On November 2nd, the Boulder Housing Coalition will be appearing before Boulder’s Planning Board, seeking a recommendation that city staff grant us additional occupancy in our proposed co-op at 4662 Ingram Court (near Moorhead & Table Mesa). In this post we will discuss the reasoning behind our request for additional occupancy, speak to the criteria Planning Board is supposed to use in evaluating our request, and address some questions that we have heard from the community regarding the project.

It’s also a good opportunity to try and convey what all goes on behind the scenes in the creation of affordable housing more generally.

A Few Facts About the Project

• The newly adopted law enabling co-ops allows for up to 12 co-op residents within the low density residential zones, but gives permanently affordable, non-profit owned co-ops the option of requesting additional occupancy, so long as all the other requirements of the land use code are still satisfied.
• We have already had 5 separate single parent families walk away from our membership process, because the occupancy limitations would prevent them from sharing a room with a child, or allowing children to share a room. This is our main motivation for requesting additional occupancy.
• We purchased the property at 4662 Ingram Court in earlier this summer for $850,000, using a $350,000 grant from the City of Boulder’s Division of Housing, and a $750,000 loan from the small, locally chartered Flatirons Bank. However, the total project acquisition cost was about $1.1M (more on that below).
• Our loan has a 5.07% fixed rate, a 25 year amortization, and a 10 year term. The bank requires us to have a debt service coverage ratio of 1.25 — meaning we need to collect 25% more than required to pay the loan, as an added margin of safety.
• The house has more than 4,500 square feet of habitable space.
• As purchased, the house had 9 bedrooms. We are renovating the property to create 3 new bedrooms. We are not adding any square footage.  As part of the renovation, we are also bringing all of the existing bedrooms up to current fire and safety code.
• Residents of the proposed co-op will need to income qualify, earning no more than 50% of the area median income (AMI). For a single person household, this means they’ll need to be making less than $34,400/year.
• In order to cover the costs of acquiring and operating the new co-op, and also make it affordable to folks making 50% of AMI, we needed a minimum of 12 rooms, collecting an average rent per bedroom of $678/month, or $8136/month total. (More on what all that number covers below).

Addressing Planning Board’s Evaluation Criteria

Planning Board has a specific set of criteria they are supposed to consider in evaluating our application for additional occupancy, which are set out in BRC 9-8-5(d). These criteria are:

• The potential impacts on the surrounding community,
• the number of residents proposed,
• the proposed habitable square feet per person,
• available off-street parking,
• the mission of the cooperative.

We’ll address each of these evaluation criteria below.

Criteria 1: potential impacts on the surrounding community

Neighborhood EcoPass district

Members of the Chrysalis Co-op organized the West Whittier EcoPass district several years ago, giving the neighborhood cost-effective access to unlimited use transit passes. The prospective members of our new co-op have expressed interest in working on an EcoPass district for their neighborhood. BHP’s High Mar apartments which provide affordable senior housing at Moorhead & Table Mesa already have an EcoPass contract with RTD, and BHP is interested in collaborating on expanding the area covered by that contract to include the adjacent block, which includes 4662 Ingram Court.

Neighborhood eGo Carshare EV

The BHC is working with eGo Carshare to get an electric carshare vehicle and charging station at 4662 Ingram Court. This would provide a cost effective, low-carbon, shared mobility option for the co-op’s members, and would also be conveniently available to anyone in the neighborhood that is a member of eGo Carshare. 4662 Ingram Court has an ideal rooftop for on-site solar PV (the City’s rooftop solar evaluation tool suggests it could accept up to a 18kW array). The BHC is pursuing funding to install as large a solar array as possible. If both of these projects are successful, the shared EV would likely be fueled entirely by renewable energy.

