How Boise could keep at least some Downtown housing affordable | Idaho Statesman

Living in Downtown Boise keeps getting harder for working-class people.

As Downtown booms, housing is more expensive than ever. Rents for newly built one-bedroom apartments are as high as $1,700. Old housing is getting more expensive, too. If this trend continues, Downtown Boise could become off-limits to all but the rich.

“I would love to live there now, but it’s just cost-prohibitive,” said Justin Bates, owner of Boise landscaping company Natural Beauty. “And I just don’t see where any of the new developments are going to be that cheap.”

Some developers, elected officials and planners say it’s time for government to step in and promote affordability through tax breaks, reduced fees, zoning changes or bigger subsidies.

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But government tools are limited, in part because Idaho law prohibits many of the programs other parts of the country use.

With houses costing less than $200,000 approaching extinction in Boise, the City Council has begun a long-term conversation on housing, aimed in part at Downtown. Boise’s urban renewal agency also could play a role: It just bought a Downtown building that could be torn down and replaced with a project that includes housing.

“If we want to be the most livable city in the country, we have to have a wide range of people and can’t just wait for the market to build for the people who can afford the highest level of housing,” said Dana Zuckerman, a home builder and president of the renewal agency’s board. “It’s both a fairness issue and an economic-development issue.”

Affordable Downtown housing is scarce, but high-end units are still being built. Developer Michael Hormaechea has begun construction of a second, 35-unit building in The Afton condos, on River Street between 8th and 9th streets near the Downtown library, in the foreground of this artist’s rendering looking east on River. The first building, in the background, was finished last summer. A one-bedroom, 1,254-square-foot unit there was listed recently for $635,000.

Provided by Drake Cooper

Boom brings new housing, but it’s still scarce

Downtown development has seen an unprecedented boom in the past five years. Three hotels and almost 900,000 square feet of office space have been built, according to Thornton Oliver Keller, a Boise commercial real estate brokerage.

City figures show that 379 homes — mostly apartments, some condos — have been built, too, and almost 1,100 more are under construction or planned.

Still, housing is hard to come by. Jobs in the city’s center outnumber homes almost 11 to 1, according to the urban-renewal agency, the Capital City Development Corp. The ratio is 4 to 1 in Portland and less than 9 to 1 in Denver.

In normal circumstances, the best way to get more affordable homes is to build more homes.

“The more housing you have on the market, the more likely that existing housing is going to move down-market a bit as new housing comes on, which makes it more affordable for workforce (tenants),” said Elaine Clegg, a Boise city councilwoman and urban planning consultant for Idaho Smart Growth, a nonprofit.

But that principle might not apply to Downtown Boise, Clegg said, because of strong demand, developers’ debt payments on new projects, and high land and construction costs.

A persistent lack of housing is a problem for the long-term health of the city’s core, said Clay Carley, a longtime Downtown Boise developer who is building 81 apartments on the corner of 5th and Main streets.

“Our percentage of Downtown living compared to other downtowns, even much smaller than ours, is really quite poor,” Carley said. “If we want to have want to have strong retail and really sustainable commercial Downtown, we need more residents. Rooftops drive retail.”

‘Go vertical’ to ease traffic

From a planning perspective, dense, urban housing is more attractive than sprawl. It uses infrastructure like sidewalks, streetscapes and utility lines more efficiently. In many cases, those amenities are already in place when a new project goes up.

People who live in downtowns often work and recreate there, too, so they drive less. That cuts traffic and pollution.

“The only way to mitigate really bad transportation issues is to go vertical … and encourage development that goes five stories, eight stories, and not quarter-acre lots with big lots and three-car garages,” Carley said.

Urban housing is valuable, but long-term, Boise also should improve public transportation to move workers quickly and conveniently between Downtown and the places they live, said Al Marino, an office broker for Thornton Oliver Keller who’s lived in Boston, Seattle and San Francisco.

“Traffic hasn’t gotten to the point where it’s so formidable that it’s these hourlong commutes,” he said. “I used to drive around the Bay Area, and I’d tune to the AM stations for the traffic report every 10 minutes, because I’d have to listen to where the next bottleneck was going to be and try to avoid it.”

Incentives influence builders …

For developers, residential development is harder to justify economically than commercial projects like office buildings. Apartment rents per square foot Downtown are just now approaching rates for the most desirable offices.

