In August 2023, the City of Boulder launched a down payment assistance program for middle-income home buyers, hoping to give residents a foothold in a housing market where prices are rising faster than incomes. More than two years later, no one has signed up, according to city officials.
City officials are now considering ending the program as soon as June. They said certain requirements, including the timeline for repaying the loan and a cap on appreciation rates, may have deterred potential participants.
Ending the pilot would close one of the city’s few programs aimed at adding deed-restricted, permanently affordable units for middle-income residents to Boulder’s housing supply.
In January 2022, councilmembers made launching the program one of their top priorities, after the pandemic paused work on it. The program was open to residents earning 80% to 120% of the area median income. That’s roughly $84,000 to $127,000 for an individual, according to the Colorado Housing and Finance Authority.
The program offers a 0% interest loan of up to $200,000. In exchange, buyers must agree to a deed restriction capping appreciation at up to 5.2%, according to a city staff memo. The loan must be repaid within 15 years or at the time of sale, and future buyers would have to meet the same income requirements.
City officials said the combination of capped appreciation and repayment terms may have created concerns among potential participants. The program also may have been less appealing compared with the city’s other affordable homeownership options.
The city’s House to Homeownership program, for instance, known as H2O, offers a 0% interest loan of up to $100,000 that does not have to be repaid for 30 years or until the home is sold. Buyers are not required to sign a deed restriction capping appreciation. Instead, the city collects a share of any appreciation based on the loan amount. Future buyers of those homes also do not need to meet income requirements, and the home can be sold at market rate.
Since 2000, 94 households have participated in the H2O program, according to city officials.
Hollie Hendrikson, a housing policy senior project manager with the city’s Housing and Human Services, said the city has not formally received feedback from residents who chose not to participate in the middle-income down payment pilot. But she said it likely suffered by comparison.
“The middle-income down payment assistance program offers a higher assistance level than the H2O program,” Hendrikson said. “But that comes at a price, and the price is a deed restriction. And we’re just assuming that when people see those two options side by side, it’s just not a competitive comparison.”
A central goal of the pilot was to add deed-restricted units to the city’s housing supply for middle-income residents. That segment is particularly challenging to serve because it falls outside the reach of most affordable housing subsidy programs, which are designed for lower-income households, but also does not pencil out for market-rate developers.
The city’s middle-income housing goal, established in its 2016 strategy, is to build or preserve 3,500 middle-income homes by 2030, including 1,000 deed-restricted homeowner units.
Of Boulder’s current 836 affordable homeowner units, 107 serve households earning above 100% of area median income and 595 serve households in the 61% to 100% range, according to city data. The city’s affordable housing dashboard does not break the data down by the middle-income threshold of 80% to 120%.
The middle-income downpayment assistance program followed the passage of a 2019 ballot measure in which voters authorized 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.”
City officials said they have not yet drawn on that debt.
Councilmember Matt Benjamin indicated during a council meeting earlier this month that he would like to see the money directed toward a new middle-income program.
“It’s hanging out there as an unfulfilled promise to the voters,” Benjamin said. “I just think we owe it to them to either say, ‘hey we got a new plan for this money’ or something.”