Increased neighborhood income diversity

The benefits of neighborhood economic diversity are often cited by members of the public and Planning Board in connection with proposals for new housing development.  This is one of the reasons many people say they prefer that developers provide on-site affordable housing rather than cash-in-lieu payments. However, in our existing neighborhoods where little or no new development is likely to take place, it is very difficult to increase economic diversity. Furthermore, our low density, single family neighborhoods are among the most economically exclusive areas of the city. High land costs and large minimum lot sizes make these locations largely inaccessible to residents of modest means. Housing cooperatives like the one we are proposing can bring economic diversity to existing neighborhoods without new development taking place, and without altering the physical character of the neighborhood.

Increased noise

Some members of the public have cited increased noise as one possible local impact of a new housing cooperative. In our experience, this has been a non-issue. All of the existing BHC housing cooperatives have voluntarily adopted their own internal norms around household quiet hours, which are far more restrictive than the city’s noise regulations. When many people share space in a co-op, there’s a need to be respectful of many different schedules. There are almost always some co-op members with jobs that require them to get up very early. All of our co-ops also currently house families, most with small children, which also encourages the adoption of strict internal norms around noise.  A common co-op saying is “All hours are respect hours.” meaning that even if it’s not technically “quiet hours,” if someone asks you to be quiet — because they have to get up at 5am, or the baby is sleeping, etc. — that request needs to be respected. It’s been our experience that the same respect is extended to the broader community by our cooperatives.

Improved Yard Maintenance

The BHC co-ops have historically taken pride in expressing themselves creatively through gardening and landscaping, often growing an abundance of vegetables. Most houses allocate some of their own internal budget each year to the garden, and invest in long term infrastructure like raised beds and drip irrigation systems, that make the garden easier to take care of.

Our co-ops typically organize 2-4 household work holidays each year, often centered on preparing the garden for planting in the spring, and putting it to bed in the fall, as well as taking care of other major outdoor maintenance tasks like cleaning out the rain gutters, pruning trees, etc. Typically one or more members will compose a garden and/or groundskeeping leadership team, coordinating and performing outdoor maintenance tasks as their leadership role within the co-op.  Especially given that the landscaping at 4662 Ingram Court currently consists of nothing but red lava rock, we are confident that whatever garden plan the co-op adopts will be an aesthetic improvement to the neighborhood.

As a charitable 501(c)3 non-profit, the BHC is also able to work with folks who have been sentenced to community service, helping them fulfill their service obligation by inviting them to help on co-op work holidays. We’ve also occasionally made use of supervised work-release crews from the County Jail, in order to get especially big landscaping projects done quickly.  These community service opportunities are a modest supplement to the labor of the co-op members, who are responsible for most property maintenance on a day to day basis.

Improved Building Maintenance

The BHC is a responsible property owner with a very long term interest in maintaining our buildings, since we are never going to sell them. This differentiates us from many profit motivated landlords, who are seeking to maximize their revenues, and minimize maintenance expenses associated with their rental property. It is common for landlords to treat the rental as a land-bank, since in many cases the owner knows that the existing house will likely be demolished if and when they sell the property. Nothing could be further from the BHC’s ownership model.

The proposed co-op on Ingram Court will have annual minor maintenance budget of $5,000. This is money collected by the BHC from the co-op as part of their house dues, and then reimbursed to the co-op over the course of the year as they submit receipts.  This arrangement gives the co-op the ability and the incentive maintain the property, paying for materials to support internal maintenance projects, and for specialized outside labor (plumbers, electricians, etc.), since if they don’t spend the money on maintenance, they don’t get it back.

Each BHC house has a maintenance coordinator who is responsible for fulfilling maintenance requests from members of the co-op, fixing and improving things within the house, or coordinating outside help if necessary.  In addition, the BHC has an annual, system-wide major maintenance budget, which is used for any maintenance project costing more than $1000. This spending must be approved by the board.  We also make regular contributions to our capital reserves which will be there to pay for major capital improvements when necessary, for example replacing the roof.

Reduced Traffic & Parking Impacts

The regulations governing co-ops are very clear: no more than 3 vehicles from the co-op may be parked in the public right-of-way. Given the nature of the property at 4662 Ingram Court (an enormous, but not particularly fancy home with 9 bedrooms) what efficient, legal uses of the building are there that would have more tightly regulated transportation impacts than turning it into a co-op?