Apartments often take longer to fill, and the cost of including extra bathrooms, kitchens and thicker walls drives up construction costs, said David Wali, a developer, hotelier and dealmaker.

Wali had hoped to build affordable apartments in the former Macy’s building Downtown but abandoned the idea after he and his partners concluded they wouldn’t turn a profit. Apartment tenants cause more wear and tear than office tenants, too, Wali said.

Carley said developers need to rent Downtown apartments for about $2 per square foot — about 30 percent more than in the rest of the Treasure Valley — to turn a profit.

Four years ago, recognizing that a lack of housing could become a problem, the city began offering grants and loan guarantees for residential development. The goal was to have 1,000 new homes Downtown by 2020.

So far, Boise has awarded grants of $1,000 each for 65 apartments and condominiums, according to the city’s statistics.

Incentives are twice as much — $2,000 each — for low-income housing units, reserved for tenants who make no more than 80 percent of median income: $45,100 for individuals and $64,300 for a family of four, according to the city. Rents can’t exceed $900 for an individual. The city hasn’t awarded any low-income grants yet, but 175 are in the approval process.

All of the low-income grant money so far is going to two projects west of Downtown: Adare Manor, a planned 134-apartment complex reserved mostly for low-income tenants on Fairview Avenue between 24th and 25th streets, and New Path Community Housing, a 41-unit apartment building under construction on Fairview between 22nd and 23rd streets for chronically homeless people.

Construction of Ash Street Workforce Housing is expected to start by early summer. The project will include 34 apartments and a small retail area near the corner of Ash and River streets in Boise’s River Street neighborhood.

GGLO

… but Idaho law limits incentives

Some of the most common incentives for affordable housing in other states are illegal in Idaho, whose constitution and laws emphasize private property rights.

Carley said one of the most common is tax abatement, which reduces or eliminates property taxes for a period of time and requires developers to rein in rents. Another is inclusionary zoning, which requires a certain number of living units in a project to be workforce or low-income homes.

On Feb. 27, the Boise City Council began a periodic in-depth discussion of housing, focusing on long-term goals, obstacles to achieving them and tools at the city’s disposal.

Clegg said one option is to loosen government control instead of offering incentives. Boise could help developers find cheaper land for high-density residential projects by widening the area zoned for high-rise development, she said. Right now, that zone is mostly north of the Boise River, west of Broadway Avenue, south of State Street and east of the river near the West End. A new zoning classification that allows slightly less density than the high-rise zone could help, too, Clegg said.

Another option is to encourage, or even require, dense development, such as high-rise apartment buildings, along popular transit corridors like State Street and Fairview Avenue, she said. Housing in those areas could give tenants quick, easy access to Downtown without the Downtown price tag.

“We’ve got to figure out how to make sure that people of all means can live in the region, or it won’t be a healthy region,” Clegg said.

Christina Marfice, a freelance copywriter and former Boise State University student, said she paid $420 per month for a large one-bedroom apartment between 2011 and late 2013. She was living in the Stewart House, a historic home on the northeast corner of Myrtle and 5th streets that has since been demolished.

“I moved in there just a few months before I turned 21, so being crawling distance from the bars was very convenient,” she said. “But I also just had to jump across Myrtle and walk through (Julia Davis Park) and I was on campus.”

A diverse group of low-income and working-class people, including students and artists, made her time at the Stewart House especially memorable.

“I would say that Downtown is already very well on its way to losing that,” she said.

The new Fowler apartments Downtown have rents that are higher than most, but some qualify as workforce housing. The city of Boise approved $159,000 in incentives for the project. Tenants are scheduled to start moving in next month.

Sven Berg sberg@IdahoStatesman.com

Developers say grants help, if only psychologically

Grants have been Boise’s main tool for encouraging Downtown housing. They don’t make a big difference financially, developers said, but they signal support from City Hall.

“It tells the developer that the city and the comprehensive plan and the community really want you to do this project,” Carley said. “And while that doesn’t have economic value directly, it is really important psychologically.”

City spokesman Mike Journee said the city has no data to show whether the grants are persuading developers to build more housing, but developers have told the city that knowing the city is behind them encourages banks to finance their projects.

Casey Lynch, whose company LocalConstruct recently completed a 159-apartment building on the south edge of Downtown and 37 apartments at Idaho and 14th streets, said the city’s grants were “certainly a factor in us deciding to move forward” with those projects.

If all of the Downtown homes that have been planned are built, Boise will easily reach its goal of 1,000 new homes, including the 175 low-income ones.

