Conversations with Advocates of Fair Growth
Overview | Conversations with Advocates of Fair Growth | Living on the Fenceline
Cindy Brown
Cindy Brown is director for development of the Boulder Housing Partners, Boulder's Housing Authority. Brown worked on producing affordable housing for 14 years in Boulder, first doing preliminary development work for the Housing Authority and then administering the City of Boulder's Trust Fund, the Community Housing Assistance Program. CHAP's financial sources come from a percentage of the property tax and a tax on new development. These taxes for affordable housing, which generate about $1 million a year, are combined with federal funds and are then allocated through a competitive process. Brown subsequently returned to the Housing Authority from the trust fund to continue to do development work focusing on the Holiday project described below.
During the time she has worked for Boulder, Brown has seen the city evolve a comprehensive plan to provide 10 percent of the housing stock as affordable housing. This initiative is taking place at the same time that Boulder acquires open space and limits residential development. The result of these policies has been the stead increase in values of local properties making the acquisition of affordable housing expensive.
To achieve its goal of 20 percent permanent affordable housing, Boulder imposes taxes to fund affordable housing and requires that all new development include 20 percent affordable housing. An effort is also made to scatter affordable housing throughout the city. Land banking of city own properties has helped make affordable housing affordable; as has a policy of allowing the city to develop projects which have a mix of affordable and market-rate rental units. In this fashion, the market-rate units generate the profit to that allows the city to produce and manage the affordable units.
A number of the city's affordable housing developments are mixed-income in configuration. Brown says that the affordable units are indistinguishable from the market rate units and that residents are unaware of which of their neighbors are occupying subsidized units. The Foothills project, a small New Urbanist development adjacent to Front Range parkland is an example of this mixed-income approach. The setting and design of the units is so appealing that many local residents asked if they could buy units on the open market. Half of these units are subsidized, income-limited, affordable housing.
Currently, the city has bought the land and built the infrastructure for a 333 unit development a third of which will be permanently affordable. Located on the site of an old drive-in move theatre, the Holiday development is a mixed-use, New Urbanist, mixed-income development with both market-rate and affordable units built side-by-side. A number of different developers are working on the project ensuring that the architecture is varied. A bus route ensures good mass transit access.
Interview
Steve Lerner (SDL): I understand there is an Urban Growth Boundary in Boulder.
Cindy Brown (CB): There are a number of things that limit land supply in Boulder. The Urban Growth Boundary is one of them. We also have a policy of limited annexation. The city has identified its service area and the areas that could be annexed -- Service Area #2 and to the northeast Area #3. In general these are lands that are not anticipated to be developed in the near future. That is all described in the Boulder Valley Comprehensive Plan, which is an inter-governmental agreement between the city and the county first adopted in 1978 and updated every five years. We also have a policy of acquiring open space which also limits the availability of land. And there is a limit on residential growth, the Danish Plan, since 1978. The idea was to limit residential growth to a certain percentage each year. That percentage varies over time between one and two percent a year so it is kind of a "slow growth approach." All those things together combine to limit the land supply and the number of permits which are available. These restrictions make land and therefore housing much more expensive.
SDL: How did you deal with the rise in land prices?
CB: It is difficult. I think what the city needs to do when they have policies such as the ones we have been talking about, is to mitigate the unintended consequences which are driving up the land prices. The Housing Trust Fund is an excellent method to do this. The city will also sometimes waive some fees for affordable housing in the development process such as the new development tax I mentioned that goes into the affordable housing trust and others like under certain conditions. They also have a first time home buying program in the form of payment assistance. So I would say the city, more than some, has taken an active role in promoting affordable housing. Also, the City Council has made one of its four goals the provision of affordable housing. Our goal in the city (and it is pretty ambitious) is to have ten percent of all of our housing be permanently affordable. Last time I saw statistics we are probably half way there. Most of this affordable housing has been developed by the Housing Authority. The city has an inclusionary zoning program so when a developer builds any new housing he must provide 20 percent of that as affordable housing.
SDL: Is that if the development is a certain size?
CB: Yes, any development of more than two units. In Boulder these things tend to be pretty small scale. Our Holiday project is 27 acres which is by far the largest.
SDL: Say I am a developer and I put up two units. How can I make 20 percent of two units affordable?
