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<br />Constraints and Barriers Affecting the Supply of Permanent Supportive
<br />Housing
<br />Market Conditions and Constraints
<br />The Colorado Front Range is currently experiencing robust
<br />population growth. Demographic and population data show
<br />that for the past several years, Front Range communities have
<br />gained record setting increases in population. Population growth
<br />has a symbiotic relationship with economic activity and as
<br />communities receive more new residents, the level of econom-
<br />ic activity increases to serve the needs of both migrants and
<br />present residents. Both growth and economic activity have
<br />powerful influences on the real estate and housing markets.
<br />The Great Recession of 2008 severely disrupted the housing
<br />production system. Because demand became soft and uncertain
<br />and financing tools largely disappeared, housing producers cut
<br />back on the number of for -sale and apartment products they
<br />were introducing into the market. As the Colorado economy
<br />made a strong recovery, the housing production system fell
<br />behind in producing the needed number of units to keep pace
<br />with demand and to hold prices stable. At the same time,
<br />because rents were increasing, and there was an under supply
<br />of for -sale homes, in some Boulder County communities, older
<br />rental non -deed restricted, complexes which were affordable,
<br />were upgraded or redeveloped and converted to higher priced
<br />rental dwellings. This factor makes it more challenging for
<br />households with limited income to continue to compete in the
<br />rental housing market because there are fewer "affordable" units
<br />available.
<br />Builders are striving to rapidly expand the supply of both for -
<br />sale and rental housing to meet the increased demand that has
<br />grown due to population growth and job expansion. The cost
<br />and availability of suitable green field land has risen significant-
<br />ly and in most Boulder County communities, there is a very
<br />limited supply of parcels that would be suitable for development
<br />of new, denser rental and for -sale product. Apartment building
<br />is proceeding at a robust pace in some areas of Boulder County
<br />and adjacent Broomfield County but because of the cost of
<br />land, hard costs and soft costs, the new units placed in service
<br />are priced at levels in excess of $2,200 per month for two
<br />bedroom two bath units. While the rent rates are necessary for
<br />builders to cover development costs and return on investment,
<br />the prices demanded are not affordable to those with incomes
<br />less than $60,000 per year.
<br />Increased employment and economic activity are placing further
<br />demands on a limited land supply. In most communities in
<br />Boulder County, new commercial and industrial development
<br />is also reducing the potential supply of land suitable for resi-
<br />dential development. New and expanding businesses are con-
<br />structing new retail and service outlets, office buildings, ware-
<br />houses and distribution centers to accommodate the need to
<br />provide physical platforms to serve the growing sectors of the
<br />Boulder County economy. The years following the 2008 eco-
<br />nomic meltdown saw empty commercial buildings and facilities
<br />that potentially could have been repurposed to provide more
<br />residential uses. This surplus of commercial real estate has been
<br />absorbed. In surveying potential development opportunities
<br />for Permanent Affordable Housing, CSI discovered that there
<br />are very few existing buildings or commercial parcels available
<br />that could be redeveloped as housing facilities. Conversion of
<br />existing commercial parcels into residential uses is a challeng-
<br />ing process not only because of the extensive construction ac-
<br />tivities needed for conversions, but also because in many mu-
<br />nicipalities, housing is not a use by right in commercial zones.
<br />Population growth and increased economic activity have re-
<br />sulted in a limited supply of buildable land and a limited in-
<br />ventory of commercial buildings and parcels that could be
<br />converted to residential uses such as the Bridge House conver-
<br />sion. The high demand for development opportunities exceeds
<br />the available supply of parcels and represents a challenging
<br />constraint to increasing the availability of affordable housing
<br />and in particular, Permanent Supportive Housing.
<br />Land and Development Costs
<br />Both the availability of land and the cost of land are barriers to
<br />developing new permanent supportive housing throughout
<br />Boulder County. CSI reviewed publically available land offer-
<br />ings in May of 2016 and found few parcels for sale. There were
<br />no parcels for sale in Louisville or Superior. There were few in
<br />the City of Boulder, City of Longmont and City of Lafayette.
