Inclusionary Housing

Inclusionary Housing (IH) is a regulatory requirement that all new residential development provide 25% of the total dwelling units as affordable housing or contribute to affordable housing by alternate means like a cash-in-lieu contribution or land dedication.

For rental projects, of the 25% provided, 80% of the homes should be affordable to households earning no more than 60% of the area median income (AMI, the median income for the Denver metropolitan statistical area, as determined annually by HUD). The remaining 20% of the required affordable rental units should be affordable to households earning no more than 50% of the area median income. For-sale affordable units should have the price set to what is affordable to households earning 100% of the AMI, except for single family or townhome units that have the price set to what is affordable to households earning 120% of the AMI. Note, income limits for for-sale affordable units are set at a higher level than the price.

Regardless of size, all developments within the city that add housing units are subject to the requirements of inclusionary housing. The means for satisfying the inclusionary requirement must be approved by city staff prior to application for a residential building permit.

Developers are encouraged to meet with staff well in advance of review or permit application to determine how the IH requirements will be met in order avoid delays. For-sale affordable units that are constructed by a developer and sold, with city assistance, to an approved buyer. Rental affordable units can be owned either by the developer or subsequent owner, or a housing authority or similar nonprofit agency. A deed restricting covenant for each permanently affordable unit must be signed and recorded prior to application for a residential building permit. In most cases, the city never owns the affordable units.

Developments may provide any number of the required affordable units on-site, with the remainder of the requirement met through the other available options, including a cash-in-lieu contribution, provision of the affordable units off-site, dedicating vacant land, or by any combination of these options.

Affordable housing obtained through city programs is deed restricted as permanently affordable. This means a given apartment or home has an ongoing restriction designed to keep it affordable in perpetuity to lower income households. The exact terms of the resale restriction are contained in a deed restricting covenant that is recorded in the county assessor office against each property.

Maximum allowable sales prices for the affordable housing units are calculated on a quarterly basis to consider mortgage interest rate changes and are established when the affordable covenant is signed. Pricing sheets can be found below. For information on how the maximum allowable sales prices for new affordable homes are determined, review the Sales Price Calculation Methodology. Please note that these are the maximum allowable sales prices and not a guaranteed minimum price. Depending upon the market and desirability of a given permanently affordable unit, prices may need to be adjusted downward to successfully complete a sale.

The maximum sales price for permanently affordable homes is calculated based on estimates of principal, interest, taxes, insurance, private mortgage insurance and an adjustment that represents homeowner’s association dues and unit type. The resulting monthly mortgage payment for low/moderate pricing may not exceed twenty-eight percent (28%) of gross monthly household income and for middle-income pricing may not exceed thirty (30%) of gross monthly household income. The maximum sales price is based on a thirty-year fixed-rate mortgage at prevailing interest rates. A five percent (5%) down payment is assumed.

Low/moderate-income prices are based on the mortgage payment affordable to a household earning the US Department of Housing and Urban Development (HUD) determination of low income for the region containing the Boulder Primary Metropolitan Statistical Area (PMSA). Middle-income prices are based on the mortgage payment affordable to a household earning between eighty percent (80%) and one hundred and twenty percent (120%) of the area median income as determined by HUD. Income limits to purchase the homes are set higher than those used to determine the permanently affordable prices. This “window” between the income used to price homes and the income limit for households purchasing the homes increases the range of households financially able to purchase the homes.

Affordable prices are updated quarterly and can be found in the two pricing sheets, low/moderate and middle income, below. Contact a Housing Planner at inclusionaryhousing@bouldercolorado.gov for additional information.

Rents for permanently affordable units are determined annually and can be found in the Affordable Rent Chart. Affordable rents include the total rent paid by the tenant including any non-optional fees and the established monthly utility allowance. City of Boulder maximum rents are grounded in the published CHFA maximum rents and reflect the Boulder market. The city maintains the discretion to amend maximum rents or substitute an alternative index.

All affordable units must meet the Livability Standards for Permanently Affordable Housing. This includes standards such as linear feet of cabinetry, minimum room sizes, amount of storage and closets and appliance warranties.

The IH requirement is a proportional determination of unit type, number of bedrooms and unit size to the market units. Affordable units must be distributed throughout the development and not aggregated in one area or building.

