A housing project near Boulder’s Eben G. Fine Park that once promised an unusually high share of on-site affordable homes is in limbo after the developer said the plan is no longer financially viable.
Construction at 90 Arapahoe Ave., also known as the Saddle Creek development, has been paused for more than a year. One building stands partially framed, while the landmarked former Silver Saddle Motel is boarded up.
The developer, Canyon Creek Villas LLC, is requesting an amendment to an annexation agreement first approved in 2017 to reduce the percentage of on-site affordable housing units from 45% to 24%. The plan includes 46 attached, for-sale residential units, such as duplexes and triplexes. The change, approved last week by the city’s Planning Board, still requires approval from the Boulder City Council. A decision is expected as soon as next month.
The setback underscores how difficult it is to build affordable housing in Boulder, where high costs collide with layers of added challenges. In this case, landmarking the old Silver Saddle Motel, unexpected site work and escalating construction expenses all pushed the project off track.
The original commitment would have far exceeded Boulder’s baseline requirement that 25% of units be permanently affordable or that developers instead pay “cash-in-lieu” into the city’s Affordable Housing Fund, money the city uses to create affordable housing elsewhere. The proposed units were intended to be for-sale homes for income-qualified buyers earning between 60% and 120% of the area median income, a range that represents one of the biggest gaps in Boulder’s housing supply, with few options for middle-income residents.
Curtis McDonald, president of Canyon Creek Villas, which recently filed for bankruptcy, said rising construction costs, unexpected site challenges and the financial burden of preserving a historic structure have made the original plan no longer feasible.
“It was optimistically possible to make it work,” McDonald told the Planning Board on July 22. “It’s just the way the costs have escalated and what it takes to build these things. It’s humbling.”
The project faced several challenges: the cost of rockfall protection quadrupled in price, the removal of over 2,000 tons of boulders, redesigning a ditch with a custom-poured culvert and relocating an Xcel Energy utility line that was mistakenly placed through the construction site, according to McDonald. Additionally, cost overruns related to renovating the historic motel amounted to about $1.3 million, in part because the original siding was rotted and the foundation needed to be rebuilt from underneath.
As part of the original annexation deal, the developer agreed to landmark the motel, a 1920s-era rustic motor lodge, according to a city staff memo. What seemed to some like a preservation win at the time has since become one of the project’s biggest hurdles. McDonald said it will cost more per square foot to renovate the landmarked building than to build the new market-rate homes.
Today, the original structure is barely recognizable, with its roof tar paper peeling and the exterior clad in plywood. Some Planning Board members questioned whether the stripped-down structure still complies with historic landmark rules and suggested it could have been effectively demolished.
As an example of how expensive the project has become, McDonald said that for one affordable duplex, the cost of a building permit was about $89,000, adding about $32 per square foot to the overall cost of construction.
The Planning Board recommended that city council approve the reduced affordable housing requirement and remove the landmark status, citing concerns that maintaining the structure would be a burden on future low- to moderate-income homeowners who may someday live there.
While board members said they were disappointed over the reduced affordability, they acknowledged the realities of building affordable housing in Boulder and the constraints of building on the partially developed site.
“It is not our duty as a planning board to preserve profitability for developers,” board member Laura Kaplan said. “However, the city does have an interest in seeing this property be developed and not remain a largely unfinished construction site.”
Kurt Nordback was the only Planning Board member who voted against the annexation amendment to reduce the number of affordable housing units, suggesting it could encourage developers to make unrealistic promises in future annexation agreements just to advance their projects.
“My concern is that if we modify the annexation terms so significantly that it will provide an incentive for future developers to be very optimistic in making their annexation agreements, knowing that a precedent has been set,” Nordback said.
A 2023 study commissioned by the city found that even Boulder’s baseline 25% on-site affordability requirement is likely financially infeasible for most on-site, for-sale residential developments. Many developers instead pay cash-in-lieu to the city’s Affordable Housing Fund. What made the Saddle Creek development unusually bold was that nearly half the affordable units would be built on site and for sale.
In March, Canyon Creek Villas LLC filed for Chapter 11 bankruptcy, according to court filings. McDonald declined to comment further on the project until after the Boulder City Council discusses the annexation agreement.
This all sounds pretty Boulder to me. We don’t allow much reality to enter our sphere.
Planning Board and council are the hands of the developers, so of course they will approve the reduction in affordable housing. Just the latest example of developers promising affordable housing and failing to deliver, the most glaring example being the Boulder Academy failing to deliver on the Fruehauf’s affordable housing project. With these two projects, developers know they can pretty much promise anything and get away from it. The developers are making a mint on this, that they can’t afford to build this is just ridiculous. This reduction in affordable housing just creates more places for rich people and investors to move and overpay for luxury second homes and/or overcharge for rents. Kudos to Boulder Progressive Kurt Nordback for recognizing this, but the Progressive’s alliance with the developers to get in power is the reason we are here, and most of the rest of the Progressive controlled planning Board just goes along with it, that there is no push back on this is stunning.
The cost of the building permit was $89k for one affordable duplex? Way to go Boulder. The city does not help facilitate affordable housing unless it’s built by BHP. Maybe learn to PARTNER with developers who will provide that amount of affordable housing. Did anyone at the city bother to run the numbers to see if this proposed project was even feasible and investigate what it would involve to bring it to fruition? Silly me.
