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Fort Collins leaders are remodeling the city’s 25-year-old Land Use Code, and like any remodeling project, it has been messy work.

On paper, the Land Use Code is a detailed rulebook for developing land in Fort Collins, with exacting standards for lot size, parking, building design and thousands of other stipulations that depend on the land’s underlying zoning.

In practice, the code is the blueprint for Fort Collins’ housing future. But staff and most of council think it’s stuck in the past — a relic of the city’s vision for development in 1997, when the code was adopted.

Back then, the city’s median home price was less than $175,000 and neat rows of single-family homes sprung like cornstalks from broad swaths of undeveloped land outside the city’s core.

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Today, the median home price is more than $600,000 and the community has a dwindling stockpile of undeveloped land fit for housing. With its tendency toward larger, single-family homes, more restrictive building heights and density caps, the decades-old code is a hindrance to goals laid out in Fort Collins’ new city and housing plans. Those plans envision a community with more housing options for people who don’t make six figures, don’t need a yard and don’t want to depend on cars to get around.

The city has made regular changes to its Land Use Code over the last 25 years, but this will be the first comprehensive update. The impact of this undertaking will take years to be realized, staff say, but they see it as one of the most important tools the city has to make housing more accessible.

The update will culminate in a council vote this fall. This first phase of the revamp is focused on residential development, with a second phase focused on other types of development likely kicking off next year.

A draft of recommended Land Use Code changes will go public later this summer, but council reviewed the recommendations in a more general sense at a June 14 work session. The recommendations fall under four themes: reorganize, reillustrate and rewrite portions of the code to make it more user-friendly; remove barriers to a diverse range of housing types and infill development while retaining compatibility with the surrounding area; adjust requirements that diminish housing capacity; and create effective incentives for affordable housing.

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Population growth a point of disagreement

Fort Collins staff and council have been working on the Land Use Code update for more than a year, identifying perceived problems in the current code, crafting recommendations to address those issues and debating proposed changes. That’s where the “messy” part comes in — council debate is exposing fissures in perspective on housing and population growth.

While most council members have been supportive of the proposed changes, council member Kelly Ohlson has been a vocal critic of many aspects of the update. At a work session earlier this year, he called it some of the worst work he’s ever seen from staff.

“The problem of affordable housing was created by too fast and too much growth,” Ohlson said at the June 14 work session. “You’re not going to solve the problem of affordable housing with doubling down for more and faster development and growth. It simply has never worked anywhere that way. If you stabilize your population, then you can increase your housing stock.”

“Yes, people can come in,” Ohlson added later, noting that he moved to Fort Collins in the 1970s. “But it’s not our job to guarantee them housing at a particular price.” 

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Other council members quickly objected to the notion of limiting population growth to address housing issues. Mayor pro-tem Emily Francis said the whole country is grappling with a housing shortage that’s grown since the Great Recession brought home-building to a standstill.

“When we start to take away choice, which is what we ultimately do when we stop building housing, then we just focus inequities in our city,” she said. “And when we focus inequities … overall quality of life decreases for our residents and future residents. I think we’re doing a disservice to future generations by limiting (housing).”

Added Mayor Jeni Arndt, “We could easily stabilize the growth in Fort Collins by just not building houses and letting the housing price go above $600,000. But I don’t think that’s what our community wants. … I’ve always thought that we were more inclusive and pragmatic than that.”

The big question, council member Tricia Canonico said, is “who gets to live here? If you’re not from Fort Collins, are you not allowed to be here? Who do we close the doors to?”

The Land Use Code update is a highly technical project, replete with reams of jargon that can be confusing even for the staff who speak that language fluently. But as the council debate shows, the topic is profoundly personal.

It makes Fort Collins Housing Manager Meaghan Overton think about her own home, an aging townhouse she bought about three years ago. She wasn’t sure if it was the right time to buy a home, but the nature of Fort Collins’ housing market left little room for waffling. Looking back, she feels like she won the lottery.

“It shouldn’t feel like winning the lottery to be able to find an affordable place to live,” she said. “And I think that’s really what we’re trying to address, in part, with these code changes. Housing is super complicated, and it takes multiple solutions at multiple different levels. But if our regulations aren’t helping us get there, then they’re part of the problem.”

Why the city is so focused on capacity and cost to develop

Clocking in at about 207,000 words and 470 pages, Fort Collins’ Land Use Code is roughly the same length as “Moby Dick.”

