Impacts From Proposed City Code Changes (Use Standards And Table Changes In The Opportunity Zone And Their Application Citywide)
July 4, 2019
Revised July 12, 2019
Revised July 19, 2019
The City has been involved in two projects for several months that will affect multiple zoning districts citywide (See Appendix A for background). There will be substantial changes to some neighborhoods as a result.
The “Use Standards and Table” project involves changes to the Use Table component of zoning. The Use Table establishes which uses (e.g., office, apartments, retail) can exist within each zoning district, and what restrictions apply to those uses. For example, the Use Table establishes whether apartments or offices can exist in a single family zoning district. The proposed changes are discussed herein.
The “Large Homes and Lots” project changes the number of dwellings per lot in the RR, RE, RL-1 and other single-family zoning districts.
Some aspects of these two projects overlap.
On May 28th 2019, the City Council held a study session to consider the changes under these two projects.
This document, developed by The Peoples League for Action Now (PLAN)-Boulder County, summarizes and explains the most significant elements of the “Use Standards and Table” project. For questions, contact email@example.com
An accompanying document, “Large Homes and Lots – Impacts From Proposed City Code Changes On Single Family Residential Neighborhoods,” discusses the impacts of the “Large Homes and Lots” project on single-family residential neighborhoods.
It is the opinion of PLAN-Boulder County that the changes proposed as part of the “Use Standards and Table”project constitute upzoning – that is – elements of the zoning change enable more intensive development within zoning districts that are affected by this project.
The Use Table changes proposed as part of this project are concerning as much for what they don’t do as for what they do.
What the use Table changes don’t do, or rather what City Council has failed to do, is capture the value created by Opportunity Zone designation for the community, especially for permanently affordable housing and preserving affordable business space. These are the objectives of the Opportunity Zone – to alleviate financial distress for vulnerable portions of communities. The moratorium (See Appendix A for background) was supposed to enable development of policies to capture the “Opportunity” in the Opportunity Zone and to ensure broadly shared community benefits rather than being primarily a hedge fund and investor windfall.
The concern for what the changes do, arises from City Council’s rush to lift the moratorium and how that has short circuited the extensive community outreach recommended by Planning Board’s subcommittee for the “Use Standards and Table” project. Further, the nature of some of the changes, such as the extreme expansion of Efficiency Living Units (ELUs), constitute upzoning without calling it upzoning. Changing the zoning by redefining what can occur under the zoning name, is deceptive – characterizing the changes simply as “Use Table Changes” doesn’t adequately and transparently alert the public to the significance of the project. Most people in Boulder do not know that development limitations they understand to apply to the zoning districts in which they live, will change, dramatically, to substantially more intensive development in some circumstances (ELUs in high density residential zoning districts for example).
Lost Opportunity Zone
Council’s continued shirking of meaningful measures to capture the value created for investors by the Opportunity Zone and Use Table changes risks transforming the Zone into the Lost Opportunity Zone. That, in essence, renders the Use Table project largely ineffective with respect to the Opportunity Zone.
The powerful market forces that create the housing affordability challenges in Boulder are unlikely to abate. The underlying economics are that Boulder is a highly desirable market and there are plenty of deep pocketed buyers who want to live here. In order to counter these market forces, City Council needs to employ more powerful mechanisms. Just building more of everything – the supply side economic approach that hasn’t worked over the past 40 years – won’t alter the underlying economics of deeper and deeper pockets queuing up to live here. Limiting the tools the City employs to the same set that it has employed for the past 20 years hasn’t changed the paradigm. City Council continues to employ the same approach but expects a different outcome.(See Appendix A for background)
The Opportunity Zone offers a way to shift the paradigm. The combination of investment capital specifically focused on the Zone, with land use changes that capture that capital for affordability, should be a no-brainer. Council needs to be bolder. Demand enhanced affordability for business and housing development in the Opportunity Zone. Where Council entertains expanding development intensity, as they are with ELUs, push the envelope. Implement rent control and deed restrictions in return for development entitlement expansions. Don’t make entitlement expansions by-right. It gives away the only leverage the community has to make substantial headway with respect to housing affordability.
Council should articulate a clear vision for the Opportunity Zone. A good start would be to state: No significant loss of units or displacement of people or businesses shall result from development or redevelopment.
