) are like the Top 10% of homes for most of the country, and that is probably an under estimation. It’s time to start chipping away at this reality and collecting on one of the few benefits of being a wealthy, happening place. Nobody that can already afford a $750k pop-top and renovation will sniff their nose at a $15,000 fee, let alone a $4M teardown mansion – let’s be real.
Jonah, the homeless are a result of the COB policies like these that widen wealth inequity! The handouts to the developers are obscene. Observe the details and you will understand.
Rmutt, you got it! And then they complain about the “missing middle” like the approval of 2206 Pearl with 300 sf. efficiencies to feed the missing middle at 120 % AMI $1700-$2600 3 yrs ago, now risen. Efficient for the developer.
Lynn, my husband and I live 1/2 block from this proposed development. We spoke against it at the city council meeting but it was still passed 7 to 2. Two months later that property is now up for sale. Maybe the banks disagreed with council??
Judith & Fred Jones
enigma@comcast.net
Judith – Maybe so. They were also working on some larger efficiencies of 375 sf. at around 1700 Walnut, that white building set back from the street, after setting precedent at 2206. It was Stok, remember? I heard you in the testimony. My contact is 303-434-8128 24/7
Yay! Those ridiculously miniscule and overpriced Stok units are exactly what Boulder never needed — despite the bs from the progressives to the contrary. We can’t figure out how to build affordable housing so lets build really expensive housing for visiting corporate execs looking for a 30 day lease? Pathetic.
thankyou Lynn
I have read that our current affordable housing units are not full yet council is clamoring for more. Denver has overbuilt altogether. Some digging needs to be done as to whether Boulder’s affordable units are full and if they are not, we need to know why. Maybe it is the middle class that needs more housing and it does not qualify for affordable restricted deeds? Curious to see how many market value apartments are actually full as well. Are we overdensifying?
This study should have been done years ago since it confirms what everyone already knows – that mega mansions replacing normal housing is totally jacking the cost of housing along with AMI making it unaffordable for everyone not already a relatively wealthy landowner. Get ON with it city council! The tax on tearing down housing to replace it with much larger housing should be much higher than proposed. Time to walk the talk on affordability.
Siga – 120% AMI IS the middle. But it is going up logarhythmically in town because of the JOBS part of jobs/ housing!
Judith- It’s just JLL Investments is selling it as an approved project. “Affordable Potential: The site is located within a Qualified Census Tract (“QCT”). The QCT designation allows for additional financial incentives for affordable development. The city of Boulder, CO has a average household income of $141k+”
Which property are you talking about?
Oh, 2206 Pearl. Stok, a private equity investor sold to JLL another private equity investor before building even started? Stok is out of it now? Made their cut already?
Roxanne I do not know. However it appears they are selling the permit, if not the plans with the property. A lot was already put into all that.
The house on Grape used as an example literally used to be a neighborhood chicken coop. It was falling apart and unquestionably would not have passed current building codes. This is a better example of improving the neighborhood. Demonizing tear-downs in already expensive neighborhoods, I don’t believe is particularly helpful.
A property that rents for 15k a month is doing far more damage to the neighborhood and the price of land and housing anywhere near it than that chicken coop. The chicken coop likely had more character and was more appropriate for a rural setting too. The more stuff like this gets built the more impossible it becomes to build anything other than for the uber wealthy.
I shared a corner of my yard with the house on Grape. The stuff that was coming out of the place when they were tearing it down was extremely concerning. They had people going in clad in full PPE. I suspect that your idea of what it means to do damage to a neighborhood, as well as what constitutes “uber wealthy” is a little more ideologically based than mine. The idea that a chicken coop converted to a clearly unsafe two apartment rental, “has character,” is outside of my idea of reasonable. Might be best to leave it at that.
Perhaps Boulder can free up some of their “Open Space” to build affordable housing. Locking down land is also directly responsible for high housing prices.
Affordable housing. Deserves affordable developers… outsource. Labor,engineering /planning, some materials. To China and Vietnam , they will get it built for 1/2 the cost. Tough decision. But tough problems. Ty