In this issue…
Council Passes Construction, Energy Code Updates
Ordinance to Prohibit Residential Metro Districts Passes First Reading
Council Passes Inclusionary Housing on First Reading
Montava Project Receives More Approvals
Land Bank Purchase Approved
Council Appoints Ross
COLORADO ASSOCIATION OF REALTORS®
Housing Affordability Panel
NAR Hosts Affordability Forum
Council Passes Construction, Energy Code Updates: On February 18 the City Council unanimously passed a package of updates to municipal building codes on third reading, including the 2018 International Residential Code and the 2020 City of Boulder Energy Conservation Code.
For the first time, the residential code will allow tiny aka micro-homes – 400 SF or less.
The tiny home amendment requires these homes to be constructed and inspected on a fixed foundation and hooked to fixed utilities, as is the case in most municipalities.
New single-family and duplex homes and any single-family or duplex unit undergoing a change of use, including detached ADUs, must include sprinklers for fire safety. The cost to install them is estimated to cost an additional $1.35 per square foot. In addition, the City Council approved a variety of other local amendments, including straw-clay construction for non-load bearing walls and the use of strawbale construction for structural and non-structural walls.
Regarding the approved amendments to Boulder’s energy code, new homes larger than 3,000 SF must meet net-zero energy requirements. It is the City’s goal eventually, to require net-zero construction for all new buildings but it will take several building code cycles to get there. Also, increased recycling and reuse rates are now required for materials during demolitions.
The effective date for the ordinance was changed to July 1, at Council’s request.
2020 Priorities: Following a retreat in January, the City of Boulder has released the Council’s list of key priorities for the year. Most of the priorities are not real estate-related per se, such as advancing racial equity, Boulder electric utility development, Climate Commitment/Climate Mobilization Action Plan and homelessness, for example.
However, the Council continues to list housing as a priority. Some Council members would prefer it to have a higher prioritization in the workplan. For these members, there are concerns that job growth is outpacing housing growth. They would like to “ensure regulatory structures prioritize housing so that housing and job growth increase at the same rate,” but it is unknown if the Council will address this concept in 2020.
Other real estate-related topics the Council intends to tackle this year include development regulations (community benefits vis-à-vis site review criteria) and the East Boulder Subcommunity Plan.
Ordinance to Prohibit Residential Metro Districts Passes First Reading: As expected, the City Council voted 5-2 with Martin and Waters opposed, to revise Longmont’s metro district ordinance on first reading. The ordinance allowing residential metro districts had only been in effect for a year and resulted in the approval of one residential metro district (Mountain Brook).
If the ordinance passes at the public hearing on March 17, residential metro districts will be prohibited. Instead, Longmont will revert to its previous policy which only allows mixed-use metro districts in which no more than 50 percent of the development’s gross floor area can be residential.
Councilmembers Martin and Waters argued forcibly against this concept but were outvoted. They said residential metro districts could be a way to get more entry-level housing in Longmont, something that has been missing for at least the past decade.
Councilmembers Peck and Christiansen countered this by saying the City’s inclusionary housing ordinance will create more affordable homes through time. Peck also argued she would support metro districts if they only paid for the cost of land and infrastructure as State statute requires. Instead, she said, “the residents end up funding all sorts of things.” (This is only one of the statements made that is simply untrue. Colorado statute does not allow metro districts to fund land costs.)
Mayor Pro Tem Aren Rodriguez said, “I haven’t seen any evidence that municipalities have the adequate ability to regulate residential metro districts.” He said the mixed-use metro district model is a good compromise and urged his colleagues to quit arguing and pass the ordinance. Suzie Hildalgo-Fahring added little to the conversation but made it clear from the beginning she intended to vote with the majority.
Mayor Bagley used one of his favorite phrases, “I can count to four.” He tried to get support for the concept of a mixed-use metro district without limiting the amount of residential floor space but could not get enough votes to pass that amendment.