Council should also articulate a clear goal for these and future zoning changes. A good start would be to state:When changes to the use of property enable a greater range of uses and development potential that result in increased value of affected properties, most of that value SHALL be captured for the community’s benefit in the form of housing that is permanently affordable to lower to middle income households.(See Appendix A for background)
The zoning changes and the issues Council seeks to address are being treated as stand-alone problems, resulting in a series of ad hoc decisions, one after another, under pressure from Council to make decisions before the Council changes after the November election. But the issues are inter-related and need to be integrated with the affordable housing program, Opportunity Zone planning, the East Boulder Subcommunity Plan, the update to the Transportation Master Plan, etc.
The extent of the changes is considerable. The current draft plan for Use Table changes for just the newly proposed “L” Limited Use category affects 33 conditions across 26 of the 27 city zoning districts. That’s a total of 173 conditions affected by just the “L” category changes Consequently, it is unclear just how large-scale and wide-ranging these alterations change zoning. They are happening mostly under the radar, and because the changes are so complex, the public is largely unaware and the ramifications of the changes are not widely understood, including, PLAN-Boulder County is convinced, by Council members.
The presumption for zoning changes should be that one size won’t fit all. It would be better to consider changes that are desirable and then evaluate where they will work best. Decisions about citywide desired outcomes should be made through subcommunity and neighborhood planning processes that can contemplate the uniqueness of different areas. This truncated process effectively reduces future subcommunity and neighborhood area planning to irrelevance.
Moreover, these code change projects are occurring in isolation of where the City’s population is currently (108,500) and where it is projected to be in the near future relative to the current population planning target of 103,000. The impacts of more people are more traffic congestion, difficult parking, taller buildings that affect views to the foothills, wear and tear on Open Space, and eroding levels of services for City-provided facilities and services in the face of greater demands. The essence of planning is that it is done to guide growth and land uses according to where we want to be at some specified point in the future. That isn’t happening with these projects, or generally.
The manner in which Council is pursuing this project is the opposite of planning.
There is a conspicuous indifference on the part of Council as to how their decisions affect their current constituents. Council seems to give greater weight to the interests of the corporations that want to bring much more growth to Boulder than to current residents.
The most intense work on this project will occur in 2020. It is crucial for community members to remember: It will bethe newly elected City Council that will determine the extent of upzoning throughout Boulder. Community members must register their concerns with the current Council, both now, and again at the ballot box in November.
In February 2019, City Council adopted an emergency moratorium in the area of the City designated as an Opportunity Zone. (See Appendix A for background) Opportunity Zones are a creation of the Trump Administration’s 2017 tax bill.
At the time they imposed the moratorium, Council was concerned that investors taking advantage of Opportunity Zone benefits would finance projects that would result in gentrification, which would eradicate existing relatively affordable housing and business space. Council also wanted to explore how the capital sources and tax advantages specific to the Opportunity Zone might be leveraged to satisfy certain community priorities such as affordable housing.
Work on the “Use Standards and Table” project was already underway when City Council adopted the moratorium, and the Planning Department was tasked with prioritizing the review of eighteen different zoning districts represented within the Opportunity Zone as an expedient way to lift the moratorium as quickly as possible. The changes made to these zones will be applied citywide as soon as they are approved as part of the Opportunity Zone project.
This project changes the building uses allowed in various zoning districts, thereby altering the zoning. It will have citywide affect. The Use Table project has two phases:
- Summer 2019: Changes to zoning districts within the Opportunity Zone that will then be applied to those same zoning districts where they occur elsewhere in the City.
- 2020: Citywide changes to zoning districts that do not occur in the Opportunity Zone.
PLAN-BOULDER COUNTY INTERPRETATIONS
PLAN-Boulder County has analyzed the study session discussion. Given that it was a study session, it wasn’t always clear what direction or nod was given, but these are our interpretations with respect to the impacts of the changes under consideration. Readers should watch for subsequent clarifications from staff, Council and PLAN-Boulder County.
City Council gave the green light to city staff to continue with certain changes that will have significant impacts on the City. It does not appear there is widespread knowledge within affected zoning districts that changes are being considered, let alone what the changes are and their implications for the affected areas.