Herman Melville’s magnum opus is by some measures easier to navigate: Ryan Schaefer, CEO of NAI Affinity, said he’s only witnessed a more difficult development process in Boulder and California.

Prolonged review and code complexities increase development-side costs and add to the final cost of homes built in Fort Collins, reducing the likelihood that developers will propose things like townhomes, duplexes and condos — which means fewer accessible options for would-be homebuyers. The problem is known as “the missing middle,” and it’s one of the major issues that staff and council hope to address through the code update.

Many proposals must go through Planning and Zoning Commission review rather than a more by-the-book staff review process, adding time, complexity and uncertainty to proposals for larger developments with more than 50 units as well as proposals for non-traditional housing types. Commission members might have different code interpretations or preferences than city staff, and developers say working with staff for months to make sure a project adheres to the code doesn’t guarantee the commission will approve it. 

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Even when a development nets more streamlined review, the city’s current code and processes can slow it down and add to the project cost.

For example, Landmark Homes’ Northfield development went through three years of back-and-forth with the city before winning approval. The process increased Landmark’s costs by millions of dollars, Landmark CEO Jason Sherrill said.

“Capital is expensive, debt is expensive, and the punishment that a builder faces because of delays is significant,” he said. “And the market will only pay so much for product. So you have these two headwinds that are converging on you that are really restricting your ability to perform.”

Sherill said there’s a “giant misconception” that developers and builders are making increasingly hefty profits as home costs climb. He said their profit margin is usually 2% to 4%, with every additional cost from materials to labor to prolonged review taking a cut. Sales prices aren’t increasing at the same rate as cost increases, leaving developers with less capital to reinvest in future projects, he said.

Some council members, particularly Ohlson, expressed skepticism during the June council work session that lowering the cost of development and increasing housing supply would influence home prices in the city.

Schaefer said there’s an inherent incentive for developers to reduce sale prices because higher prices discourage people from buying.

“In general, it’s very difficult for developers to make these new projects work anywhere within the region, and what we’re trying to do is get them occupied and full,” he said. “Home builders are better off to sell more of something, generally speaking, than they are to try to hold out for the last dollar and sell less, because it’s a volume and numbers game.”

There is evidence that increasing housing supply can moderate prices.

A 2018 article from New York University researchers reviewed dozens of studies and concluded that “the preponderance of the evidence shows that restricting supply increases housing prices and that adding supply would help to make housing more affordable.” A 2021 review by University of California Los Angeles researchers also found that market rate development tends to moderate rents nearby, though they cautioned that “housing production should still be prioritized in higher-resource communities where the risk of displacement and other potential harms is lower, and complementary policies such as tenant protections and direct public investments remain essential.”

So what are the recommendations?

Since most of us don’t have time for a novel-length analysis of Fort Collins’ Land Use Code, let’s take a panoramic look at the themes of the recommended changes. Each speaks to a problem in current code that staff identified with the help of a consultant and a working group of frequent code-users. For each theme, we’re including a few examples of recommendations and some snippets of council and builder/developer reaction.

1. Make the land use code more user-friendly

Why? Builders and developers told city staff the code was confusing and contained inconsistent information, increasing the chance for misunderstandings between staff and groups proposing development. Staff reviewing the code found similar issues. The illustrations in the code is inconsistent (some appear hand-drawn; others make it difficult to understand the information being conveyed), and it includes few graphics.

How?

  • Develop and use consistent graphic templates and improve illustrations so they’re easier to understand, including form-based illustrations that show how new development should fit in with existing development.
  • Reorganize the sections of the code so information is easier to find and the most commonly referenced information is found sooner.
  • Introduce a new “building types” section to consolidate information that’s currently scattered throughout the code.
  • Update definitions and rules of measurement to align with adopted plans and use a consistent definition of density.
  • Change name from “Land Use Code” to “Land Development Code,” to reflect what the code is used for.

Reaction: Council was on board with these changes, though Ohlson said he thought the proposed name change was “appalling” because land is used for more than just development.

2. Remove barriers to diverse housing types and infill development

Why? Staff found the current code lends itself to development of fewer, bigger (and therefore pricier) homes. Their goal is to enable more homes with a smaller footprint and other features that could lead to more accessible prices. And with less space available for new development, staff want to promote infill development such as accessory dwelling units (also known as carriage houses or granny flats) or redevelopment of existing homes, so long as they’re compatible with their surroundings.

How?

