Boulder study proposes up-to-$15 per sq. ft. fee on large demolitions, additions to fund affordable housing

Solon Walbert, the City of Boulder's Inclusionary Housing Program manager, and consultant Andrew Rochford on Feb. 26 presented a nexus analysis that recommends a square-foot impact fee on large home demolitions and additions to help pay for affordable housing.

The report, commissioned by the city and prepared by Bruin and Associates (with presentation support from Sullivan's consultant team), quantifies links between teardown/expansion projects and additional local demand for workforce housing and estimates the capital subsidy needed to make a typical affordable unit viable in Boulder.

Walbert said the city's Inclusionary Housing Program currently requires new developments to make 25% of units permanently affordable or pay a cash-in-lieu contribution; single-family projects and demolitions of four units or fewer that replace a unit within three years are typically waived. "This is sort of the gap we're trying to fill through this study," he said, describing how many smaller projects escape the inclusionary requirement.

Rochford summarized the consultant's approach: model three prototypical project scenarios (small teardown/replacement, larger expansion, and modest addition), estimate the change in home values and resulting income profile of occupants, translate that into local job creation, and then estimate how many affordable units would be needed to house the workers generated. "The short answer is most of the studies are on the so-called demand side of the equation," Rochford said, explaining that new or expanded homes typically sell for substantially more and are likely to be occupied by higher-income households.

Using the study's assumptions, consultants recommended a per-square-foot fee capped at about $15 per above-ground square foot, noting that a higher fee would be harder to justify legally. The analysis produced illustrative maximum fees per project of roughly $25,000 for a smaller-lot teardown/replacement, about $45,000 for larger replacements, and about $14,000 for modest additions near the chosen cutoff.

Rochford also presented an average capital subsidy estimate for an affordable rental unit of roughly $140,000 and an overall weighted average financing gap of about $100,000 per affordable unit. At $15 per square foot and current project counts, the study estimates roughly $1.2 million to $1.5 million in additional annual revenue could be collected and deposited in Boulder's affordable housing fund.

Board members asked about key assumptions: whether two-thirds of the jobs generated by new spending would be housed in Boulder (an optimistic assumption the consultant said is commonly used in defensible nexus studies), how land values factor into the calculations, and whether small additions or accessory dwelling units (ADUs) should be exempted. Walbert and Rochford acknowledged those are policy choices the city would decide; the consultant said the recommended 500-square-foot cutoff was primarily for administrative ease and to avoid imposing fees on modest projects such as adding a bedroom.

Several board members voiced concern about the impacts on long-time homeowners making modest additions and discussed possible exemptions or waivers (for owner-occupants, percent-increase thresholds, or time-since-purchase covenants). The presenters and board members also discussed enforcement and administrative costs, legal defensibility, and the need for public engagement before any code changes.

Walbert said staff plans further outreach and to bring code-change proposals to Planning Board in the spring and to City Council later in the year for possible adoption. "We're just sharing the consultants report back," he said, adding that the presentation was intended to gather HAB feedback before the formal public process begins.

Ending: The Housing Advisory Board offered detailed questions and tentative support for further study and public engagement; staff said next steps include additional outreach, a Planning Board presentation, and returning to council with potential code amendments for consideration later in the year.