The significant items that Council is moving forward with are as follows:
- Eliminating restrictions on Efficiency Living Units (ELUs) citywide. This has vast impacts and is discussed in detail later in this document.
- Lifting the moratorium in the Opportunity Zone industrial zoning districts. The substantive Use Table change that Council is moving forward with will allow convenience retail in industrial zoning districts.
- Continuing the moratorium for residential zoning districts within the Opportunity Zone until Council determines policies that resolve gentrification concerns.
Other consequential Use Table changes are proposed under the “Large Homes and Lots” project.
Listed below are the significant changes, with explanations, that the public will be interested in knowing about and expressing their support or opposition thereto.
DETAILS OF IMPACTS
Limit single-family dwelling units in high density residential zones
City Council is generally moving in the direction that new housing development should be at greater densities than single-family detached to reduce housing costs and to reduce environmental impacts resulting from larger dwellings and lessen transportation impacts resulting from spread out dwellings.
What Will Change
City Council supported staff’s proposal to make single family homes in high-density residential zones a Use Review (Option C in the May 28th Study Session memo). Staff recommended Use Review to encourage division of the homes into multiple units rather than their demolition and replacement with apartment buildings.
The objectives to promote division over demolition and replacement are consistent with environmental goals, preservation of neighborhood character and with the intent of the current high-density zoning.
It is unlikely that that anyone would build a single-family house in a high-density residential zoning district when they could get much higher economic benefit from building high-density housing. Consequently, PLAN-Boulder County does not believe there will be an impact of any consequence.
Limit Ground Floor Residential Uses In BR Zones.
This change restricts residential uses in the Business Regional (BR) zones from the ground floor of buildings in order to promote more street level commercial activity, similar to the requirements of the Business Community (BC) zone.
What Will Change
BR zones currently allow detached, attached, duplexes and townhouses. This change limits residential uses to no more than 75% of ground floor area in order to provide for some mixed use, with the remaining 25% reserved for commercial uses. Residential uses may be above or behind the commercial use. However, the change does not preclude a development being 100% commercial.
This reserves some ground floor space for commercial (retail and restaurants), which is a worthwhile consideration and promotes a mix of uses and street activity. On the other hand, it reduces floor area available for residential which Council has identified as a priority. There is no clear advantage or disadvantage to this change.
Allow Restaurants In Industrial Zones
Currently, restaurants are very restricted in industrial zones. Less restriction is being considered to create more mixed use toward an effort to create 15-minute neighborhoods.
What Will Change
The decision is deferred pending further study. It will be addressed as part of the East Boulder Subcommunity Plan and then applied to the relevant zoning districts in the Opportunity Zone and to those same zones where they occur elsewhere in the City.
The intent for this change is good. However, care must be taken to ensure that the economics associated with the uses do not create incompatibilities between uses that result in landlords being unwilling to lease to certain other business types that the City may wish or need to retain, because those business types might diminish the rents that can be charged for a restaurant.
For example, expanding restaurant uses in various industrial zones will result in a higher income yield from restaurant development. While the City may take measures to ensure the industrial uses/spaces are not diminished in number or aggregated square footage, where the occupying business might by its nature be unattractive (noisy, malodorous, high levels of activity, etc.) to a potential restaurant use, landlords will seek to protect their higher yield use (restaurant) and not rent to any businesses that threaten those higher yields.
Allow Residential Uses In Industrial Zones
Currently, residences may not exist in industrial zones. Enabling them is being considered to create more mixed use in an effort to create 15-minute neighborhoods.
What Will Change
The decision is deferred pending further study and will be addressed as part of the East Boulder Subcommunity Plan and then applied to the relevant zoning districts in the Opportunity Zone and to those same zones where they occur elsewhere in the City.
The intent for this change is good. However, care must be taken to ensure that the economics associated with the uses do not create incompatibilities between uses that result in landlords being unwilling to lease to certain other business types that the City may wish or need to retain, because those business types might diminish the rents that can be charged for a residence.
For example, expanding residential uses in various industrial zones will result in a higher income yield from residential development. While the City may take measures to ensure the industrial uses/spaces are not diminished in number or aggregated square footage, where the occupying business might by its nature be unattractive (noisy, malodorous, high levels of activity, etc.) to potential residents, landlords will seek protect their higher yield use of the land (residential) and not rent to any businesses that threaten those higher yields.
