Boulder staff present nexus study, propose up-to-$15/sq ft impact fee for large home additions and teardowns

Boulder City Council members on Tuesday reviewed a completed nexus study and staff recommendations for a residential impact fee aimed at offsetting the affordable‑housing impacts of single‑family home teardowns and large additions.

The study, presented by consultant Andrew (Andy) Ratchford of Gruen+Associates and Housing Planner Sloan Wahlberg, estimates that a fee applied to net new above‑ground living area could be justified and recommends a conservative maximum of roughly $15 per added square foot. "We think the fee probably shouldn't be any more than $15 per square foot of additional living space," Ratchford said.

Why it matters: Council directed staff in 2023 to study how demolitions of smaller homes and large additions affect Boulder’s affordable housing supply and needs. Staff say current inclusionary housing rules apply only to new housing, so replacements of existing single‑family homes frequently avoid inclusionary requirements through demolition‑and‑replacement waivers. Kurt Fernhaver, director of Housing and Human Services, said the proposed fee is intended to address that inequity by generating revenue for the city’s Affordable Housing Fund.

Key findings and proposal - The nexus analysis focused on a demand linkage: higher‑priced replacement homes tend to be occupied by higher‑income households whose local spending creates additional jobs, which in turn increases demand for affordable workforce housing. Ratchford summarized the model as producing about 0.15 to 0.45 additional affordable units of need per project, depending on scenario assumptions. - The consultant calculated ownership/rental “gap” subsidies needed to house those workers and converted that into a maximum justifiable per‑project fee. Example maximums ranged from about $14,000 to $44,000 per project depending on scenario; staff recommended a uniform per‑square‑foot fee and suggested using the lower end of estimates. - Staff recommend applying the fee to net new living area added by demolition/replacement or major additions, exempting net increases below 500 square feet (for example, many ADUs under that size would be exempt). Sloan Wahlberg noted the exemption is intended to avoid applying the fee to modest expansions. - Estimated yield: Based on historic counts (about 23 replacements and 35 additions per year), the recommended $15/sq ft fee would likely generate roughly $1.2 million annually, staff said.

Council questions and concerns Council members asked about legal limits, distribution of funds, and effects on homeowner choices. Ratchford and staff repeatedly emphasized the analysis is structured to satisfy legal requirements for an impact fee: "To avoid a takings clause, you have to show that direct linkage between what you're asking ... and the actual impacts on affordable housing," Ratchford said.

Several council members urged careful implementation to avoid unintended harm to middle‑income homeowners who simply need additional bedrooms or space. Council Member Tara Weiner and others pressed for exemptions or tiering that would reduce the fee’s burden on modest family expansions; staff said implementation could include waivers or exemptions and that staff will seek feedback during public engagement.

Comparative context and implementation schedule Ratchford reviewed similar policies in other U.S. cities (Denver, Aspen, Los Angeles, Evanston), noting approaches and rates vary widely. Staff proposed an engagement and code‑change schedule that would pursue public outreach through July, follow racial‑equity assessment guidance, and return with draft code changes in the fall.

Details and clarifications from staff (selected) - Current single‑family inclusionary cash‑in‑lieu rate cited in materials: $15.34 per square foot (used for comparison), though the proposed new fee is calculated separately and would apply only to net added area, not to full house size. - Waiver rule: Inclusionary requirements are currently waived if a demolished unit is replaced within three years; that waiver is a root cause of the inequity the proposal seeks to address. - Activity levels: Staff reported an average of about 23 replacements and 35 substantial additions per year in recent years.

Next steps and scope limitations This was a study‑session briefing; no ordinance was proposed or adopted at the meeting. Staff asked council for clarifying questions and initial policy guidance ahead of a public engagement period. Staff said the nexus analysis focuses on the demand linkage (jobs/housing need) and does not attempt to quantify any direct loss of units that would have been affordable absent redevelopment, because the market characteristics of affected parcels make such losses hard to substantiate in the legal analysis.

Ending Council members differed on the appropriate size of any fee, the exemption threshold, and whether ADUs should be exempt. Staff said they will return with additional outreach results and draft code language later in 2025. "Keeping the revenue broad would probably have the biggest impact," Kurt Fernhaver said of the eventual fund use, while also acknowledging implementation choices about targeting funds to middle‑income or lower‑income programs remain policy decisions for council.