Clearly, some Council members would be willing to approve a mixed-use metro district with limited residential units but only under certain conditions that would be difficult for a developer to meet. It will be interesting to see if any mixed-use metro district applications are submitted moving forward. None were submitted under the previous policy in place prior to 2019.
Council Passes Inclusionary Housing on First Reading: On February 11 the Broomfield City Council passed ordinance 2100 on first reading to implement inclusionary housing. Inclusionary Housing, a policy requiring a developer to create deed-restricted affordable units or pay cash-in-lieu is already in place in Denver, Boulder, Longmont and other towns and cities in Colorado.
Broomfield’s new policy, which will become law if it is approved after a public hearing on March 10, will require developers to deed-restrict 10 percent of for-sale units in projects of 25 or more units for residents who make 80 percent of the Broomfield Area Median Income (AMI). As an alternative, cash-in-lieu can also be used to meet developer obligations.
Developers of rental properties will be required to pay cash-in-lieu for the equivalent of 20 percent of the units on a sliding scale, $25,000 per studio to $37,250 for a three-bedroom. The rental units must be leased to families who meet Broomfield’s 60 percent AMI.
Councilmember Elizabeth Law-Evans, who supports inclusionary housing, said, “I’m a free-market person but we can’t count on the free market to fix this problem over the next five years. We have to do something.” Kimberly Groom, the only councilmember to oppose the ordinance said, “This will make free area units more expensive.” She also expressed concern that there is no organization or structure to monitor or manage inclusionary housing.
During the Council’s Q & A, a question was asked about how the deed restriction will work. Staff explained that the Real Estate Commission’s 2020 Exclusive Right-to-Sell Listing Contract now includes a check-off box, requiring sellers to note if a property is deed-restricted as affordable. In the event that a seller fails to disclose the deed restriction, it would show up during a title search.
Montava Project Receives More Approvals: The Fort Collins City Council passed a pair of ordinances on February 18 that will allow the 1,000-acre Montava project to move forward. The Planned Unit Development (PUD) ordinance provides a framework for how Montava will develop over time. The second ordinance gives the project vested rights, which is important because developer Max Moss said it will take about 25 years to complete the entire project.
At build-out, Montava could include as many as 4,000 new homes including a mix of single-family, attached and multifamily units. It will also include schools, retail development and acres of parks and trails.
In response to resident complaints about current traffic issues in the area, especially on Country Club Road, staff explained that the developer will be required to pay for the construction of two new north/south arterial streets to alleviate the project’s traffic impact. Because the development will be phased, a new traffic study will be required for each phase, presenting additional opportunities for the City to assess the traffic impact and require more mitigation by the developer. (The City and Larimer County are also working together to address current traffic issues in the area.)
While the majority of the Council seemed satisfied by the public benefits of the project, including a 40-acre working farm, affordable housing, zero-energy homes, schools, parks and trails, etc., Councilmember Ross Cunniff remained unimpressed. He said the approval for the project was rushed and argued Montava got special treatment from staff and Council. Cunniff also expressed concern about chemicals at the Anheuser Busch plant, saying it was dangerous to put housing near an industrial facility.
The Council voted 6-1 in favor of the PUD and the vested rights ordinances, with Ross Cunniff voting in opposition to both.
Land Bank Purchase Approved: The City Council approved the appropriation of at approximately $1.2 million to purchase a five-acre parcel of land just west of North College Avenue for the City’s Land Bank Program. The Land Bank allows the City to purchase land at current prices and setting it aside for future affordable housing development.
Council Appoints Ross: Kevin Ross, the former Mayor of Eaton was appointed to the vacant at-large seat on the Weld Board of County Commissions by the Weld County Council on February 17. Ross had already announced his decision to run for the seat in November. Fellow Republican Perry Buck, who currently serves in the Colorado House of Representatives (District 49) interviewed for the appointment and had also declared for this seat, setting up a June primary.