One of the issues is that no one at the City understands the economics of residential development, the profit margins are not what people think they are and the economic risks are huge. To be tied up in process with the City for months and years is a huge opportunity cost, the timeline for the Saddle Creek’s process for annexation was 8 years!
Amen, John. It took 10 days to get a permit to just replace my roof. 1,500 city employees all working with my best interests at heart.
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Affordable housing is even more difficult to build I imagine. Construction is usually LIHTC funded for rentals, but I don’t know what this project did. Sure would be nice if the city could do more than squawk about the lack of affordable middle income housing for sale, and actually help developers like this with resources, subsidies and programs that could help him build it. They should be laying out the red carpet for someone willing to do this huge amount of onsite affordable housing. Instead he gets a lot of delays and static about the historical preservation which was absurd in this case.
or … maybe the issue is that the developers deliberately made their project sound way more enticing re affordable housing than they knew was feasible & counted on being able to amend their project down once it was under way, cause what was the city gonna do then … ? not saying they were necessarily being greedy, but if the shoe fits … !
Shouldn’t the city be able to perform due diligence to figure out if developers are stretching the truth or not? Anyone can tell them anything and they have no ability to understand what is reasonable? As much as these staff in the planning department are paid, why can’t anyone understand development processes and issues? What a waste. The city should have been involved in meaningful ways.
What happened to the TWO cottages that were to be saved at 311? Am I missing something? I still have my photo of one after it was damaged with a bulldozer by a non- contractor random vagrant or someone that allegedly illegally turned it on and used it. Didn’t change anything, it just had to be repaired. (Nowadays Landmarks just uses “demolition by neglect” delay tactics). WHERE are the landmarked cottages????????
What was the full address at 311?
From the financial institutions, to the developers, to the property managers, the entire point of the organizations involved in private housing construction is to maximize profit. After a charade intended to hide that fact with the pretense that profit will be sacrificed for some token “affordable housing,” the city government’s approval has become essentially automatic. At that point, the developer can add the cost of buying out of the “requirement” to the final price and blame that choice on onerous regulations. Managers are paid to do whatever is required to maximize profit and with Boulder’s high land prices, there are only two final results that meet that requirement: ostentatious, gentrified developments sold as investments that often remain unoccupied for long periods, and large scale, hyper-dense apartments that are only “affordable” if the externalized costs for both the tenants and their neighbors are ignored. So, that is what we inevitably get in the end.
Fred & Judith Jones
The City has done a decent job with the housing development at 3rd and Pearl, and it is a real asset to the neighborhood. Perhaps the Housing Authority could take on the failing Saddle project to provide the missing middle income housing that they
promote.
Even if Council agrees to the 24% lower number, this is still a risky development. The original pricing of the market rate duplexes at between 3 and 4 million was a stretch, and the market has softened considerably in the past few years.
Boulder’s housing authority, BHP, only builds rentals. It’s all LIHTC funded. 60% AMI and under. Clearly we need a new model for development if the city expects affordable for sale middle income housing or even rentals.
I’m writing on behalf of Historic Boulder Inc., the preservation advocacy group. The BRL authored an article about the Residences at Saddle Creek development. It quotes the developer in a way that attacks the impact of historic preservation. I want to clear that up.
In 2015 the developers worked out a deal to have the property annexed into the city service area in exchange for the preservation and adaptive reuse of the iconic Silver Saddle motel for apartments. For decades the motel was the among the first businesses that greeted motorists as they entered the city limits coming down from Boulder Canyon. It is one of the few remaining reminders of the bygone days of inexpensive tourism at the foot of the Rocky Mountains that existed many places in Colorado.
The annexing is a huge benefit to the developers because it connects their property to city utility and emergency services. The project could not go forward without that. Repurposing the older motel has an added benefit to the developer by adding charm and an attractive anchor to their development. Unfortunately, the developers seem to have gotten in over their heads with regard to the realities of construction costs and building on a rocky and sloping site. They have also stripped the historic buildings of their nice, wood siding and the iconic neon sign seems to have gone missing.
Putting the blame on historic preservation for their development troubles seems shortsighted. Preservation has contributed to making many other developments in town flourish. Some examples include the Pearl Street Mall, the Holiday development in North Boulder, the Boulder Transit Center at Pearl and 30th streets, the Shadow Creek homes on west Arapahoe, and the Boulder Housing Partners ‘affordable’ development at 3300 Penrose Place. Historic Boulder is happy to meet with the developers to see how we can help them achieve their preservation goals.
if the silver saddle had historic preservation protection, how could its historic exterior been stripped? who let that happen? isn’t that anathema to historic preservation?!
Exactly. Where was the oversight when it counted? Does the city just wash its hands of projects like this once the contract is signed, then wring their hands later?
No one seems to consider the people buying these “affordable” houses. They are affordable until the structures get old and start needing major maintenance and improvements. These owners have no cap on their costs and liabilities, covering the same expenses as their market rate neighbors, but unlike their market rate neighbors they are not permitted to recoup their costs at sale time. They received no net gain. Their “investment” is a total loss. Their “ownership” makes them responsible for redeveloping the property at their own expense to subsidize these affordable programs. It is nothing like true ownership and is financially more like renting but without the freedoms of renting.