Spruce Street project: 101 condos and $7.5 million for affordable housing

By BHN Editor Caitlin Ryan

A re-designed housing proposal on Spruce Street between 26th and Folsom is back for a second round of Concept Review before Planning Board on Tuesday, November 1. With substantial changes to the original design, Planning Board will need to decide how far they are willing to go to get exactly the kind of housing the City has been asking for: a higher quantity of smaller, for-sale units.

Last Fall, Planning Board approved the original proposal but Council rejected it, asking for more density. The greatly improved redesign is now before Planning Board again, but many issues, including whether the four-story project is “out of character” with the surrounding neighborhood, might derail it.

The “Papilio” project proposed by Pace Development on Spruce Street. The 101 units would fall within the red outline.

The developer, Pace Development, wants to construct a four-story building with 101 units, of which 87 would be a mix of studio, one, two and three-bedroom units averaging 1,150 sq. ft. Fourteen units would be three-bedroom, luxury homes ranging from 1,800-2,600 sq. ft. The plans also include ground-floor, street-side retail space, pitched roofs, significant common outdoor patio space, and creative reuse of materials from an existing building with historic value.

The original design called for just 63 units, including 14 luxury townhomes of 2,400-2,600 ft. sq. that would likely sell for $2.5 to $3 million, and 49 rental units of 960-1600 ft. sq. BHN’s initial review of that proposal concluded that “we can do better,” and called for City Council to encourage greater density.

Fortunately, City Council called the project up for further review last fall and, with encouragement from BHN readers, asked the developer for more housing at the site. Council also indicated a desire to waive some of the barriers to density, including an outdated transportation connection and curb cut, historic preservation of an “Oblong Box Gas Station,” and rezoning of the site.

The developer now offers the City what Council asked for, adding 58 percent more units (increasing the number from 63 to 101) and decreasing the share (though not the total number) of ultra-luxury units compared with the original design. 

These changes also increase the developer’s required contribution to Boulder’s affordable housing program by 61 percent, from $4.65 to $7.5 million. 

To make it work, the site will need to be rezoned from BC-2 to MU-3, a change that reduces the required amount of open space per unit. Still, the new plans from Pace Development contain significant outdoor space for residents. Every unit has a large balcony and there is also a large shared outdoor patio.

In addition to substantially increasing the unit count and affordable housing contribution, the project also meets many of Council’s and Planning Board’s repeated requests, such as for angled roofs, greater density in central districts, and more for-sale units. The latter can be quite challenging for developers (more on that below). By right, the developer could build a small number of high-end luxury town homes on this site.

While none of the units are expected to meet middle-income housing requirements (defined as 80-120% of Area Median Income, which is $81,000 to $121,500 for a three-person household in Boulder County in 2022), the redesigned project is a far better deal than the alternatives. It introduces dense housing to a transit-rich site with excellent existing bike and pedestrian connections to numerous retail and service areas, as well as to many of Boulder’s workplaces. It would contribute towards the Boulder Valley Comprehensive Plan goal of achieving “new housing and mixed use neighborhoods in areas close to where people work.” By reducing in-commuting and adding housing to a walkable site, it will also help the city reach its climate goals. 

Currently, the site is a mix of light industrial, service commercial and residential uses, including a couple car repair shops, a scooter repair and retail shop, a thrift store, a fitness studio, and a furniture shop. 

With significant changes to the original proposal, including the addition of a fourth story, it is far from certain that Planning Board will approve the project. Of particular concern, according to staff analysis in the Planning Board packet, are questions about the building’s massing along Spruce Street and the transition of the roof line to adjacent properties, especially to several two-story homes on the north side of Spruce Street. Planning Board’s decision will likely hinge on the key question of whether the “height, mass, and scale of the proposed buildings [are] compatible with the character of the area?”

A rendering of the proposed Papilio project from Pace Development.

The difficulty of building for-sale housing

City Council and Planning Board have repeatedly called for developers to build more for-sale instead of for-rent units, but doing so is challenging and expensive. Colorado’s building defects law requires owners to sue a builder within two years of discovery of a construction issue. Colorado has one of the shortest limitation periods in the nation for filing defects claims. This encourages lawsuits because new owners worry they will lose their right to sue later.

Colorado developers have responded in a variety of ways. Many have shied away from building for-sale housing. Those who do build such must now purchase additional insurance coverage to protect themselves from litigation, which will cost $5,000,000 to $5,500,000 on Papilio’s 101 units, according to the project sponsor.

The defects law also encourages builders to go with more expensive framing. Wood frame construction in multi-unit buildings, while far cheaper, is more likely to warp over time, leading to defects that invite litigation by homeowners’ associations. Wood framing also allows more sound to travel between floors than other framing options, a common subject of litigation under the defects law.

Anticipating these issues, Pace Development now plans to build a steel and concrete frame at the Spruce Street project, instead of a wood frame as originally planned. While wood prices have come down from their 2020-21 pandemic-era highs, steel and concrete prices have not come down at the same rate. Ali Gidfar, President of Pace Development, estimates that building a concrete and steel frame at Spruce Street will increase the total project cost by as much as 30 percent.

How to get involved

E-mail: If you would like to see Planning Board approve the Spruce Street concept, we urge you to email them with words of encouragement.

Speak: You may also attend and/or speak at the meeting on Tuesday, November 1st. The meeting begins at 6pm and the Zoom link will be posted here 24 hours before the meeting begins. The Pace Development presentation will begin at about 6:30 PM, followed by questions from Board Members, and then the Public Hearing begins at about 7:00 or 7:15.

Learn more: You can also read more about the Spruce Street proposal and staff analysis of the key issues in the meeting packet.

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