Planning board reviews nexus study recommending $15-per-square-foot fee for demolitions and large additions

The City of Boulder Planning Board on March 4 reviewed a technical nexus study that examines whether demolitions of smaller houses and replacement with larger homes — and significant additions to existing single‑family homes — create a measurable need for additional affordable housing and therefore justify an impact fee.

The study, prepared for the city by Gruen & Gruen Associates and summarized to the board by consultant Andy (Andrew) Ratchford, concluded there is a defensible “demand nexus” between expanded single‑family housing and increased need for workforce housing. Ratchford said the consultant’s analysis supports a per‑square‑foot fee and recommended the city set a fee no higher than $15 per square foot of added living area.

The study traces the proposed link in three steps: newer, larger homes sell for substantially higher prices and are more likely to be occupied by higher‑income households; higher household spending generates additional local jobs; and those jobs, in turn, increase demand for affordable and workforce housing. Ratchford summarized the approach and findings, saying the three prototypical project scenarios in the study produced estimates ranging from about 0.14 to 0.47 units of affordable housing needed per project, and that converting that need into the capital subsidy required to build or preserve affordable units yields a recommended fee in the roughly $15–$20 per square foot range. “We’re recommending the fee shouldn’t be more than $15 a square foot of added living space,” Ratchford said.

Why the study matters

City staff and the consultant said the study is intended to close gaps in the city’s current affordable‑housing tools. Boulder’s inclusionary housing (IH) requirements already require 25% of new housing to be permanently affordable, with options for on‑site units, off‑site units, donated land or cash‑in‑lieu. But the IH regulations include a waiver: if an existing unit is removed and replaced within three years, the replacement is often exempt from IH obligations. Staff said that waiver has led to a situation in which many newly built single‑family homes are not subject to IH contributions; those developers often pay no cash‑in‑lieu when they demolish and build larger homes. The city’s current IH cash‑in‑lieu is calculated on a per‑square‑foot basis and was cited in the meeting as $15.34 per square foot for the methodology used in prior updates.

The presentation and board questions

Sloan (Solon) Walbert, the city’s inclusionary housing program manager, introduced the topic and framed the study as a necessary step if the city wishes to impose an affordable‑housing linkage fee tied to redevelopment of single‑family properties. Walbert told the board that IH “does not need an access study because it is based on the city’s ability to enact zoning,” distinguishing the legal basis of IH from the nexus study needed to justify a fee.

Ratchford walked the board through three prototypical scenarios the consultant used: a small teardown/rebuild, a larger teardown/rebuild on a large lot, and a modest addition. He said the estimated increase in home value from the projects ranged roughly from $900,000 to $3.5 million depending on scenario, and that the analysis converted those increases into expected incremental household spending, jobs supported, and then into the number and type of affordable housing units that would be needed to house the workforce generated by that spending.

Ratchford illustrated how the study converts a per‑project affordable‑housing need into a one‑time capital subsidy per expanded home. For the smaller teardown scenario, he said the maximum fee calculated by the model was about $25,000 per project, which converts to roughly $15 per square foot of added living area; larger projects produced higher maximums (roughly $18 per square foot in the study’s mid scenario, about $20 per square foot for some additions), but the consultant recommended the city adopt a single per‑square‑foot fee and suggested $15 as a conservative upper bound the city could defend.

Board members asked technical and policy questions throughout more than an hour of discussion. Questions focused on: the data and assumptions used to translate higher house prices into local job creation; how the PUMS/American Community Survey data and economic multipliers were applied; how much of the workforce induced by new household spending would live in Boulder rather than commute in (the study used a two‑thirds in‑Boulder assumption for conservatism); whether investor‑owned vacant luxury houses would change the analysis; and how the fee would interact with existing IH waivers and exemptions.

Key policy choices raised

Several recurring implementation issues emerged in the discussion and in board comments: - Fee base and rate: the study recommends a single per‑square‑foot fee on net new living area, with the consultant proposing $15/sq ft as a defensible, conservative level (the study’s internal calculations produced a range up to roughly $20/sq ft for some scenarios). Several board members urged consideration of tiered or progressive rates that charge more per square foot for very large projects. - Threshold/exemptions: the consultant suggested exempting small additions and accessory dwelling units (ADUs). The study recommended a 500‑square‑foot exemption threshold for net new living area; projects that add less than that would not pay the fee. The consultant also recommended exempting ADUs and allowing exceptions for disaster rebuilding. Board members debated whether disaster rebuilds should be exempted in all cases because of predatory purchases following disasters; some suggested limited carve‑outs only for reoccupations by the prior owner. - Interaction with inclusionary housing: staff clarified that because IH uses a zoning‑based approach, it does not require a nexus study; the proposed fee would address projects that currently escape IH obligations under the three‑year replacement waiver. Under current IH practice, projects of fewer than five units typically pay cash‑in‑lieu rather than provide on‑site units. - Legal defensibility and comparables: Ratchford said similar methodologies have been used for commercial linkage fees and for some demolition or mitigation fees in other municipalities (Evanston, Denver, Aspen were cited as comparators), and noted that many jurisdictions set fees below the maximum defensible level to reduce legal risk.

Public comment and board suggestions

During the meeting’s open comment period, resident Lynn Siegel urged stronger policy measures, saying Boulder’s current impact fee for demolitions has been too low and recommending a much higher rate (she said “we need at least a 40% impact fee”) and stronger inclusionary zoning. Siegel described recent local demolitions and infill projects she characterizes as replacing smaller, affordable homes with very expensive units.

Multiple board members recommended further data checks and refinements before drafting ordinance language: investigating typical project sizes (how many projects exceed 4,500 square feet), assessing how many additions fall near the proposed 500‑square‑foot threshold, and checking whether a tiered fee structure could be supported by the study’s categories. Several board members also urged that any adopted fee include a standard annual escalator (CPI or similar) to preserve real value over time.

Next steps

Staff said the planning board discussion is an early policy conversation; the city intends additional community engagement and policy analysis through the summer and plans to return with code language in the fall. Sloan (Solon) Walbert and staff noted the item is scheduled for City Council discussion on or about April 3, 2025. Director of Housing and Human Services Kurt Fernhaubart told the board the city is also running a separate preservation program that purchases market condominiums and resells them as permanently affordable homeownership units; he said the proposed fee could materially increase funding available for that program.

The board did not take formal action at the March 4 meeting. Staff asked the board for feedback on the study’s key policy choices and indicated they will bring refined policy options and draft code language back for subsequent review and public hearings.

Ending

City staff and the consultant said the nexus study provides a technical basis for further policy design but that final decisions — including fee amount, exemptions, indexing and whether to use a single fee or a tiered structure — will require additional Council direction and code drafting. Council consideration is expected in early April as staff continues community outreach and prepares ordinance language for later public hearings.