At the proposed co-op on Ingram Court, this means there will be a hard cap of 5 cars associated with the house. The BHC will integrate this restriction into our lease agreements with the members of the proposed co-op, as well as the management agreement that the co-op and the BHC will enter into. These agreements will give the BHC the power to cure violations of the parking plan and vehicle restrictions if need be, including the power to terminate a member’s tenancy if they are not abiding by the lease, which will specify whether they are one of the up to 5 members permitted to have a vehicle.  We are also planning to do a vehicle records check on each member as they are accepted, as part of our rental reference checking process. This will allow us to determine whether a member has a vehicle registered in their name, even if they do not disclose this fact to us. Given the above safeguards and restrictions, we feel it is unlikely that the co-op will have significant negative traffic or parking impacts on the neighborhood. Furthermore, the fact that no two co-ops may be located within 500’ of each other means that the broader traffic & parking impacts of cooperatives generally will be miniscule.

In addition to the limitations on vehicles that may be associated with the co-op, the BHC provides an extensive package of mobility options to all of our members. The co-op’s house dues will cover Community Cycles and eGo Carshare memberships for all house members, as well as Neighborhood EcoPasses if and when they become available in this location. We actively promote a culture of biking, transit use, and sharing vehicles.  As mentioned above, we are hoping to be able to put a shared EV at the co-op, in collaboration with eGo CarShare, and may be able to join the existing Neighborhood EcoPass district which currently encompasses BHP’s High Mar Apartments, both of which should significantly mitigate the need for private vehicles at the co-op. We are also planning to use the existing outdoor storage shed for secure, covered bike parking for at least one bike per member.

Having no more than five motor vehicles between the members of a 16 member cooperative household is entirely plausible given our experience with the Masala and Chrysalis cooperatives. While it will act as a screen on the membership, we are confident that there are enough potential members who do not own cars, or who are willing to part with their vehicles in the context of co-op living, that we will be able to keep the house full, and provide our members all the mobility they need.

Criteria 2: The number of residents proposed (16):

We are requesting that the proposed co-op be granted a maximum occupancy of 16. This is also the maximum occupancy allowed in both the Chrysalis & Masala cooperatives (which are technically 4-plexes in RMX and RH districts). Chrysalis & Masala rarely get to their maximum occupancy, and they have about the same number of bedrooms (11 at Masala, 13 at Chrysalis), but substantially less overall square footage than the property on Ingram Court.

Currently, with 12 bedrooms, and a maximum occupancy of 12, it is not possible for the proposed co-op to affordably accommodate single parents who would like to share a room with small children, or for children to share a room of their own. We have already had 5 separate single parent families walk away from our membership process because of this limitation. Given the amount of interest that we have already had from single parents, we anticipate that many of the additional residents enabled by this increase in occupancy would be children. We believe that low income single parents are a vulnerable population that need access to affordable housing in Boulder. Many single parents also enjoy and benefit from living in a community setting.

Criteria 3: The proposed habitable square feet per person:

Ingram is enormous. At 4500+ square feet, it’s more than 40% larger than either Chrysalis or Masala. With 16 residents, it would still have 283 square feet per person, which is well above the 200sf per person required by the code, and more space per person than any of the other existing BHC cooperatives. Our co-ops have operated successfully for more than 30 years combined. This amount of space works for people.

All but one of the bedrooms at Ingram is larger than 100sf — meaning that they can legally be shared by two people. Half of the bedrooms are larger than 150sf, which means they’re legal for at least 3. The largest bedroom is more than 260 square feet.

In addition, Ingram has two large common rooms — one is an open floorplan kitchen & dining room, the other is an adjacent — but separable — living room. We have found that having 2 separate common areas is both necessary and sufficient for a co-op with the proposed number of members. One (often the kitchen/dining area) usually ends up being the more active social space, while the other is typically used for quieter activities.