The expectation is that the permanently affordable units will be “functionally equivalent” to market rate units. This means that if the market units include dishwashers and garbage disposals they must also be provided in the affordable units. It also means that finishes and appliances provided in the affordable units, such as kitchen cabinets, countertops, flooring, etc., do not need to be identical to what is provided in the market units. For example, market rate units could include granite countertops, while laminate countertops of reasonable quality would be acceptable for the permanently affordable units.

Permanently affordable homes are expected to be constructed as complete and livable homes. As such, upgrades should be offered in moderation and must be approved in advance by the city. Upgrades are allowed in for-sale homes only and include items which would be more costly or structurally difficult to add after construction. A list of acceptable upgrades may be found in city’s policy on New Construction Pre-purchase Upgrades.

Developments may satisfy some or all the inclusionary requirements with a cash-in-lieu (CIL) contribution.

Cash-in-lieu amounts are assessed by the total residential square footage in a development. Cash-in-lieu rates scales with development size and are adjusted annually on January 1st. Refer to the Unit & Cash-in-Lieu Calculator tool available on this page.

The following definitions may be found in Section 9-16-1, “General Definitions,” B.R.C. 1981 and should be used to determine the “residential square footage” of a residential development:

Floor area for attached dwelling units means the total square footage of all levels measured to the outside surface of the exterior framing, to the centerline of demising walls between units, and to the outside surface of the exterior walls if there is no exterior framing which includes stairways, storage, and mechanical rooms, internal to the unit, but excluding garages.

Floor area for townhouses and attached small units means the total habitable square footage of all levels measured to the outside surface of the exterior framing, to the centerline of demising walls between units, and the outside surface of the exterior walls if there is no exterior framing, which includes stairways, storage, and mechanical rooms, internal to the unit, but excluding garages.

Floor area for detached single-family dwelling units means the total habitable square footage of all levels measured to the outside surface of the exterior framing, or to the outside surface of the exterior walls if there is no exterior framing or portions thereof, which includes stairways, storage, and mechanical rooms internal to the structure, but excluding garages.

This option is evaluated on a case-by-case basis. Dedicated land must have residential zoning and meet a number of other land use criteria which can be found in Section 9-13-10(a)(3), “Land Dedication,” B.R.C. 1981. Refer to the Land Dedication Review and Approval Process webpage for more information.

An owner may choose to provide the required affordable housing at a separate location. Existing or newly constructed homes may be proposed to be deed restricted as permanently affordable to satisfy the IH requirement. A number of processes and other requirements apply, including location approval, concurrency of construction, providing a financial guarantee, and housing inspections. The first step in the process is to have a proposed off-site location approved by submitting a Pre-Application Review form to the planning department. Refer to the Off-site Process and Timelines for Developers webpage for more details. Details about the off-site option can be found in Section 9-13-10(a)(2), “Provision of Affordable Units Off-site,” B.R.C. 1981.

An administrative level Affordable Housing Design Review is applicable to any affordable housing provided off- or on-site with greater than 40 units that does not complete a site review, use review, or form-based code review. Refer to Section 4.0 of the Inclusionary Housing Ordinance Administrative Regulations for more information.

In order to ensure fair access to permanently affordable homeownership opportunities, the city requires all affordable home sales to comply with a set of fair marketing procedures. These may be found in the Marketing Procedures for Developers.

Permanently affordable housing represents a substantial long-term public investment. As such, it is imperative that affordable housing produced be functional, meet the needs of a range of types and sizes of households, meet state and local code and property standards, and be constructed with quality materials and skilled installation consistent with industry standards. Affordable units must meet the city’s Livability Standards for Affordable Units. Livability Standards ensure that affordable housing is livable, of good quality and design, and meets health and safety standards.

Depending on the configuration and location of the affordable units the city may require a Housing Inspector to ensure quality construction, materials and installations and compliance with all affordable housing requirements, covenants, and agreements. The owner is responsible for the cost of the inspector which must be provided to the city prior to residential building permit submittal. A final report from the Housing Inspector is due prior to issuance of any certificate of occupancy (CO).

A replacement home may be eligible for an exemption from the inclusionary housing requirements. An exemption is available for replacement homes that are replaced within three years after the issuance of a demolition permit. An applicant must apply for a building permit for a dwelling unit within the three-year time period, use due diligence to commence and complete the construction of such building, and meet all deadlines set by city building codes. Note, replacement homes that receive an exemption from IH may be subject to certain affordable housing impact fees at time of building permit.