Monday, March 17, 2008

A Letter to City Council of Boulder

by Osman Parvez
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City Council will hold a public hearing tomorrow on new restrictions to house sizes. I've encouraged residents of Boulder to voice their concerns by writing an email to City Council and by attending tomorrow's meeting. If you'd like to let city council know your thoughts on the matter, send them an email at council@bouldercolorado.gov.

Here is my email to City Council:
Dear City Council Members,

My name is Osman Parvez and I live in Boulder. Together with my wife, I run a small, independent real estate brokerage. We own a small home in South Boulder and it's been our privilege to help many other families buy and sell homes in our City. In the process we've gotten to know our clients' personal situations and their intentions. Many have become our friends.

From serving our clients and friends, we've learned that when most people purchase a home it represents the largest component of their savings. Their financial future is closely tied to the value of their real estate. We've learned that homeowners passionately invest time, energy, and in many cases years of their life in improving their property. Most have an eye on what they may do in the future before they acquire the property. A young family may plan to expand the property to accommodate a growing family. Some have parents who are aging and who will one day need additional space to take care of them.

When you limit what people can do with their property to protect "neighborhood character", keep the impact to these people in mind.

A few points:

1. Current zoning works. We already have limits that include setbacks, solar shadows, environmental regulations, and more. With a few exceptions, these limits have been working effectively in the vast majority of renovations. In my conversations with our neighbors and with our clients, most recognize that renovations add value to their neighborhood. For prospective buyers, a newly refurbished home on their street is almost always preferred to the dilapidated 1950's style ranch. Only a tiny fraction of renovated homes are "over the top," an opinion expressed by a vocal minority.

2. New FAR limits are not fair because they will disproportionately rob Boulder's less well-off residents of the economic potential of their property. This is simple supply and demand. When the supply of larger homes is constrained because they can no longer be built, benefits accrue to those who currently own these properties. The loss of potential for smaller property owners will be felt disproportionately. Large property owners are typically well-off and this hidden benefit comes at the expense of those less fortunate. In a progressive City like Boulder, this is a disgrace. Even if a Boulder home owner plans to undertake no renovations, the potential of their property for that expansion represents a loss of real economic value.

3. This is no emergency. If passed as an "emergency" ordinance, new FAR limits will immediately derail plans that Boulder residents have been making for their homes. This represents a loss of time and money for people. The pattern of development in Boulder has not changed markedly in the past 5 years and thus there is no emergency to respond to. I have a friend who has invested $10,000 in architectural fees planning renovations for their Boulder home. Dropping the FAR ratio will effectively terminate the project because his property is already maxed out at 0.4. An "emergency" ordinance may save the planning department from getting a flood of applications but it does not give the population an adequate period to adjust. For a change this major, that doesn't seem right to me. I certainly don't want to overload our government employees with permit applications but what about the rest of us? Please include an adequate period to gather input from residents.

4. While it may feel morally acceptable to impinge on a developer's plans, most of the so called "pop and scrapes" have been undertaken by homeowners and were not speculative projects by profiteers. New house size limits will impinge on the residents of Boulder more than on commercial developers.

5. This is not a good time for a big change in allowable redevelopment. If the potential for smaller lots is constrained, this will reduce their market value and destabilize the lower end of Boulder's real estate market. At time when home values in many parts of the country are collapsing, this is a potentially reckless course of action. As I've shown in many analyzes on my real estate blog (http://boulderrealty.blogspot.com), Boulder County has been largely spared the collapse of the housing bubble. Boulder County has the lowest rate of foreclosures of neighboring Counties and within Boulder County, foreclosures are concentrated in Longmont.

This is good news. So far, we've been spared the housing downturn and may yet sail through the coming (or current) economic recession. If you take action that drops the bottom out of house prices, people may lose what equity they have in their homes. Many have very little equity to begin with. As people walk away from homes that have lost their value, the City of Boulder's foreclosure rate will rise, thus sparking a downward spiral of negative side effects. Smaller properties will be worth less decreasing the City's tax revenue. Are you sure you're ready to take that risk?

In summary, please realize that the public has not had an adequate time to respond to your initiative. As I walked my neighborhood talking to people this past weekend, most had not heard that City Council was planning a house size reduction. Few have considered the long term ramifications of a dramatic restriction on house sizes. Please, be extremely cautious when passing an "emergency" ordinance to limit house sizes. The impacts could be enormous.

Kind Regards,
Osman Parvez
ph: 303.746.6896

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