Criteria 4: Available off-street parking:

4662 Ingram Court has one conforming off-street parking spot (the garage) and one non-conforming spot (in the driveway). Masala has a single off-street parking space. Chrysalis has no off street parking. Those cooperatives and their neighborhoods manage to function just fine.

Ingram will have a maximum of 3 vehicles parked on street — as required by the co-op license. BHC leases will indicate whether a resident is entitled to have a vehicle. No more than 5 vehicles will be allowed to be associated with residents of the co-op. Having a vehicle without it being on your lease will be a violation of the lease, and grounds for termination of a member’s tenancy. We are taking the parking limit very seriously. We believe living within this constraint is doable. Our other co-ops have often had substantial periods when there were fewer than 5 vehicles associated with them.

The BHC offers a comprehensive package of mobility options to all of our members. We have a partnership with eGo Carshare, which provides all of our members discounted rates, and the BHC covers members’ annual membership fees. We also cover household memberships to Community Cycles for all co-op members. Where they are available, we also cover Neighborhood EcoPasses for all of our residents. BHP already has an EcoPass contract with RTD for their High Mar senior apartments a block away, and they are excited to work with us on expanding the district to include Ingram. Members of the Chrysalis cooperative started and still coordinate the West Whittier EcoPass district, and are excited to mentor the Ingram members, if they decide to take on the project of annexing their block into the existing district at High Mar.

Because of the limitation on vehicles, there will be no adverse parking impacts on the neighborhood — if there are challenges associated with the modest amount of off-street parking, they will be ours to deal with inside the cooperative.

The BHC would be supportive of a Neighborhood Parking Permit (NPP) district. If other residents of the neighborhood are interested in getting a parking permit district applied to the area around Ingram Court, the BHC would be very supportive, as it would provide an external enforcement mechanism for our vehicle limitations. If the neighborhood isn’t supportive of this measure, we certainly wouldn’t want to impose it, and will do our own enforcement internally.

Criteria 5: Mission of the cooperative

The primary mission of the proposed housing co-op on Ingram Court, as with all of the BHC’s housing cooperatives, is to provide permanently affordable, community oriented housing to the low-income residents of the City and County of Boulder.

The additional occupancy we are requesting will specifically allow this cooperative to provide affordable, community oriented housing to low income families. Since opening the Ostara Cooperative in 2013, the BHC has experienced strong demand for community oriented, shared housing from families, especially single mothers with young children. We wanted the Ostara cooperative in particular to attract families from the beginning, and so we proactively recruited them and offered a family discount in that cooperative, paid for by our co-op system as a whole. The demand from families was more that we could accommodate at Ostara, due to that co-op’s occupancy and income qualification requirements. As a result, since 2014 we have budgeted for several system-wide family discounts (roughly one per dozen members) that can be used at any of our co-ops by families with dependent children. Since implementing this policy, we have had families at all of our co-ops almost continuously.  We very much want to be able to serve families at our proposed co-op on Ingram Court, but without additional occupancy, it will not make economic sense — since each child, no matter how young, would need to occupy their own entire room.

Cooperative housing is especially attractive to some single parents because of the additional adult supervision that is almost always available within the co-op setting. Childcare is a major household expense, especially for single parents with small children, and no nearby family to help them on a regular basis. Without paying for outside help or daycare, it can be hard for single parents to take time for themselves, and deal with the chores of everyday life. In the co-op setting, there’s almost always someone else around, and folks are often happy to take a short turn entertaining a child while the parent takes a shower, cooks dinner, does some laundry, or simply takes a break for themselves. This kind of informal, incidental, shared attention to kids need not put an undue burden on any individual co-op member, because there are many of them, but can still offer substantial relief and flexibility to the single parent. This arrangement isn’t necessarily appropriate for all parenting styles, or all co-op members, or all children, but on balance, we feel it’s proven to be a significant benefit to the families living in our co-ops, and in many cases to the other co-op members as well.

