Planning board backs affordable-housing impact fee on single‑family replacements and large additions

City of Boulder planning board recommended that City Council adopt an ordinance establishing an affordable‑housing impact fee on certain single‑unit redevelopment projects and substantial additions, after staff presented a consultant—s nexus study and answered clarifying questions.

The board voted to forward the proposed ordinance, which would add a new fee rate to chapters 4‑20 (fees) and 8‑9 (capital facility impact fees) of the Boulder Revised Code, for City Council consideration. The fee as proposed in staff materials is $15 per square foot applied to new square footage on replacement homes and to additions above a 500‑square‑foot exemption; accessory dwelling units (ADUs) and houses under a 2,000‑square‑foot threshold are exempt.

Why it matters: Staff and consultants argued that replacing smaller homes with larger new homes and adding substantial square footage increases local housing costs and demand for affordable housing. An impact fee is intended to mitigate that effect by creating a locally controlled funding source for the construction, acquisition or preservation of affordable housing.

What staff presented Jay Segnet, Housing and Human Services, summarized the purpose: single‑family demolitions/rebuilds and large additions currently can avoid inclusionary housing (IH) requirements that apply when new units are created; the proposed impact fee would close that gap. Gruen & Gruen (the consultant) modeled how new or expanded high‑value homes affect local housing demand and calculated a maximum supportable fee in a range that varied by redevelopment scenario. Staff recommended the $15 per‑square‑foot fee as a policy balance between mitigation and project feasibility.

Key elements of proposed fee and exemptions - Fee basis: $15 per square foot on new gross square footage created by replacement homes or substantial additions (the draft threshold for an "addition" is work creating more than 500 square feet of new conditioned area beyond a property—s existing gross square footage). - Credits and exemptions: demolition of existing floor area receives credit (the ordinance treats replaced area consistently with current impact-fee practice); ADUs are exempt; homes under 2,000 square feet are exempt from the fee; the first 500 square feet of an addition is exempt. - Effective date and revenue outlook: staff proposed an effective date of Jan. 31, 2026. Based on recent permit activity (consultant analysis), staff estimated roughly $1.2 million annually if typical teardown and addition activity continues; staff noted that local dollars can be leveraged with state and federal funds.

Board questions and clarifications Board members asked technical and policy questions about how the Nexus study was structured and how the fee would be applied in particular scenarios: whether basement/below‑grade area would be counted, how fees compare to the existing IH cash‑in‑lieu calculations for vacant‑lot new development, whether an escalation formula is in the code (fees are adjusted annually through the city—s budget process), and how the fee treats rebuilds after disaster. Staff and the consultant explained that the study used local permit and sales data, that the nexus work supports a $15‑to‑$23 per‑square‑foot range across scenarios, and that staff proposed the conservative $15 rate so the fee is defensible across multiple redevelopment configurations.

Public comment and concerns Public commenters were mixed: some urged a higher fee and stronger measures to address affordability; others urged rejection of the new charge and questioned the study—s assumptions and legal defensibility. A public commenter identified as Robert Ross argued the economic assumptions in the nexus study were flawed; another commenter urged a much larger fee. Staff pointed to the number of comments received through the BeHeardBoulder portal and public outreach already performed and noted that council will hold additional hearings.

Board action and direction to staff The planning board voted to recommend that City Council adopt the ordinance adding the new affordable housing impact fee rate. Board members who spoke in favor said the fee closes an equity gap (similar projects that create housing now pay into IH while single‑family replacements often have avoided that obligation) and that the modest fee is unlikely to make projects infeasible but will fund affordable units when combined with leveraged state and federal sources. Several board members asked staff to confirm specific technical points (basement treatment; the interaction with IH when new multiple units are created; and the assumptions in the nexus model) as the ordinance moves to council.

Ending note Staff scheduled Council hearings in October; if Council adopts the ordinance it will be implemented with a Jan. 31, 2026 effective date to allow staff and the development community time to prepare. The fee is intended as one tool among many to fund affordable housing production and preservation in Boulder.