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Only four projects take advantage of Boise’s housing bonus ordinance a little over a year since approval

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The City of Boise’s housing bonus ordinance could be set for a shakeup after only a handful of projects used the program in its first year. 

In order to help build more housing at lower reduced rents, Boise City Council and Mayor Lauren McLean passed a housing bonus ordinance allowing developers to build more units in exchange for some affordable units or putting their project in a location with access to services and public transit. An original version of the bonus allowed developers to take advantage of the bonus in residential neighborhoods, but council members limited it to commercial areas near major intersections and along major roads before approving it.

[You Asked: How do low-income housing tax credits work?]

The city heard an outpouring of opposition from some residents during a six-hour hearing at the end of 2020 who were concerned the ordinance would supercharge gentrification and overrun neighborhoods with overpriced, dense apartments with little affordability in return. But, since the ordinance has been approved, only four projects have taken advantage of it. 

City Council President Elaine Clegg said the ordinance and concept are strong, but it wasn’t as successful in creating more housing as they hoped because construction prices have escalated beyond what the bonus offers developers.

“You offer a bonus of so many units or so much cost reduction per unit and then the market increases more than your bonus, it doesn’t do a lot,” Clegg said. “I would say that nobody expected the (construction cost) market to increase this quick. You put that on top of everything else and it makes it really hard to make policy you can be confident that hits what’s needed to provide a good incentive.”

What happens next?

Boise is in the midst of rewriting its decades-old zoning code and the housing bonus ordinance will likely be absorbed into that new rewrite. 

Deanna Dupuy, Boise’s housing programs administrator, told BoiseDev the ordinance was reviewed by Planning & Development staff in the fall, but because only four projects used the program the city opted not to suggest major changes at the time. Instead, the housing bonus ordinance was written into the second module of the city’s draft zoning code rewrite

The housing bonus ordinance is only a small piece of incentives for developers in the second module of the code so far. Other incentives include added entitlement opportunities for developers who include high levels of energy efficiency into their projects.

“We worked with leadership to determine that it was best to include the HBO as written in first draft Module 2 and assess the ordinance once we completed the Module 2 outreach,” Dupuy said. “As you are aware we have done tons of outreach on Module 2 this winter and, in response, are working on another set of revisions to Module 2 which will most likely include updates to all incentives found in Module 2.”

1715 W. Idaho SMR
Rendering of a proposed project at 1715 W. Idaho St. in Downtown Boise. Via Pivot North

At the time of its passage, Boise City Council said they would reevaluate the ordinance a year after its passage to consider changes. But, there has been no public work session on the matter or any public discussions at the city about its performance or what potential changes are needed. Clegg said the turbulence in the housing market makes it hard to shape policy, so it’s best to wait things out.

“The circle back didn’t happen because we’re in the midst of unprecedented times and we have to figure out how that settles out before we change policy in reaction to it,” she said. “You can’t chase changes like that. It doesn’t work very well.”

What projects did use the ordinance?

Of the four projects that used the housing bonus ordinance, half of them are public sector efforts. 

One is the city’s affordable housing land trust project at State and Arthur, which will provide all of its 102 units at rents affordable to those making less than 60% of the area median income. This is equivalent to roughly $31,000 per year for a single adult in Boise and rents will start at $792 per month for one person. 

Due to the bonus, Eagle-based firm Pacific Companies was able to build 53 more units on the site than otherwise allowed. 

The second local government-powered affordable housing project using the bonus is a 48-unit project on a lot at Idaho and 18th streets by Boise-based SMR Development. The bulk of the lot is owned by Capital City Development Corporation, but SMR acquired nearby lots on its own to make a larger project. Seven units in the project are reserved for those making less than 100% of the area median income, which is equivalent to $52,000 for a single adult.

The bonus allowed SMR Development to build 15 more units on the site than city code would otherwise allow. Rents in the restricted units will start at $1,318 for a single person. 

A rendering of the proposed project at the intersection of Cole Road and Denton Street. Photo: Courtesy of Kal Pacific & Associates, Inc

The housing bonus ordinance also powered a privately financed development for a 136-unit, five-story apartment building near Boise Towne Square Mall at the intersection of Cole and Denton roads. This project took advantage of the activity center part of the bonus due to its location near a transit hub and services to get approval for 43 more units than otherwise would have been allowed. 

The fourth project from California-based Slagle Development is using the bonus to construct a 46-unit apartment complex at the corner of Vista Avenue and Targee Street. The project will include seven apartments for those making 100% of the area median income or less, just like the SMR Development project. The bonus nettled the project an additional 14 units. 

Margaret Carmel - BoiseDev Sr. Reporter
Margaret Carmel - BoiseDev Sr. Reporter
Margaret Carmel is a BoiseDev reporter focused on the City of Boise, housing, homelessness and growth. Contact her at [email protected] or by phone at (757)705-8066.

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