For another example, IS 1 & 2 zoning districts allow vehicle service facilities, which are quite noisy with pneumatic equipment and emit solvent fumes. If the City were to allow Live-Work as a by-right use rather than the current requirement for Use Review, the by-right availability of Live–Work and the higher profit it generates for a landlord might cause the landlord not to rent to a vehicle service business because its noise might limit the rent the landlord could charge relative to renting to a quieter business, such as a self-service storage facility.
Restrict Office Uses In BR, BMS, And BT Zones
It is recognized that there is a great imbalance between nonresidential development potential and residential development potential built into the zoning code. Much more nonresidential potential exists relative to residential. The result is that much more job-generating building space is developed relative to residential space and that increases demand for housing and pushes up housing costs. Bringing the two into balance will decrease housing demand relative to job creation and ease upward pressure on housing costs.
Currently, office use is allowed by-right in most business zones.
What Will Change
Restrict offices in BR, BMS, and BT zones to no more than 25% of a building by-right and allow that up to 50% could be permitted through Conditional Use if onsite permanently affordable units are included. Only allow expansion of existing office uses through Non-conforming Use Review process. New office buildings would be subject to the 25% maximum or 50% if affordable units are provided.
This is a start to addressing the jobs housing imbalance. However, the result of applying it universally hasn’t been fully considered.
In the University Hill business district (BMS zoning), new residential uses are prohibited. The office floor area percentage limitation in this change results in the remaining floor area only allowing for commercial uses, which the economics of the zone may not support. Since the commercial businesses are dependent on students, there is not year-round support for other commercial businesses, whereas office uses provide more consistent year-round rental income and customers for other nearby business such as restaurants.
Such issues may exist in other locations.
BMS (Business Main Street) districts are intended to serve surrounding neighborhoods. Each neighborhood is unique, therefore there is danger in universal applications of Use Table changes without taking a holistic approach to planning.
PLAN-Boulder county supports this change in the Opportunity Zone but believes broader application citywide is ill-advised. Application in areas outside of the Opportunity Zone should occur only after subcommunity or neighborhood planning has been completed in affected areas.
Preservation Of Existing Market-Rate Affordable Housing In The Opportunity Zone
There is concern that development arising from capital investment in the Opportunity Zone will result in redevelopment of existing market-rate affordable housing, thereby displacing current financially challenged households—contrary to the intention behind the Opportunity Zones.
What Will Change
The moratorium will stay in effect until Council devises a remedy to the displacement concerns cited above.
Maintaining the moratorium in residential zoning districts within the Opportunity Zone is a wise decision.
Adopting policies to prevent gentrifications and displacement of the very populations that Opportunity Zones are purported to support should not be difficult. And such policies should not be confined to the opportunity Zone exclusively.
The City should apply two tests to all development citywide.
- Will a proposed development or redevelopment result in a reduction of either the number or percentage of housing units available to low to middle-income residents and the displacement of the residents? If so, to what extent and what extent is acceptable?
- Will a proposed development or redevelopment result in a reduction of the number or percentage of affordable spaces for locally owned businesses and the displacement of the businesses? If so, to what extent and what extent is acceptable?
The tests should result in no significant loss of units or displacement of people or businesses.
Use Table Change: Efficiency Living Units (ELUs)
Efficiency Living Units (ELUs) are dwellings under 475 sf. They are counted as half a dwelling unit, so if zoning allowed 200 dwelling units in a development, there could be 400 ELUs, subject to current limitations (which are proposed to change).
ELUs are not allowed in some zoning districts such as single-family residential zones (low density) and most medium-density residential zones. YET.
Outside of the University Hill General Improvement District, ELUs are conditionally allowed in some medium-density and high-density residential zones, mixed use zones and most nonresidential zones.
In some zoning districts where they are conditionally allowed, ELUs are limited to less than 20% of overall units in a development. Some districts allow them by-right with this limitation and others require a Use Review. But if the ELU count is over 20% of overall units in a development, a Use Review is required.
In other zoning districts where they are conditionally allowed, the limitations are a function of the percent of ELU floor area relative to the overall floor area and the amount of nonresidential floor area in a development.
In other zoning districts where they are conditionally allowed, there are limitations to their being located on ground floors facing the street.
