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Overcoming zoning obstacles to create affordable homes for families


Mary Duvall, CEO, Thistle Communities

Challenge: Boulder, Colorado, is has some of the nation's highest incomes and housing costs per capita. Boulder's decades-old Open Space regulations have resulted in a beautiful and well-planned city, but one that has effectively priced working families out of the real estate market.

A white couple hold their child's hand as they walk through a new neighborhood

Boulder, Colorado, is among the highest income and highest housing cost per capita areas in the nation. Boulder's decades-old Open Space preservation ordinance and subsequent planning regulations have created a beautiful and well-planned city, but one with little land available for development or growth. As a result, working families are effectively priced out of this real estate market. In June 2011, the median sales price for a single-family home was $535,000. To qualify for a loan on a home at that price, the buyer would have to earn $210,000 a year, but the median household income in 2011 was $57,112.

As a result, working families are effectively priced out of this real estate market. In June 2011, the median sales price for a single-family home was $535,000. At this price, a typical area resident could not qualify to buy a home in Boulder: To qualify for a home loan required an income of $210,000. The median household income in 2011 was $57,112.

Boulder's Inclusionary Zoning was designed to address the problem by providing incentives for affordable housing construction. It requires developers to build 20 percent of their homes as affordable, or make payments of up to $180,000 per unit. But the ordinance allows builders to transfer the portion of their required affordable homes to other entities. As a result, 75 percent of affordable homes developed are one- or two-bedroom condos, and not attractive to families who work and live in and around Boulder.

Thistle Communities is a nonprofit affordable housing supplier in Boulder, and we sought to address the problem by partnering with a developer that had complementary strengths. Thistle provided the financing and Allison Management provided the development expertise. Yarmouth Way was our second project together.

In an innovative move, the team transferred another builder's four-unit affordable obligation to our Yarmouth Way site. Adding these units also provided additional financing when the builder paid us approximately $100,000 per unit to complete his affordable requirement. The project included 15 market-rate homes as well. Without the 15 market rate homes and the obligation transfer, Thistle would have been limited to six affordable homes. The transfer increased that number to 10.

All told, Thistle and Allison Management developed 25 homes in a variety of housing types at Yarmouth Way at affordable price points. The site maximized density with townhomes, duplexes and single-family homes, all having at least three bedrooms and garages. A majority also had finished basements. Most were laid out along an arbored lane where pedestrians and cyclists have priority over motorists.

Because it was a "by-right development" (a project permitted under zoning that does not require legislative action), Yarmouth Way was not subject to time-consuming and costly reviews by the Planning Board or City Council. The 1.82-acre site was slated for 25 homes, necessitating efficient and compact use of the space. Both development partners agreed to build homes with three and four bedrooms for larger households that were shut out of the existing market.

Carlyn Carroll was a first-time buyer and teacher at Boulder High. "I needed a three-bedroom home because of the kids," she says. "Now Christian will be able to graduate from Boulder High and Chloe can ride her bike in the neighborhood with other kids. That was missing in the young professional complexes where I lived."

The 10 income-qualified families that bought Yarmouth homes paid between $208,000 and $237,000, about 65 percent of market rate. Six of the purchasing families were employed by the Boulder Valley School District and two were affiliated with the University of Colorado.

David Williams is another affordable buyer at Yarmouth and a writing instructor at the university. "There are limited opportunities for renting in Boulder because of all the students," he says. "Many people work at lesser paying jobs at [the university], it's beneficial for those people. It's a great program."

Even those who bought the market-priced homes paid only between $275,000 and $450,000, very low for new residential construction in Boulder.

Using Community Housing Capital and federal CDFI funds for the development loan streamlined the financing process. The transfer of another builder's affordable housing obligation increased the number of low-income housing units in the project. CHC had flexibility in underwriting the loan due to Thistle's NeighborWorks members. The terms of the loan and limited fees kept costs down and helped meet a fast timeline of one year to completion.

Community response has been overwhelmingly positive. The site design facilitates resident interaction and frequent social gatherings, and children play in the covered arbor and adjacent alleys. The success of Yarmouth Way demonstrates how nonprofit and for-profit developers can collaborate to accomplish community goals. Thistle hopes to replicate it elsewhere in the Boulder area.

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