One idea, and some skepticism

Carley said the city could do more. He suggested Boise reduce or eliminate impact fees, which developers pass on to tenants in the form of higher rent. Impact fees account for roughly 3.5 percent of a Downtown residential project’s total cost, he said.

That idea has come up informally at City Hall, Journee said, but no one has proposed it officially.

The Ada County Highway District, which controls public roads, ought to waive its fees for Downtown housing, said Jim Hansen, a member of the district’s commission.

It isn’t fair for developers of Downtown housing to pay the same road fees as everyone else, Hansen said, because the district can spend that money only to widen arterial roads and intersections. Downtown streets are as big as they’re going to get, so the fees force Downtown tenants to subsidize wider roads in less dense parts of the county that they’re less likely to frequent.

But even people who live Downtown benefit from better roads outside the core, said Sara Baker, another commission member.

“People don’t necessarily stay in one place,” Baker said. “They use the roads throughout the county.”

Hansen said he’s suggested fee waivers to his fellow commissioners, but the conversation has gone nowhere. That’s too bad, he said, because high rent Downtown is forcing average wage-earners to live long distances from their jobs.

“When you push affordable housing to the fringes, you’re really hitting working people, modest-income people, multiple times,” Hansen said. “You’re saying, ‘OK. Because you can’t afford to live near your job, you also now have to pay more for your car’… Working people have to spend more and more of their day in the car. They probably have to spend more on day care, because they can’t get home to care for their kids. So there’s a moral issue that really needs to be addressed, and we shouldn’t be immune to having those conversations.”

Baker said the highway district has not received an official request to reduce or eliminate impact fees. Even if it did, she said, the district’s attorney believes reducing impact fees for some developers and not others would be illegal.

Besides, Baker isn’t convinced that reducing fees would make much difference.

“Would it really reduce the cost of housing Downtown? Probably not,” she said. “Would it make it more affordable? Probably not.”

A one-bedroom, 700-square-foot apartment in The Owyhee, a historic Downtown hotel that Los Angeles developer LocalConstruct and Boise developer Clay Carley converted to high-end apartments in 2014. Studio and one-bedroom apartments were available recently for $1,200 to $1,400 per month.

Darin Oswald doswald@idahostatesman.com

Is this site a candidate for affordable housing?

The Capital City Development Corp., Boise’s quasi-independent urban renewal agency, can promote affordable housing in ways City Hall itself can’t.

Last month, the agency bought the Idaho Sporting Goods building and the 0.4-acre lot it sits on at 421 N. 10th St. It plans to redevelop the property, likely through a bidding system that asks private developers for project proposals, Executive Director John Brunelle said.

“It could be residential, or it could be office. It could be some kind of a mix,” Brunelle said. “We’re always looking for that mixed-use project and that mix of uses neighborhood by neighborhood in our districts.”

CCDC could award the Idaho Sporting Goods property to a developer for free or a reduced price and require a project that includes at least some reduced-rate housing, as inclusionary zoning would do. Idaho law authorizes urban renewal agencies like CCDC to acquire and dispose of property with encumbrances that could be considered inclusionary zoning if local governments applied them.

The agency required rent-restricted housing on property it owns on the northwest corner of Ash and River streets. Last year, CCDC picked developer Dean Pape’s proposal to build 34 apartments there, rent them to people earning between 80 and 140 percent of the local median income, and charge no more than 35 percent of their gross incomes.

Zuckerman said CCDC should promote homes that a coffee-shop manager or entry-level software engineer can afford. In general, those people are fairly young, so they’re likely to spend time and money at bars, restaurants and other stores, keeping the city alive into the wee hours.

“It is definitely within our mission to promote housing and affordable housing within the Downtown core,” she said. “That’s the only way to keep our Downtown vibrant.”

Bates, the landscape company owner, grew up in the North End but lives and bases his business in Northwest Boise now, in part because of the cost of housing.

“Slowly, we’re getting pushed out,” he said.

Carley, the developer, thinks Boise “has been on an unplanned growth chart, and now it’s a crossroads.”

“If we don’t start planning and funding more intelligently,” he said, “we’re going to end up like Phoenix and Denver and the rest, and my kids and their kids and the rest are going to say, ‘Meh, I’m going to go to whatever the new community is that’s not so bad.’”

Sven Berg: 208-377-6275, @SvenBerg51

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