Policy Documents: A Rational Policy for Affordable Housing


Because the discussions on this subject are all over the map, I thought it would be useful to summarize what I think would be an appropriate approach.

A reasonable goal would be to maintain some level of economic diversity in our community. But that doesn’t mean that everyone who wants to live here and every business that wants to expand here can do so. We have finite resources: our streets, our water supply, our views, and our Open Space are limited in their carrying capacity.

Besides, trying to build more market priced housing won’t work. The market has already priced this housing out of range of anyone even somewhat above the area median income . So just adding market rate housing will just add more people with high incomes or net worth, and leave out the middle and lower income folks. Also, the demand is so huge that it cannot be reasonably satisfied: There are over 60,000 workers that commute in every day, and together with their families, they would double Boulder’s population. And then there are untold numbers of successful or lucky entrepreneurs, trust funders, athletes, outdoor fanatics, etc. who’d love to come here.

Some council members’ notion of cutting development fees on such housing to reduce costs is absurd; this would just increases developers’ profits since they set price based on the market, not on their costs; such a move just shift those costs onto existing citizens, increasing their cost of living. Sorry, no free lunch here!

So the first step is to not make things worse. For new residential development, at least 50% of it should be price/rent-controlled so that the new population looks economically more or less like the current distribution. The fee-in-lieu, that developers pay to get out of supplying affordable housing on site, should be raised to 150% of the actual cost difference. That will discourage going off-site.

For commercial construction, the Jobs Housing Linkage Fee should be raised from the current ridiculously low $12 per square foot to the commute adjusted numbers recommended by the City’s housing fee consultant of around $75 per square foot, so that the workers in the new office buildings could live here at the same percentage as those currently. And developers could still make a profit.

Another shibboleth is the notion that density is going to solve our housing, transportation and energy issues. Let’s be clear, for mass transit to be cost effective, density levels would have to be so high that most people live in Boulder would find it intolerable. And besides, the future is not transit as we think about it now – it’s renewably powered zero emissions self driving jitneys, micro cars, delivery services, etc. So we should require new development to pay for the car pools, van pools, and other alt modes necessary to net zero out their traffic impacts. And if we shifted to paying for our transportation budget with parking fees rather than sales tax, there would be an appropriate incentive to use other means of travel. The combination of all the above would effectively eliminate any real traffic issues without rely on density demanding big bus transit.

Maintaining the affordability of existing housing is tougher. The pressure on prices will only increase over time because more and more places will become overbuilt, congested, and less desirable. To convert a portion of existing housing to permanently affordable is the only long term answer, but it will require significant levels of investment, even with the most creative of financing schemes.

Imagine a market priced $600,000 house. Maybe the rents would cover, say, $400,000 of that price, but the other $200,000 would have to be covered by the price appreciation. Even with creative financing using tax-exempt bonds, $500,000 might be covered by the rent, but the remaining money would have to come from existing citizens and businesses. Given the Trump budget cuts, we shouldn't expect any Fed money to help. So it will be a long process to cover much ground, but it’s worth a try.

Finally, existing residents should have a strong voice in all of this, since it impacts them significantly. We live in a democracy, not a feudal autocracy. Our elected officials are supposed to represent the citizens, not be their rulers, as some seem to think. And besides, if our elected officials really care about affordable housing, they would be trying to gather support for their solutions, not destroying whatever support they have by jamming densification projects down citizens’ throats.

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