What Will Change
As currently proposed, the 2019 Use Table change will apply only to those zoning districts in the Opportunity Zone and will subsequently be applied citywide to those same zoning districts where they exist outside of the Opportunity Zone.
The 2020 Use Table change proposes to eliminate conditional approval for ELUs in “most” zoning districts where ELUs are currently allowed, irrespective of whether those zoning districts occur in the Opportunity Zone. This would make ELUs by-right citywide and remove the limitations that apply currently.
Council Shirks Affordability
This expansion of ELUs has been proposed under the guise of a variety of justifications.
Council has said it’s about affordability. But Council has consistently shirked adopting measures that can enhance percentages of permanently affordable housing obtained from new development or redevelopment and from the expanded development potential as this change represents.
This Code change expands the development potential for affected properties beyond what is currently allowed, and consequently, there is the potential to acquire much higher percentages of permanently affordable housing from new development that takes advantage of this expansion. (See Appendix A for background) By making the expanded permission conditional rather than making it by-right (as this Code change currently proposes to do), developers will exercise a choice of whether or not to take advantage of the expanded conditional permission, and therefore, the City would not be constrained by State statute from applying rent controls to any expansion of ELUs beyond the current Code allowance.
Neglects Family Needs
ELUs, sometimes referred to as “coder housing,” serve a very small segment of the population needing affordable housing due to their very limited size. ELUs do nothing to expand family housing opportunities, and therefore, such an extreme increase in their potential is unwarranted.
The city has some prior undesirable experience with similar small dwellings, known as Limited Living Units (LLUs): they were introduced in the 1980s with the intention of providing very basic, affordable rental housing for students. The dwelling units were 400 square feet or less and were located in predominantly student neighborhoods in high-density residential zoning districts. At the time, staff anticipated that individual landlords would construct buildings devoted solely to LLUs that they would rent to students at affordable rents. But instead, developers built luxury LLUs that they sold as expensive condos to students’ parents and other investors. The City subsequently replaced the LLUs with ELUs and capped them at 20% of units in any given development unless the developer went through a Use Review.
ELUs are counted as half a dwelling unit. Thus, any zoning limitations on the number of dwelling units is effectively doubled for development of ELUs. If the dwelling unit limit by zoning is, for example, 200 units on a property, then there could be 400 ELUs.
Since traffic generation and parking demand are based on number of “dwelling units,” determining them based on 200 rather than 400 households will grossly understate the impacts from ELUs. Whereas 200 dwelling units would likely have something approaching 200 associated cars, 400 ELUs are highly likely to have on average, double that number of cars. The traffic generation and parking impacts of ELUs are much larger than the “dwelling unit” count implies.
Council should redefine ELUs as full dwelling units rather than half dwelling units in order to reflect their full impact, especially with respect to traffic generation and parking demand.
Expanding ELUs mostly serves the needs of specific types of businesses that want to expand here and want their future, single, imported workers housed. The proposed drastic increase comes with large impacts to the areas where they will be allowed.
Council Has Not Made the Case
Council should NOT remove existing limitations on ELUs. They have not made the case for the community need. Moreover, their shirking of meaningful measures to capture greater affordability as a result of expanded development potential resulting from this Use Table change, fails to create a community benefit.
Last year, when City Council members and the public learned that staff had applied for and received Opportunity Zone designation under a federal program to promote private investment in low-income urban and rural communities, City Council imposed a moratorium so the City could consider land use changes that would benefit the community and prevent undesirable development outcomes such as displacement and gentrification arising from Opportunity Zone investment-driven development.
The Colorado Office of Economic Development and International Trade created an Opportunity Zone program that provides communities with the resources and tools necessary to ensure these new investment opportunities not only benefit investors but also combat economic disparity and satisfy social needs. The June 25th Colorado Opportunity Zone Update provides a link to the Community Strategy Playbook from the non-profit Local Initiative Support Corporation (LISC) that recommends approaches for both weak and strong markets. It advises communities with weak markets to make zoning changes that offer incentives for desired development and those with strong markets (Boulder) to apply guardrails; for example, a higher inclusionary housing rate to protect against the loss of affordable housing through gentrification or zoning changes that limit high profit enterprises that do not serve the needs of the community.