<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:m="http://schemas.microsoft.com/office/2004/12/omml" xmlns="http://www.w3.org/TR/REC-html40"> <head> <meta http-equiv="Content-Type" content="text/html; charset=utf-8"> <meta name="Generator" content="Microsoft Word 15 (filtered medium)"> <style></style> </head> <body lang="EN-US" link="#0563C1" vlink="#954F72" style="word-wrap:break-word"> <div class="WordSection1"> Kurt, thank you very much for those substantive replies to my questions. They are substantive and responsive. I do not always agree with you on this matter, but I am very grateful that you have addressed the numerous issues that I raised. I look forward to tonight’s discussion.<o:p></o:p> <o:p> </o:p> <div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in"> From: "Firnhaber, Kurt" <FirnhaberK@bouldercolorado.gov> Date: Monday, May 16, 2022 at 3:19 PM To: "Wallach, Mark" <WallachM@bouldercolorado.gov> Cc: HOTLINE <HOTLINE@bouldercolorado.gov> Subject: FW: 1422 55th Street<o:p></o:p> </div> <div> <o:p> </o:p> </div> Dear Mark,<o:p></o:p> <o:p> </o:p> Please see the response to your questions below.<o:p></o:p> <o:p> </o:p> Kurt<o:p></o:p> <o:p> </o:p> <div> <div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in"> From: Wallach, Mark <<a href="mailto:wallachm@bouldercolorado.gov">wallachm@bouldercolorado.gov</a>> Sent: Sunday, May 15, 2022 8:37 PM To: HOTLINE <<a href="mailto:HOTLINE@bouldercolorado.gov">HOTLINE@bouldercolorado.gov</a>> Subject: 1422 55th Street<o:p></o:p> </div> </div> <o:p> </o:p> On March 15, I wrote a Hotline post questioning several aspects of the proposed revision to the Annexation Agreement governing the development of 1422 55th Street. As some will remember, this property was subject to a 1999 Annexation Agreement to provide for-sale affordable housing units, requirements that the developer now views as onerous and not feasible to permit the development of the property. Accordingly, City staff has engaged in negotiations with the developer to revise the Annexation Agreement to provide both adequate community benefit as part of the transaction and to permit the redevelopment of the property to provide additional housing, particularly affordable and middle-income housing. I have a number of comments and questions with respect to this project, as follows:<o:p></o:p> <o:p> </o:p> First, in my original Hotline I raised 8 different questions regarding the project, and at the time I was content to have staff respond to these when the project was to come before us for definitive action. In the staff memo for our review this week, only 3 of those 8 points were addressed, which is quite disappointing. I have a number of additional questions, which I will outline below, and will restate some of the questions that did not receive a response. Those questions are as follows:<o:p></o:p> <o:p> </o:p> 1) The staff memo states, in response to one of my earlier questions, that one potential negative outcome of this negotiation is that the developer could simply withdraw from the conversation and build a 7,000 sf mega-mansion. Yet that statement is contradicted by page 6 of the same memo which points out that any “redevelopment” of the property would require any new housing units to be subject to the difficult affordability requirements of the 1999 Annexation Agreement. And “redevelopment” includes the issuance of a building permit for additional square footage. So how does the developer build such a structure as of right? And, if he cannot, how are we threatened by the construction of a mega-mansion?  Mark, thank you for this question. I can see how the sentence you reference creates confusion.  Let me try to clarify this:  The annexation agreement creates several requirements for the applicant.  Some of them are triggered by the events the agreement defines as “redevelopment”, including issuance of a building permit for additional square footage.  For example, redevelopment, as the term is defined in the agreement, triggers the requirement to pay a Stormwater and Flood Control Plant Investment Fee and an assessment for the water main in 55th Street.  The affordable housing requirements are NOT triggered by the defined “redevelopment” term but are triggered by the addition of dwelling units (refer to Paragraph 4.a. of the annexation agreement which states: “No additional dwelling units shall be approved for the site unless the following requirements are met: a. The Subject Property shall be developed at the maximum practical density consistent with the zoning; b. 30 % of any new dwelling units shall be permanently affordable….” ).  Addition of dwelling units is typically what triggers affordable housing requirements in Boulder’s annexation agreements. The property is currently, and was at the time of annexation, developed with one detached dwelling unit.  