CB: There is a provision that you can buy out so in the smaller developments almost everybody buys out. They pay a cash in lieu fee. So there are a number of things you can do as a developer. You can make 20 percent of your units affordable; or pay cash in lieu. Or you could buy an apartment building somewhere else that would provide those units and the city would have to make a determination that what you are providing is at least as great as providing the 20 percent on site.
SDL: Do you look at where the units are located so you don't get a concentration of affordable housing in any one area?
CB: The city has always had a scattered site approach. The guideline is no more than 35 affordable units in one place. That is what the city does. But how do you deal with those questions from an affordable housing developer point of view. In some cases we have land that we purchased in 1985 and that land was held over time. The land was purchased with grant funds from the city. The Foothills Project, which you will see today, that land was purchased in 1985 and sat waiting while several plans were discussed. But it wasn't developed until very recently. It is a gorgeous piece of land surrounded on two sides by park. Today we would not be able to afford to buy that piece of land. So land banking was one of the techniques.
The other thing we do is that we have an acquisition program and a construction program. Our new acquisitions are scattered through out the city. They are typically modest and small scale. Sometimes we can provide some tax benefits to sellers of either land or buildings so we can compete in a very competitive market. If someone has an appraisal that says the land is worth $1 million and they are going to sell it to us for $800,000 they can get to take the difference as a charitable contribution to a non-profit.
We have scattered acquisitions and have a goal of acquiring about 30 units a year, which we have been doing consistently. We are slowing that down because we are experiencing a market where there are greater vacancies but no one is dropping their sales prices. People who own a multifamily building don't want to sell it at a reduced rate because they know over time that it will recover. As a result we have decided to be more conservative about our policy of acquiring property because opportunities are just not coming along.
SDL: How does that fit in with your zoning program where you want 20 percent of all new development to be affordable?
CB: We acquire old units but we also do new construction. The inclusionary zoning affordable units are kept affordable with a covenant. This is something that had been developed over a number of years. When a developer gets his approvals he agrees to a covenant that will restrict the sales prices in perpetuity and people have to income qualify to live there. We always use the Area Median Income as a guide and what the city is trying to do is provide home ownership opportunities for people at about 60 to 70 percent of the AMI. So private developers who are building 100 units will build 20 as permanently affordable and sell them under city guidelines: the price is set for and income qualified buyers.
The core of our mission is around affordable housing for rent. The Foothills project is all for rent but some is affordable and some is market-rate. Most of the for-rent projects fall to us but some non-profits do for-rent affordable housing as well.
SDL: How do you price the for-sale affordable units?
CB: The city bases the sales price on what those individuals can afford.
SDL: What would someone buy into these places for?
CB: A nine hundred square foot, two-bedroom, bath-and-a-half might sell for $135,000 to $140,000. The city has a down payment assistance program.
SDL: How do you keep it affordable?
CB: We try to play the role of the go-between between the private and public sector. The city says that if the unit is subsidized with public money then there will be this covenant on your property because we want to protect our investment and that benefit should be passed from buyer to buyer. That equity or subsidy stay with a unit. It wouldn't be fair if the first person who bought and then sold that unit [realized all the profit.] If they got it for $135,000 if it were allowed to go to market it would probably sell for more than $300,000. So it wouldn't be fair for that first person to get all of the benefit of that.
SDL: Do they get any profit.
SB: It is usually based on the consumer price index. They can get about three percent a year. So it is a limited appreciation. We have had a flat market for about two years. So anyone would be lucky to get three percent for the past two years. But the average appreciation over time has been closer to eight to ten percent.
We do have one project for homeownership where people have improved their job situation and been able to sell their unit and move up and out into a market rate unit. Sometimes that does happen if people's life circumstances improve but I would say that by limiting equity you are limiting people's upside from their investment. So it is definitely a trade off.
SDL: What is the population of Boulder.
CB: Around 90,000 now.
SDL: How many affordable units are there?
CB: Around 2,000. The city is expecting at build out to have around 4,000. There are 90,000 people in boulder in 40,000 housing units. Our goal is to have 4,000 of those affordable of which there are somewhat more than 2,000 in the program now. The build out was supposed to take place by 2023. The reality is that there is always redevelopment and change even if you have limited land and you are annexing slowly. So people have let the year go but the concept of build out is still there.
