Boulder consultants recommend a square‑foot impact fee to fund affordable housing from home teardowns and large additions

City of Boulder staff and a paid consultant told the Housing Advisory Board on Feb. 26 that a legally defensible nexus exists between single‑family teardowns/large additions and the city’s need for affordable housing, and they recommended creating a per‑square‑foot impact fee to capture contributions from those projects.

The study, prepared by Bruin & Associates (presented by consultant Andrew Rochford) and introduced by Solon Walbert, the city’s Inclusionary Housing Program manager, found that replacing modest homes with much larger market‑rate houses and substantial additions increases local housing costs and demand for workforce housing. The consultant advised a square‑foot fee up to about $15 per square foot for net new above‑ground area and suggested exempting small projects and accessory dwelling units (ADUs). The presentation estimated the fee could generate roughly $1 million to $1.5 million a year for Boulder’s affordable housing fund under a $15/sq ft assumption.

The study summarized three prototype project scenarios (small teardown/replacement, larger replacement, and modest addition) and concluded the replacement/expansion produces higher home values and attracts higher‑income households. The consultant’s economic modeling estimated those households’ spending would create jobs in the city and, in turn, additional workforce demand requiring affordable units; that demand was converted into a per‑unit financing “gap” the city would need to close. The analysis produced sample maximum fees per project (roughly $25,000 for some small‑lot teardowns, about $45,000 for larger teardown projects, and about $14,000 for modest additions) and a per‑square‑foot legal justification for a fee in the mid‑teens.

Board members pressed staff and the consultant on assumptions in the modeling, including the share of workers created by these projects who would live in Boulder (the consultant said the analysis assumes two‑thirds will be housed locally, an assumption described in the presentation as optimistic but commonly used in nexus studies to justify fees). Members also discussed how to craft exemptions so the fee does not unduly burden longtime owner‑occupants making modest improvements; options noted included a larger square‑foot cutoff, a percent‑increase threshold, or a homestead‑style exemption tied to occupancy period. Staff said the legal design and administration details would be decided through the public outreach process and code drafting.

Walbert told the board the city already directs nonresidential impact fee revenue and other housing revenues into an affordable housing fund; the presentation noted the city collected roughly $102 million into that broad fund from 2015 through 2023 (short‑term rental tax and other sources were referenced during discussion). The consultant highlighted comparable programs elsewhere (Evanston, Denver, Los Angeles, Aspen) and said Boulder’s recommended fee levels are similar to fees that apply to some single‑family projects in Denver.

Next steps identified in the meeting: staff plans further community engagement this spring and summer, presentation to the Planning Board the following week, and a code‑change package for Council consideration in the fall. The consultant and staff said the city would phase in any fee and adjust it over time, and they recommended exempting small additions (the presentation suggested 500 sq ft as an administrative cutoff but board members proposed considering higher thresholds or percent‑increase rules).

Board members and staff emphasized design tradeoffs: the fee’s primary purpose is to generate revenue for affordable housing and to make contribution expectations more equitable across types of residential development; some members also discussed the fee’s potential to modestly deter certain projects. No formal action was taken by the board on the study at the Feb. 26 meeting; staff asked for the board’s input as part of the ongoing outreach process.