Weld is the only county in Colorado that has a county council. Its charge is to review “all aspects of County government.” The Council sets salaries of elected officials, fills vacancies on the Board of County Commissioners and the County Council and can suspend an elected official formally charged or indicted for the commission of a crime when a valid petition for recall … is presented.”
COLORADO ASSOCIATION OF REALTORS®
Housing Affordability Panel: In conjunction with its REALTOR® Day at the Capitol & Economic Summit, CAR hosted a panel discussion on housing affordability. Read more here:
Legislative Update: Here is a summary of some of the bills discussed at the latest Legislative Policy Committee (LPC) meeting. For more information, contact your association’s LPC member(s).
SB-109 “Short Term Rental Property Tax” CAR Position: Oppose
Good news! The bill to charge owners of short-term rentals the commercial property tax rate died in committee.
HB-1201” Mobile Home Park Residents Opportunity to Purchase” Sponsored by Edie Hooten (Boulder) and Joann Ginal (Fort Collins) CAR Position – Monitor
The Housing Subcommittee wants more information on this bill, so the LPC took a monitor position on it for now.
HB-1200 “Sunset Homeowners Association Information and Resource Center” CAR Position – Monitor
This bill continues the HOA information and resource center for 5 years, until 2025. It also creates a dispute resolution and enforcement program (program) under which the Division of Real Estate to collect and annually report upon additional data specifically related to disputes and violations of the “Colorado Common Interest Ownership Act” (act); take complaints, conduct investigations, make determinations, impose penalties, and participate in administrative dispute resolutions when there are alleged violations of the act or the program.
The LPC’s Regulatory Subcommittee is concerned about the financial impact of this bill and recommended a monitor position until the fiscal statement is available.
NAR Hosts Housing Affordability Forum: Housing Affordability is a top priority for NAR in 2020. This topic was the focus of NAR’s second annual Policy Forum, hosted recently Washington, D.C.
“As America confronts low housing inventory and a persistent lack of affordable housing options, NAR was grateful to bring together some of the brightest minds in our industry at today’s Policy Forum,” said NAR President Vince Malta. “With housing affordability set to be one of the defining policy issues of this decade, it is imperative for NAR – along with economists, lawmakers and other industry stakeholders – to lead discussions that will generate solutions to these far-reaching problems.”
Earlier this year, NAR Chief Economist Lawrence Yun released a report showing that major U.S. metro areas where housing affordability has worsened over the last five years have seen a corresponding drop in job growth. Specifically, housing affordability rankings have declined in 81 of 174 U.S. metro areas, while 34 regions are seeing job growth fall faster than the national average over the past five years.
While barriers inhibiting development remain, NAR has supported policies it believes could bring relief to the market. In response to HUD’s Request for Information on policies that “raise the costs of affordable housing and contribute to… low housing inventory,” NAR has argued for improved FHA underwriting criteria that is more equitable for first-time homebuyers; incentivization of “Yes in My Backyard” markets to encourage states and localities receiving federal dollars to reform high-density zoning; and for additional Community Development Block Grants that encourage localities to update development plans and address barriers to housing affordability.
Separate NAR research projects that $220 to $400 billion would be added to the economy if the pace of homebuilding and for-sale housing activity returned to a more normalized level, translating to 0.25% to 0.50% in added annual GDP growth over the next four years. NAR unveiled separate reports examining (inclusionary) zoning, Accessory Dwelling Units and, most notably, a White Paper reiterating the case for homeownership while calling on Congress to restore homeownership incentives in the U.S. tax code.
“No longer providing a tax incentive for buying a home versus renting is a fundamental policy shift for tens of millions of households,” the White Paper reads. “A larger number of households in the middle-class, minority and millennial groups… continue to face the greatest headwinds to increased homeownership. In order to ensure U.S. tax policies support access to the American Dream of owning a home… it is imperative that homeownership… be incentivized in the federal tax system.”