<br />Parcels in unincorporated areas for the most part are either
<br />large acreages with use restrictions with no access to municipal
<br />water and sewer, or rural lots in the foothills suitable for single
<br />family "mountain" house type construction. CSI also conduct-
<br />ed a search for suitable redevelopment sites and parcels as part
<br />of our potential development site analysis. This search also
<br />resulted in few available parcels on the private sales market
<br />suitable for construction of housing throughout Boulder County
<br />The following table provides a summary of land costs of various
<br />types and in different communities throughout the County
<br />Prices vary greatly, depending upon the location of land, with
<br />the most expensive land within the City of Boulder municipal
<br />boundaries, within existing subdivisions, and zoned for
<br />multi -family housing. The cheapest land was found to be
<br />residential lots in Lafayette, zoned for single family homes, and
<br />which includes utilities. Other less expensive land is undevel-
<br />oped and located along municipal borders, without access to
<br />utilities. There were two vacant commercial properties listed
<br />for sale in Lafayette with commercial zoning and with an average
<br />price of $9.60 per square foot.
<br />A lack of suitable building sites and high land costs reduce the
<br />options for new housing construction of any type, especially
<br />price restricted and special needs housing.
<br />Types of Vacant Land Parcels
<br />Price Per Square
<br />Foot
<br />Uses
<br />Developed Lots, City of Boulder
<br />$37 - $75
<br />residential lots with utilities
<br />Undeveloped Land, City of Boulder/Edge of Boulder
<br />$7 to $10
<br />larger lots for one home, no utilities
<br />Developed Lots, City of Longmont
<br />$2.50 - $7.50
<br />lots with utilities in town
<br />Commercial Parcel/ Vacant Land, Longmont
<br />$13.50
<br />vacant land in commercial area
<br />Developed Lot / Lafayette
<br />$3.50
<br />residential lots with utilities
<br />Commercial Parcel/ Vacant Land, City of Lafayette
<br />$9.25 - $12
<br />vacant land in commercial area
<br />Undeveloped Land, City of Lafayette
<br />$4
<br />residential up to 13 units with utilities
<br />Source: Zillow.com
<br />Many homeless service providers and affordable housing de-
<br />velopers are looking for low cost or no cost land, to reduce the
<br />amount of subsidy needed to construct housing units. Free
<br />sources of land can be unused or underutilized properties owned
<br />by local governments, and land owned by charitable organiza-
<br />tions such as churches. Two examples and one case study in-
<br />cluded in this report highlight projects that are able to afford
<br />development costs by using land owned by local churches, or
<br />parts of church properties adjacent to a churches and which do
<br />not have structures on them.
<br />Construction and development costs are high in Boulder County,
<br />regardless of the type of housing being built. Market rate rentals
<br />and affordably priced rentals must all meet the same development
<br />requirements. Affordable properties often strive to include
<br />energy savings measures and material with long lifespans to
<br />reduce maintenance and renovation costs over time. Permanent
<br />Supportive Housing units, whether within a 100% permanent
<br />supportive housing complex, or a set aside portion of a large
<br />projects, most often cannot be paid for with debt. The rent
<br />affordable to households with little or no income is low, and
<br />even with rent subsidies, it can be difficult to cover the operat-
<br />ing costs of units for these lowest income households. Devel-
<br />opers must rely heavily upon equity sources such as Low Income
<br />Housing Tax Credits, City and County general fund and other
<br />local public funds, federal funds such as HOME funds and
<br />CDBG funds through the Cities, County and State, and grants
<br />from philanthropic sources such as local foundations. It often
<br />takes a dozen or more funding resources to cover the cost of
<br />project development. Thus, high development costs have an
<br />even greater impact on construction of permanent supportive
<br />housing than on market rate or other affordable housing prod-
<br />ucts.
<br />Permanent Supportive Housing units also are tied to some sort
<br />of case management and services. These services are sometimes
<br />covered in part by operating income, partner service agency
<br />operating budgets, and in some recent cases, Medicaid reim-
<br />bursements for qualified tenants with service costs eligible for
<br />a Medicaid reimbursement.
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