  • Allow accessory dwelling units on all residential lots (they’re currently restricted to certain zone districts and large lots).
  • Allow more housing types to be built in many zoning districts as “use by right,” which would mean going through more straightforward administrative review (staff reviews the proposal to ensure it meets the code, but there’s no P&Z hearing).
  • Include in the same section definitions for mixed-use residential structures, apartments, rowhouses, cottage courts, duplexes and other housing types, several of which the current code doesn’t address.
  • Consolidate some similar housing types (for example, the current code includes nine different types of “single-unit dwelling,” which could be consolidated to one).
  • Reduce the minimum lot size for a single-family home to be more compatible with the size of older homes that surround it, and reduce the maximum floor area to be consistent throughout the zoning district.

Reaction: Most of council was complimentary of the recommendations. Ohlson, though, argued that the extension of the administrative review process would essentially cut the public out of the development review process. Staff said the city would still hold neighborhood meetings, take comments from neighbors and allow them to appeal an approval. Several council members said they consider that sufficient involvement.

Council member Julie Pignataro said she sees the changes as an effort to carry out the corresponding goals in Fort Collins’ City Plan and Housing Strategic Plan, which encompassed feedback from a much larger group of residents than would show up to a Planning and Zoning Commission hearing.

“I think what we’re trying to do is get rid of NIMBYism as much as possible,” she said, referencing the “not in my backyard” mentality in which residents oppose development they don’t want in their neighborhood. “A lot of this community, as amazing as it is — people move here and they want to shut the door behind them. … What I’ve seen in my time on council is when things go through the Planning and Zoning Commission, it can often lead to a watering down. And then we lose out on a lot of housing stock.”

Countered Ohlson: “NIMBYism has improved every single project ever built since I’ve been here in Fort Collins.”

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3. Adjust requirements that diminish housing capacity

Why? Staff estimate Fort Collins needs another 30,000 homes by 2040 simply to keep up with projected population growth, and that’s to say nothing of affordability and housing choice. The allowances in the current code fall about 4,000 units short of the 30,000 mark.

Staff are pursuing more, smaller units within city limits, and particularly within public transit corridors, to keep up with demand and facilitate lower housing prices. The other goal of the density play is to reduce greenhouse gas emissions due to commuting. Transportation makes up about 25% of the community’s greenhouse gas emissions now, and it’s expected to increase to 45% by 2030 as the city’s electricity portfolio becomes cleaner.

Whether by increasing public transit access or making it easier for people to live where they work, reducing vehicle emissions would help the city progress in its goal to become carbon neutral by 2050 and would improve air quality. Smaller units also use less water and electricity.

How?

  • Increase maximum density in zones with the largest amount of developable land and zones that are in public transit corridors.
  • Increase maximum density in the low-density mixed use neighborhood zone (a common zone for residential development) from 9 units per acre to 12 units per acre.
  • Reduce parking requirements in multi-unit developments (from 1.5 spaces to 1 space for studios and one-bedrooms; from 1.75 spaces to 1.5 spaces for two-bedrooms). Each parking space amounts to 1,600 square feet of floor area in a four-story building, so the reduced parking requirements would increase the number of potential units per development by an estimated 25%.
  • Instead of placing limits on units per building or per acre, use form standards (illustrative requirements), building type definitions and maximum floor area (the square footage of one floor) to regulate building size and density.

Reaction: Most of council’s reaction to this theme came back to parking, which Arndt called a “chicken and egg thing.” Council wants to encourage people to use public transit rather than rely on cars, but Fort Collins’ public transportation system isn’t built up to the point of rendering cars unnecessary. On the other hand, taking steps to drive up public transit ridership — such as code provisions to encourage one-car households — could justify continued investment and be good for the environment.

Planning, Development and Transportation Director Caryn Champine said the city could use tools like on-street parking to manage overflow from new developments with parking shortages. The impacts could be temporary if Fort Collins makes progress on its goals to enhance walkability, introduce new bus rapid transit routes and increase frequency of major bus routes to every 15 or 30 minutes. The city’s public transit goals are part of a long-term funding conversation that could result in a ballot measure for new taxes or fees.

“That’s something we’ll have to ask ourselves,” Champine said. “Are we willing to take on some of that tension, where we may have some spillover parking into neighborhoods because of new projects and new parking requirements? Many communities are choosing to face that challenge because they have bigger goals that are important for the community.”

Ohlson and council member Susan Gutowsky said they doubt parking reductions would reduce people’s reliance on cars and think they would instead cause parking issues. They also said they doubt developers would pass any cost savings from reduced parking to consumers.