Replacement of the existing dwelling unit does not trigger the affordable housing requirements.<o:p></o:p> <o:p> </o:p> 2) There is still no rationale suggested for applying 1999 cash-in-lieu payments to a 2022 project. What is it? If the developer suggested that he wished to build wood-shingle roofs or wood-burning fireplaces because it was permitted almost a quarter century ago, would we permit that? Of course not; so why does he get to use a time machine to minimize his cash-in-lieu? ? A developer who wishes to escape the restrictions of a 1999 Annexation Agreement has no basis for cherry-picking those portions of that agreement he finds most agreeable. The developer has the choice to develop the property to the existing annexation agreement.  Neither the staff or the developer agree that developing to this original agreement would be an outcome that would benefit the community.  The intent was to bring forward a different housing outcome that is more beneficial to the community, but somewhat equal to what was required by the developer.  <o:p></o:p> <o:p> </o:p> 3) Assuming the developer moves forward with his previous concept of 14 townhouses, what is the amount of cash-in-lieu payments that would have been due under current standards? What is the amount of cash-in-lieu that we are foregoing under the proposed transaction? In the staff memo it was suggested that the cash-in-lieu today would be $35,000 based on the percentage increase of those payments from 1999 to today. That is not the question, which is: what would the payments be today if today’s standards were applied, not 1999 amounts escalated over time? The Inclusionary Housing Ordinance was updated five years ago.  That updated ordinance created a very different approach for cash-in-lieu (CIL) where if no units are established on site, with a for-sale development, the CIL is multiplied x 1.5.  If one were to assume that 13 town homes could be developed and depending on the size of the homes and the configuration of the development, the CIL amount today would range between $906, 457 and $1,032,000 for the entire project or a range of  $69,000 - $79,000 per home.<o:p></o:p> <o:p> </o:p> 4) What is the total buildable square footage permitted on this piece of property? The proposed Annexation Agreement specifies that the property will be developed at the “maximum practical density consistent with the zoning.” How does the term “practical” impact the obligation to provide maximum density?  This question was answered in the section of the memo “Number and Type of Dwelling Units that Would be Built”.  This site could be developed as small single family homes or duplexes/condos. The best comparison is a similar size development three properties to the north, where eight additional small homes of a maximum of 1400 square feet are constructed.<o:p></o:p> <o:p> </o:p> 5) The developer will not commit to a size limitation on the homes he will build, or a limitation on price. Yet he states that he will build “missing middle” housing. How will this be achieved? How will this be guaranteed or enforced? Do we really believe that any of these units will be sold for a penny less than the maximum that the market will support? Even smaller houses and townhouses may command exorbitant prices in today’s market. And, by the way, how do we define the price points for the “missing middle”? It appears that we are falling back on the concept of “attainability” which is another term without definition. A 1,400 sf townhouse selling for $1.3MM (not at all unusual in today’s market) is certainly more “attainable” than one selling for $2.5MM, but it is hardly missing middle-income housing. By what metric are we measuring the concept of either middle-income housing or attainable housing? The conclusion in the memo that “the proposed amendment would ensure for-sale units serving middle income households” is simply not supported by its actual terms, other than the developer’s unenforceable promise that he will do so. That is a very thin rationale upon which to proceed.  The Middle Income Strategy approved by council indicates a desire for a development approach that creates smaller units such as town homes vs large single family homes.  While these market housing types are not deed restricted, it was the desire of the strategy and the community at the time to create such housing developments.  This has also been reinforced over the last year by input from Planning Board.  We do know that for-sale town homes are inherently more affordable than larger detached single-family homes.  