SDL: You could increase the size of Boulder and create new density.
CB: Exactly. In Area #3 10 to 15 years from now we might say that some of it is appropriate for development and some of it is not. It is very thoughtful deliberate approach.
SDL: Do you build any mixed-income units?
CB: Yes. The approach we are taking now is that we have two goals. One is to protect and enhance the housing we already own so it is a wonderful place to live. We currently own or manage about 1,500 units in town so we are the largest landlord in the city and that includes the 500 Section 8 vouchers which people take out into the community. We own about 1,000 units. The Section 8 program provides a federal voucher that we administer. We help people locate a unit [they can rent with the voucher] in the community. They are typically not our units but they can be used on our units as well. The second goal is to create new opportunities for affordable housing through the acquisition of existing units and the building of new units.
Typically when we acquire housing it is all affordable although in our minds we have the goal of acquiring some mixed-income units. The people on our Board looked ahead and saw that our housing units were losing money because people pay, in some cases, $50. So they said we need an income producing asset that will carry those losses. So we build Bridgewalk in affordable in south Boulder the mid 1980sand it is 80 percent market-rate and 20 percent. It is going well. It is beautiful blue townhouses with a lake right there. That was our early experience with mixed-income.
SDL: Do people get along?
CB: It is a complete non-issue. People are typically not aware of who their neighbors are and whether they get assistance or not. It is 123 units.
When you go to Foothills you will meet with Tim Beal who is property manager for all the things we build now. He is also the property manager for Bridgewalk. We have always felt that 80/20 really works. When we first started doing our most recent project, the Foothills Community, our idea was to be about 50/50 market-rate and affordable. Our management group was a little worried about that because we know 80/20 works. What happened over time is that our percentage of affordable housing increased and the reason for that was that the funders we work with were anxious to see more affordable housing. It is part of a tax credit program the Low-Income Housing Tax Credit. The more affordable units you have the more equity you get. So it made more sense to have more affordable housing, which is a surprising conclusion to us.
When you go to Foothills today you will see that there are 75 units. One building is a group home for people who are developmentally disabled and elderly. Then 52 of the remaining units are affordable and 22 are market-rate.
SDL: Did you have to create inducements to get people to rent the market rate units?
CB: We have two tiers of rents. One of them is at market-rate and the other is affordable. You can ask Tim if he had problems leasing up the market rate units but generally they didn't experience problems in either portfolio.
SDL: Can you tell the difference between the market rate and the affordable?
CB: No.
SDL: Do people know who is in a subsidized unit and who is not?
CB: I don't think so. Some of the market rate units have the premium views. There is the park and foothills on one side so some market-rate units look across lands that will be developed only as parks. But it is a beautiful project. It is small scale. The biggest block of units that you will see is town houses, row houses, duplexes. It is very fine grain traditional neighborhood. The whole north Boulder area is being developed under the city's community plan that really emphasizes New Urbanism. The garages are on the alley, there are porches, narrow streets, and the development is walkable. We won a bunch of design awards from the National Association of Housing Redevelopment Officials. In the affordable housing business that is one of the most important awards. We also won several Colorado awards. These are brand new and in a beautiful location. I don't believe anyone suffered from the stigma of its being in an affordable unit. I think the location and the product overcame any hesitation people had. We would give tours and there were so many people coming by because they wanted to buy one and they couldn't tell from looking at them that they were for rent. So I don't believe we experienced much of a problem by reversing the percentages.
SDL: The affordable units are for people at 60 percent of the Area Median Income?
CB: Yes, or less. The sales of affordable units are targeted at 60 percent AMI or slightly above. We try to target our affordable units for people whose income is between 30 and 50 percent AMI. At the Holiday project we are even targeting some at 20 percent AMI. For people at the very low incomes renting is the best strategy until you start to get up to about 60 percent AMI. In our market if you price a unit at about 60 percent AMI you are starting to be near the market.
SDL: And that is because the Areas Median Income here is high.
CB: It is high. For a family of four the current AMI is about $80,000. So for a family of four 50 percent AMI is $40,000. And currently our prices for single family homes are about $410,000.
SDL: When was Foothills completed?