Other council members said they see the parking reductions as a way for the city to fully commit to its climate and transit goals.

“We really need to start making shifts in how we get around our city and use our spaces,” Francis said. “Yes, it takes 20, 30, 50 years to make those changes, but if we had started earlier, we would be there now.”

On the density issue, city staff maintain that many concerns that arise when you talk about density can be addressed through community design standards for traffic flow, building design and layout.

“It’s so much more about well-designed communities than it is about a specific number,” Overton said. “Do we really need (strict density limits) if the other regulations we have are addressing the real concerns about what a neighborhood feels like and how it functions, and how easy it is to move around?”

Most council members have told the Coloradoan in interviews that they’re open to targeted density increases to increase capacity. Ohlson said he thought some density increases in transit corridors could be acceptable, as long as the changes don’t “sacrifice neighborhoods or the quality of the development.”

4. Create effective incentives for affordable housing

Why? Affordable housing incentives in the current code are limited, and those that exist aren’t working. Staff are proposing new incentives based on market analysis that they predict will be more enticing to developers, which they hope will get the city closer to its goal of 10% deed-restricted affordable housing by 2040. Currently, 5% of housing stock in the city is affordable. Staff predict their recommendations would increase capacity for affordable housing by almost 200%, from about 1,600 to 4,700. They cautioned that developers would still have to choose to take advantage of the incentives.

How?

  • Increase the density, height and parking reduction bonuses in certain zones so the cost savings justify the cost of building and financing affordable units. This could include allowing buildings to be one or two stories taller in exchange for 10% affordable units.
  • Modify the income criteria (currently 80% of area median income) to incentivize affordable housing in the highest-demand income ranges — 60% AMI or less for rentals; 100% AMI or less for homes for sale.
  • Expand affordable housing incentives to most residential and mixed-use zones.
  • Increase deed restriction terms (the minimum period a unit must remain income-restricted) from 20 years to 50 or 60 years.

Reaction: Council had mostly positive feedback on these changes, though some members wondered if the city could go farther — either by increasing the deed restriction on affordable units to 99 years or “in perpetuity,” or by making the incentives a better value for developers.

Staff said they landed on 50 to 60 years because longer terms can have financing implications, particularly for rentals. But they said they could investigate a longer term for some homes for sale.

Jeff Schneider, president of Armstead Construction and a P&Z commission member, told the Coloradoan he hopes council will think about unintended consequences of changes to affordability requirements. If the requirements are too strict, they could discourage developers from using the incentives and be a detriment to the city’s affordable housing goals, he said.

“Lending institutes don’t like to see a lot of restrictions on projects, just because it causes more potential concerns about the project’s success in the long term,” he said. “Is it better to leave it the way it is to keep having projects come through, or change it because it feels good or sounds good, but then we don’t have any of the projects coming forward?”

Sherrill, the Landmark CEO, said he’d like to see the city reduce permit fees for developers who include affordable units in their projects. Between the cost of water, land, infrastructure and city review, he said, it’s hard to make the numbers work for affordable units even with the partnership of a developer focused on affordable housing.

The city “can’t control land, but they can control the process and timing, and they’ve got to participate in the permit fees,” Sherrill said. “And I know that deteriorates their own income as a community to pay for the machine that is a municipality, but they can’t expect the private community to be willing to deteriorate their own margins if the city’s not willing to.”

Developers and builders interviewed for this story praised the city’s overall direction with the Land Use Code update, saying they appreciate the focus on process improvement and housing choice.

Still, “the devil is in the details,” Schaefer said, and the city should be mindful of other factors that drive up the cost of developing: land cost, infrastructure and particularly the cost of water. The city will be able to address affordability more comprehensively if it examines other cost drivers in unison with the Land Use Code, he said.

Staff said that’s the plan. The code update encompasses several of the 26 strategies laid out in the Housing Strategic Plan, but they don’t see it as the beginning and end of Fort Collins’ housing strategy. Council is also in conversations about how to increase the city’s funding stream for affordable housing.

Sherrill emphasized the execution of the code changes will be crucial to their impact. The new code won’t have the desired effects if staff and other decision-makers disregard it or take an adversarial approach to developers, he said.

“It’s just so much more effective when the people on the other side of the table recognize that we’re not the enemies,” he said. “We’re both working together to solve the problem.”

Jacy Marmaduke covers government accountability for the Coloradoan. Follow her on Twitter @jacymarmaduke.