That fee, set at $12 just 16 months ago, will be raised to $30, the council decided in a 6-3 vote.
Affordable housing linkage fees are onetime payments commercial developers must give cities in order to offset the impact of their new construction — and the jobs that construction brings — on the resulting demand for affordable housing in that city.
Most cities do not have these fees. They are seen mostly in affluent communities on the coasts, and are used at higher levels in Bay Area cities with housing crises, such as Mountain View and Palo Alto.
Palo Alto’s fee is $35, which is the country’s highest. At $30, Boulder’s fee will fall just shy of that, but in effect it will be vastly steeper than the fee in Palo Alto, because land there is so much more expensive.
This fee has been, for years now, the subject of considerable debate in Boulder. But the side favoring an increase won four of the five open council seats in the November election, delivering a six-member majority — Mayor Suzanne Jones and council members Mary Young, Lisa Morzel, Cindy Carlisle, Mirabai Nagle and Sam Weaver — that favored an increase.
“Four of us that are up here now campaigned very strongly on linkage fee increases,” Young said. “So I think the election speaks for itself.”
All nine members of the council profess a strong desire to create and to preserve affordable housing in a city famously short on that product. The majority believes the higher fee will help in that shared mission. The minority — Mayor Pro Tem Aaron Brockett and council members Bob Yates and Jill Adler Grano — believes the increase will have negative impacts and won’t advance the mission.
“There is not a right answer here,” Mayor Suzanne Jones said prior to the vote. “We are all striving to manage variables and doing our best to get them all right.”
The vote will be made official May 1, but there is no more major discussion to come, and the final vote will likely be put on the council’s consent agenda.
Those who support an increased fee have said, generally, that the city’s current fee is too low to incentivize housing over commercial development, and that this is exacerbating what is widely referred to as Boulder’s “jobs/housing imbalance.”
Bringing the fee up to $30, the council majority argued, will charge commercial developers at a level more equitable with what residential developers have to play. The majority is hopeful that this “parity” in cost will make commercial developers think twice.
And when they don’t think twice and still build commercial, the argument goes, at least Boulder will be getting a heap of cash for affordable housing. Once the fee is fully phased in, even a modestly sized 10,000-square-foot office building, for example, would bring in $300,000 for affordable housing.
On the other hand, a massive office project, such as Google’s new one in central Boulder, would bring in $6 million.
Grano, who opposed the increase, has long argued that Boulder should provide those incentives through zoning, and not through fees. She noted that in zones where developers have the choice to build either residential or commercial, they usually tend toward the former.
Jim Robertson, the city’s planning director, said the same thing, adding that “absolutely, the zoning is one of the main drivers” of a parcel’s use.
Weaver said that he agreed zoning is a significant tool, but that he doesn’t believe it alone is the solution, in this case.
Boulder previously raised its fee to $12, up from $9.53, and many have argued that the council hasn’t left enough time for analysis of that increase’s impact, and that it’s inappropriate to command another increase so soon after the last one.
Said citizen Phil Day during the comment period, “If that ($12) rate, after being thoroughly analyzed and considered, was voted upon, thought about, approved, how then, in less than one year, do you want to basically repudiate that analysis and double or triple the rate?”
On the other hand, countered Weaver, waiting a few years to see how that $12 rate performs will mean the expensive consultant’s study Boulder commissioned for this project will be that much older and staler.
Opponents of the increased fee have said the higher fee will harm small businesses that seek to put up new facilities or get higher rents passed on to them from builders who have to pay higher fees.
“I believe so strongly that this is going to negatively impact our affordable housing fund,” Grano said. It does not make sense, she argued, to talk about bringing residential and commercial fees to “parity,” as Weaver so often has, given that the former sells for so much more than the latter.
Brockett cautioned that the increase is “dangerous to our local economy right now,” noting, as others did, that Boulder’s facing a $4 million budget shortfall because of low sales tax revenue, and that active dissuasion of commercial development could mean fewer people working in Boulder and paying sales tax here.
Yates joked to the majority members that they could “get a pass” on following through with their campaign promises on this front, “because you did not know at that time that we would be facing sales tax headwinds.”
While developers of office space will have to pay the full $30 fee after the phase-in, other commercial users will be spared somewhat, due to a tier system approved Tuesday by the council. Hospital space, for example, will only have to pay a $20 fee, while warehouse users will pay the minimum fee of $10.