Our housing model offers more than just low rent — it provides comprehensive affordability, addressing food, energy, transportation, and other household costs. Because our co-ops buy food in bulk, frequently cook from scratch, and share meals at home, we are able to keep food costs to about $5/member per day, even though our food is nearly all organically produced. Many utility costs are no greater for a household of 16 than a household of 4, reducing per-person utility costs. Shared appliances and other durable household goods mean individuals need not purchase many of their own things to furnish the house. Shared vehicles, carshare memberships, transit passes, and a culture of active transportation — as well as the ability to live affordably in the same city where you work — all helps to reduce personal transportation costs dramatically. This is important because transportation is the second largest household expense in the US, and it is a larger portion of household expenditures for lower income households.

Promoting environmental sustainability, action on climate change, and responsible stewardship of natural resources are important secondary missions of the BHC’s housing cooperatives. We prioritize investing in the energy efficiency of our buildings and when appropriate, on-site renewable energy generation. In addition to the affordability benefits mentioned above, the transportation systems we promote and financially support are much more sustainable than the typical usage of single occupancy vehicles.

However, enabling the simple act of sharing is by far the most powerful sustainability mechanism we employ, and it is at the core of our organizational mission of providing affordable, community oriented housing. By allowing 12-16 rather than 3-4 people to occupy a 3200sf house as we have done at Masala and Chrysalis), even before investing in major energy efficiency upgrades to those 100 year old buildings, we were using far less energy & water per person than the regional average (see this analysis done by BoCHA last year)

Addressing Questions from the Community

Below are some questions we’ve heard from the community concerning the proposed co-op.

How will increasing occupancy increase affordability? Won’t it just increase the rent you collect?

The average rent will be $678 per bedroom, not per person. As we mentioned above, we need to collect $8136/month to cover the cost of acquiring, renovating, and operating the co-op. These costs are outlined in more detail below. This number will remain virtually unchanged with higher occupancy, meaning that allowing more people to share this home will directly result in deeper affordability.

The mortgage payment should “only” be $X,XXX/mo. How do you get $8136?!

Several folks have looked up price we paid for the building ($850,000) and done their own calculations as to what the rent “should” be, based on that cost. These calculations appear to make assumptions which would be appropriate for a typical single family home buyer. This might mean a 20% down payment resulting in a $680,000 loan, and a 30 year fixed rate mortgage, for which Elevations Credit Union is currently offering a 4% interest rate.  Given those assumptions, the mortgage payment should be “only” $3,250/mo.  However, these assumptions are not appropriate for this project, and there are many costs beyond the purchase price.

Affordable housing providers must use commercial loans. This means we pay higher interest rates, and get shorter terms.  The loan on this property is at 5.07%, has a 25 year amortization, and a 10 year term — meaning we need to re-finance it in 10 years, no matter what interest rates look like at that point.  In addition, the lender requires us to collect more than we need to pay them, so that there’s a margin of safety — this is the “debt coverage service ratio.” In this case, our DSCR is 1.25, meaning we have to collect 25% more than we need to pay the loan off.

Our total acquisition costs (more on them below) were actually $1.1 million. After the City’s generous $350,000 grant, that leaves us with a $750,000 loan. Given the above terms, we need to be collecting $5,520/mo just to service the debt and keep the bank happy.

There are other acquisition costs beyond the purchase price. We paid $850,000 for the building, but there are other costs associated with getting the co-op up and running.  These include:

• Renovating the building to make it safe, more energy efficient, and able to comfortably accommodate a cooperative household. This includes creating bedrooms, upgrading the kitchen, adding egress windows to existing basement bedrooms, etc. Our construction budget was $120,000. Design work cost $15,000, there’s also construction liability insurance, etc. It adds up quickly.
• Paying for staff time to manage the purchasing and renovation of the building, as well as the initial membership process. This is a major project for our tiny organization, and it takes months of work to pull it off. We can’t do this work on a volunteer basis.
• Covering the mortgage payments during the time between purchasing the building and getting it filled with new co-op members.
• A contribution to our capital reserves so that we have the ability to deal with major maintenance issues on the new building as they arise.
• Loan origination fees, construction & demolition permits, licensing fees, etc.