This annexation would produce the type of market units described in the Middle Income Strategy. If council believes that the annexation agreement should include a maximum sq footage per home, you could discuss that with the applicant at the meeting on Tuesday.<o:p></o:p> <o:p> </o:p> 6) How many other projects have been given 5 years to pay a discounted cash-in-lieu obligation? Not only are we receiving less, we are receiving it under an extended timeframe.  Most developments in Boulder take several years from concept to completion.  The intent was to allow the developer enough time to complete the development.  One should also consider that if the developer does not complete the development in this time-line that the required affordable housing requirement goes up significantly.  Most annexations do not have a five year window.  As a result, they can play out their approach in perpetuity.  This five year time frame to revert back to our current IH ordinance is exactly the approach that you seem to be advocating for above.<o:p></o:p> <o:p> </o:p> 7) The developer refused to agree to size limitations on his units. Why did we not simply adjourn the conversation until he took a position more acceptable to the city? Why could we not have a longer-term perspective here? We do not pause applications for an amendment to an annexation based on a Hotline of a council member. This amendment represents two years of conversations with the applicant and I am certain that your inputs will be beneficial to the process. The amended Annexation Agreement is more important to the developer than to us. As Boulder Housing Partners is developing more than 100 affordable housing units this year alone, on an operating budget of $30MM, I suggest that a $325K cash-in-lieu payment from this project, potentially payable in 5 years, is not very significant in the scheme of things. And, ultimately, the property will be developed and the cash-in-lieu funds will be received. There is nothing that should compel us to act today to receive these funds in 5 years. 14 middle-income units would be a substantial benefit, but we have no assurance that anything that is built on this property will actually be “attainable” by middle-income purchasers. So what is the verifiable community benefit that we are receiving in exchange for these very substantial concessions?  These benefits are described in the new annexation agreement.  We will receive CIL amounts which we can put towards actual needed affordable housing and a development type of for sale units that is described in the Middle Income Strategy. <o:p></o:p> <o:p> </o:p> As always, I appreciate the hard work that went into this negotiation and the efforts of staff to bring it to an advantageous conclusion. Unfortunately, I do not think we have achieved a successful resolution to this project, in that we have given the developer virtually all that he could desire, in exchange for a discounted cash-in-lieu payment that must be the envy of anyone contemplating a residential project in the city of Boulder. I suggest that these conversations continue until we can negotiate an agreement that is more in line with Boulder’s needs and goals. I do not wish to kill the project, and I support an amendment to the Annexation Agreement to relieve the developer of unrealistic requirements, but at this point I believe we are not receiving anything close to fair consideration for doing so. As a real estate lawyer and a developer I have negotiated numerous agreements, some better, some worse, and I have learned that there are times when you must simply reopen the conversation to get an equitable result. I urge us to do so now.<o:p></o:p> <o:p> </o:p> Please let us know if you need further clarifications.  We look forward to your input on Tuesday night.<o:p></o:p> <o:p> </o:p> Thanks,<o:p></o:p> <o:p> </o:p> Kurt<o:p></o:p> <o:p> </o:p> Kurt Firnhaber Director of Housing and Human Services <o:p></o:p> <img border="0" width="340" height="63" style="width:3.5416in;height:.6562in" id="Picture_x0020_1" src="cid:image001.png@01D86A00.0C0B48C0" alt="https://bouldercolorado.gov/links/fetch/41501"><o:p></o:p> O: # 303-441-4424 C: # 303-917-0914 <a href="mailto:FirnhaberK@bouldercolorado.gov">FirnhaberK@bouldercolorado.gov</a> <o:p></o:p> Department of Housing & Human Services 1300 Canyon Blvd  Boulder, CO 80302<o:p></o:p> <a href="https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.bouldercolorado.gov%2F&data=05%7C01%7CWallachM%40bouldercolorado.gov%7C38e6a223b4f747fe3a6008da3781b6e8%7C0a7f94bb40af4edcafad2c1af27bc0f3%7C0%7C0%7C637883327502151045%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=hDskEYzmgM78IRQHbF9QtseSeOETEFcTuKW42OK0Ri4%3D&reserved=0">Bouldercolorado.gov</a> <o:p></o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> <o:p> </o:p> </div> </body> </html>