Area III Planning Reserve

This article relies heavily on the analysis and wording of Boulder City Council member Mark Wallach.

At the 11/23/24 meeting, Boulder City Council voted to continue consideration of the Annexation and Development of the Area III Planning Reserve. What initially looks like an appealing area for future development is mired in tremendous unfunded costs, however, and responsible voices are raising profound questions about the massive amount of money required and the lack of realistic financial thinking on this project, which at lowest estimates would represent 10 CU South projects in terms of expenditures for offsite, onsite, and parkland expenses.

Offsite costs alone are estimated at $980M over 20 years, equating to $49M annually. Staff estimates onsite capital expenditures to be $135-$160M. The proposed funding sources include undefined 'development interests' and property taxes. Since the City receives only 14% of property taxes, it would take decades to pay off these amounts, which would be due alongside the $49M per year. According to Mark Wallach, City Council member and authoritative voice on real estate and finance, to recover even a modest estimate of $150M in capital improvements, “homes with a total assessed valuation of $1.07B would need to be constructed. To achieve this over 10 years, homes with an annual assessed valuation of $100M are required.” Clearly, this does nothing to improve affordability of housing in Boulder. There is also the awkwardness of no apparent funding for initial expenditures, which must be paid upfront for construction costs before any recovery from development or taxes.

There are additional unfunded expenditures and feasibility concerns, namely, questions on the City's ability to condemn homes and displace long-term residents of the area as well as....

Condemnation of Present Homes

There are additional unfunded expenditures and feasibility concerns, namely, questions on the City's ability to condemn homes and displace long-term residents of the area as well as work with CDOT and RTD to modify and expand Highway 36. The City owns ~200 of the ~500 acres, so the effort would displace a lot of people who may enjoy their quiet, countryside home as is.

Lack of Affordability

The Staff recommendation is not to use the “parkland” area for housing. Without using the parkland, however, there's uncertainty about how any middle-income and affordable housing will be developed in Area III. Without clear mechanisms, there's a concern that Area III could become dominated by market-rate housing and rental properties. A more important focus is middle-income and permanently affordable housing, not more market-rate housing, which currently has a 12% vacancy rate. With another 10,000 units in the pipeline, there is no need for more high-end housing.

Sizable Increase in Water Requirements

As Mark Wallach explained recently in his 11/11/24 City Hotline message, The City’s consultant estimates that development of Area III could add 10-16% to Boulder’s daily water requirements, require substantial infrastructure improvements to our water system and in the event of “moderate to severe future climate scenarios,” the inclusion of any of the Planning Reserve scenarios results in increased frequency of anticipated water use restrictions…including indoor water use restrictions. Is there not broad consensus on the likelihood of at least a moderate climate scenario, given the potential risks?

The cost estimate for wastewater system improvements ranges from $40M to $180M in all 4 scenarios discussed by the consultant. It's either $40M or 4 ½ times that amount. A difference of $140M is substantial. Is there no way to pin down realistic costs? If the estimate of the increase in water use were off by this much, it would mean that water use in Area III could represent a 72% increase in water use.

Projected Sales Tax Revenue

The consultant estimates Boulder could collect between $831 million and $1.63 billion in sales tax over a 20-year build-out of the reserve. To reach the $831 million in tax revenue (the lowest estimate), the city would need to generate $1.9 billion in sales over that period. With fewer tourists and residents shopping in Boulder due to the crime, encampments and filth, this estimate may be optimistic.

In Conclusion

There is a critical need to step back and reconsider the furious pace of development in Boulder. With some 10,000 units already in the pipeline and a 8.8% vacancy rate (12% for market-rate housing), there is no need to rush headlong into an extremely expensive venture that appears to favor no one but development interests and perhaps CU.