CB: In 2002 and it was leased up in that same year. The project is design by Wolf Lion architects, an excellent design firm and good developers with whom we have partnered before. Here they were just our architects. On the Holiday development they are both architects and developers.
SDL: If I came there and was interested in renting a market-rate apartment would I be told out front that three quarters of the people here are getting their rents subsidized?
CB: I don't know. You can ask.
SDL: Do you run into a lot of Nimby problems convincing people in the community that these affordable units will not cause problems?
CB: It varies. Foothills is an example where the answer is yes. You will see some fairly big homes to the north and to the south. And people opposed the development of this piece for affordable housing. This land was annexed in 1990 and there was opposition at that time when it was annexed with a medium-density zoning. People didn't want to see that kind of density. They wanted to see big homes like theirs built. Then this 13 acre piece was proposed as 130 unit development at ten units per acre. Half way through the approval process the city did a re-mapping of the floodplain and a little creek bed to the north. The study showed that now our site, which had previously been mapped as completely out of the floodplain, was in fact half in the floodplain. So we had to stop and think. A lot of people opposed it for that reason saying: how could we put people who are poor in the floodplain and put them at risk. I think some part of that was genuine concern and the other part was something they could latch onto as another reason to oppose this.
At that point we stepped back and looked at it with our engineers and said: what if we just developed half the site and contour the other half to act as an overflow. And then in the future the city will make improvements in that flood channel and over time that will allow us top look at developing the remainder of the site. So half the site is now undeveloped. We ended up developing 75 units on half the site. That was one way that we addressed what we felt were legitimate complaints about the floodplain but were still able to move forward. It was controversial because the site is surrounded by very big and expensive homes so each time there was a city approval involved there was quite a bit of opposition.
We are very big on public process. We are very thorough and we have lots of big meetings. Stuart, who is the project manager, had coffee with everyone who opposed this. He would meet them and talk about their issues and work through them and then we did some very innovative small meetings. They were very unusual and a little risky and produced a real turnaround in the way the dynamic of the community was functioning. So with all those things together we were able to get a fair amount of support for the project. Not all the opposition went away but by the time the approval came it was well supported.
SDL: What turned that around?
CB: I think there were several things. We showed that we were willing to be flexible, willing to do a smaller project, redesign it, accommodate the floodplain, and then we held one-on-one efforts to meet with people and address their issues where possible.
SDL: What were the concerns?
CB: All the things you generally hear: low-income people in the neighborhood, crime, trafficthe usual. The floodplain was the additional layer.
SDL: Tell me about the Holiday project.
CB: That was where there were remarkably few NIMBY issues. Up off Broadway, north of Foothills, is 27 acres and an additional 3.8 acres which is in the county. It is located in the dreaded Area #3 so it is not being developed now because it is not intended for development [at this time]. This had been the Hollywood drive-in theatre from 1969 to 1989. It had twin screens. We still have the sign, which has been landmarked, and we are going to preserve. It [the area] was annexed [to Boulder] in 1990 and there was a provision which said that there could build a big-box retail space of about 120,000 square feet. You may notice that we don't have any of that kind of development in Boulder. At that time I was working with the city and the owners who owned it in 1995-6 had this idea that they were going to build a Costco there and they came in with a proposal.
By that time the city had come up with the North Boulder Sub-Community Plan where they said what they wanted was small-scale development and mixed-use and mixed-income development and not big-box development. But because the owners had the legal right to do it the city determined that they would undertake to buy the property. I was working with the city on the [affordable housing] trust fund and was recruited to find out how we could buy the land for the city. The city purchased it in 1997 for $4.8 million or four dollars a square foot. We are reselling that land today with infrastructure in place, with all the improvements and approvals for between $11-23 a square foot. We took a lot of heat for paying $4 a foot at that time and now everyone thinks we are brilliant. But we have observed that if you buy land and hold it a few years you look brilliant. In 1998 the city decided that they wanted to get hold of the land but didn't want to be the developers because we are also the regulators. So I was given a choice: I could stay with the city and do my nice trust fund job, which was a great job and not very hard; or I could take this and go back to the Housing Authority with the land and the debt and develop it. I chose to do that. At that time we had one person doing all the planning for the Housing Authority and Foothills was underway and we were trying to do acquisition so we created a four to five person staff. The entire organization is now 55 people and 50 of them do leasing and maintenance and four of us do development. So I brought that to the Housing Authority and we hired an architect to do master site planning with us.