With these items, the total cost of getting the new co-op up and running will be somewhere between $1.1M and $1.2M.  These are fixed costs. The more residents who can share those fixed costs, the more affordable the cooperative will be.

What all does that $678/month include?

The “rent” that our members pay covers much more than the mortgage payment. As any conscientious homeowner knows, there are many costs of owning and maintaining a property beyond simply paying the mortgage. These include:

• Ongoing minor maintenance of the property ($5,000/yr)
• Saving up for major renovations, like replacing the roof ($5,000/yr)
• Fire, liability, and other kinds of insurance ($3,150/yr)
• Property taxes ($4,000/yr, more on these below).

Adding all those operational costs up, we get $17,150/yr, or $1,430/mo, above and beyond the $5,520/mo required to keep the bank happy.  So now we’re up to a total cost of $6,950/mo.

Our rent numbers also include utilities and other shared household costs. Within the $678/mo number is $65/mo per person that covers the following:

• City water, sewer, and storm water utilities,
• Natural gas and electricity from Xcel,
• Garbage, compost and recycling removal,
• High speed internet,
• A budget for shared household items like kitchen utensils, tools, garden implements, and small appliances.

This $65/month per person is the only part of the “rent” number that increases as the number of members in the co-op increases, and it’s because most of these costs have some relationship to the number of people in the house.  Adding in those monthly costs, assuming 12 members, we’re up to $7,730/mo out of the $8136 that we’re collecting.

After accounting for all the costs above, there’s only $406 “left over” each month. After all is said and done — including the debt service coverage ratio that the bank requires — we expect to have a net income from the new co-op of around $13,000/year.  That’s about $90 per co-op member per month with 12 people in the house.  That money is directly re-invested in our affordable cooperative housing system. It ensures that our co-op members have carshare memberships, Community Cycles memberships, and where available, Neighborhood EcoPasses. It lets us send a few of our members to NASCO Institute each fall, and put on an annual training series, covering meeting facilitation skills, consensus decision making, fair housing, and restorative justice techniques.  It also allows us to pay our tiny staff — which for the first time in 20 years is now two people instead of one — a living wage, which lets us maintain our existing buildings and community, and create more affordable housing in the future.

This project will not make anybody rich.  It will provide permanently affordable housing to low income people who are happy to share space, many of whom don’t feel that they need a car.  We’re charging what we need to charge to cover costs, and make sure that the new co-op is sustainable for the long term.

How is there a 9+ bedroom house in Martin Acres?

This is an odd building, to be sure. It appears to have been a standard Martin Acres ranch house with a basement originally, but at some point a substantial addition was built on to the back of the house, including its own basement and a 2nd story. However, because the 2nd story steps up behind the first, from the street it’s almost impossible to tell that the house is twice as big as the ones next door.  We don’t know why the previous owners did this, but we think that the best use of such an enormous home is housing more people.

$678/mo per bedroom seems typical for Martin Acres. How is this affordable housing?

As noted above, our members get much more from their $678/mo than they would in a typical rental situation.  In addition, just like everyone else, we have to buy housing out of the market, and reducing rents further would mean using more public funds. The real benefits of affordable housing accrue over time, as the market likely continues to drive housing costs up, but the rent at our co-ops just keeps up with inflation.  In recent years market rents have often jumped by 10% or more per year, but the BHC rents increase by only 2-3% per year. Our housing will become relatively more affordable compared to the market over time.

As the proverb says: the best time to create affordable housing is 20 years ago. The second best time is today.

As a non-profit, are you going to pay property taxes?

Colorado state law allows a housing authority to partner with other entities in the ownership of affordable housing, conveying the authority’s property tax exempt status to the property. The BHC has entered into such partnerships with Boulder Housing Partners in the past, but we have no plans to do so with the proposed cooperative on Ingram Court. We will be paying approximately $4,000/year in taxes on the property.