The whole Holiday project includes 333 units. The infrastructure part of it, which is our part, is complete. Our job is to be master site planners and take it through the approval process. Then we selected development partners. We issued a letter requesting interest. We got 45 responses. We had a rigorous process where we interviewed people and we had them self select and they decided if they wanted to be a developer or lease some space or buy some space. We got down to six excellent development partners and they are the ones who are going vertical on the site. Wolf/Lion is an architect and a developer. They are doing what we call "Main Street North." You will see two big holes where they are doing underground parking structures. Then Coburn Development (in blue) is very big. As the infrastructure is being completed we are selling off the lots. Then the developers take possession.
SDL: How much of this is affordable and how much market rate?
CB: Forty percent will be affordable instead of the normal 20 percent that is required. We worked with the city and said that if we did twice the required density then we wanted a density bonus. The way this site was originally planned it would have had 200 units. So we have done half again as many. We spent the year 2000 getting the density bonus.
SDL: It went from 200 to 333.
CB: It was well worth it. It was the first time the city had done a density bonus. No one knew how to do it and that is why it took so long. It allowed us to have twice as much affordability and that being the core of our mission it was something very important to us. We are willing to forgo a certain amount of profit. You can imagine our economics are like any one else's. We have to purchase the land, we had to hire an architect and a contractor, we had to do all the entitlement costs with the city. Then we looked at what the land would sell for if it was 40 percent affordable and discounted the land to the developers. And that is how they can afford to do 40 percent affordable. So it is 60 percent market and 40 percent affordable.
This map shows different colors for different uses. The red is strictly commercial: a bakery and pizza shop. Here is mixed-use with retail downstairs and residential upstairs. The dark blue is multi-family and the light blue is single family housing. This is called "studio mews" which is really unusual: artists studios. Here is a pedestrian walkway that will bring you to a community garden. Here is where the sign, which has been restored will be erected. Here are the "carriage units" that are up against the berm that separates the development from the highway.
I've worked on this since 1996 and in 2003 we are almost done closing the land sales and the infrastructure. It will mostly be built-out by 2005 to 2006.
When we did this we wanted to make sure we retained some of this affordable housing for rent. But I wanted our sites to be scattered. So we have an agreement with three out of six of the developers that we will do what we call buy-back. We are going to purchase 56 units. And we will use them as affordable units for rent. Out of 333 some 138 are affordable and 56 of those we will hold for rent. The rest of those that are affordable will be for sale. We come to the table and we are the sellers for the land and the buyers for the units.
SDL: Is there any mass transit in this?
CB: We have the hop, skip, leap, jump a system of small buses -- and Broadway is served by the skip. It comes every six minutes. We have a stop right in this area. And we are going to have a bus shelter there. We have gotten a little grant for art. We have a call out for entries now. A people's Clinic will be located next door and we are working on a partnership with them.. This is another adjoining area that will probably be developed in the future in the same pattern. And then there is a homeless shelter being built over here with which we don't have a direct involvement but we will work in partnership with them and we will build our own office here.
SDL: It is noticeable that your two big projects are in the same part of town in North Boulder.
CB: It is and that is because this is the part of Boulder where there is still land that is developing and redeveloping. There is lots of activity in North Boulder in which we are part of it but not all of it.
You should talk to John Covalt at Coburn Development. He will tell you that when you build affordable housing to city guidelines you lose money and that the reason to do it is that you can make it up on the market-rate units and because the city makes you do it. They take pride in everything they build so they won't just throw something up and call it affordable. He will have a lot of insights about the public/private partnership and how a private developer deals with obstacles to affordable housing. We did do the Foothills community project as a tax credit deal. Our scattered site 56 units at the Holiday site is also a tax credit deal. The pro formas are many pages long. I sit on a panel at a housing authority organization and talk about how to do finances. A lot of housing authorities do not do development and you can imagine how intimidating it is when you have some public housing that you manage, you have some Section 8, it can be just overwhelming. So I do a panel where I teach the basics. Stuart Grogan, who will take you on the tour, can fill in other details. He has been here for nine years.