A housing project near Boulder’s Eben G. Fine Park that once promised an unusually high share of on-site affordable homes is in limbo after the developer said the plan is no longer financially viable.
Construction at 90 Arapahoe Ave., also known as the Saddle Creek development, has been paused for more than a year. One building stands partially framed, while the landmarked former Silver Saddle Motel is boarded up.
The developer, Canyon Creek Villas LLC, is requesting an amendment to an annexation agreement first approved in 2017 to reduce the percentage of on-site affordable housing units from 45% to 24%. The plan includes 46 attached, for-sale residential units, such as duplexes and triplexes. The change, approved last week by the city’s Planning Board, still requires approval from the Boulder City Council. A decision is expected as soon as next month.
The setback underscores how difficult it is to build affordable housing in Boulder, where high costs collide with layers of added challenges. In this case, landmarking the old Silver Saddle Motel, unexpected site work and escalating construction expenses all pushed the project off track.
The original commitment would have far exceeded Boulder’s baseline requirement that 25% of units be permanently affordable or that developers instead pay “cash-in-lieu” into the city’s Affordable Housing Fund, money the city uses to create affordable housing elsewhere. The proposed units were intended to be for-sale homes for income-qualified buyers earning between 60% and 120% of the area median income, a range that represents one of the biggest gaps in Boulder’s housing supply, with few options for middle-income residents.
Curtis McDonald, president of Canyon Creek Villas, which recently filed for bankruptcy, said rising construction costs, unexpected site challenges and the financial burden of preserving a historic structure have made the original plan no longer feasible.
“It was optimistically possible to make it work,” McDonald told the Planning Board on July 22. “It’s just the way the costs have escalated and what it takes to build these things. It’s humbling.”
The project faced several challenges: the cost of rockfall protection quadrupled in price, the removal of over 2,000 tons of boulders, redesigning a ditch with a custom-poured culvert and relocating an Xcel Energy utility line that was mistakenly placed through the construction site, according to McDonald. Additionally, cost overruns related to renovating the historic motel amounted to about $1.3 million, in part because the original siding was rotted and the foundation needed to be rebuilt from underneath.
As part of the original annexation deal, the developer agreed to landmark the motel, a 1920s-era rustic motor lodge, according to a city staff memo. What seemed to some like a preservation win at the time has since become one of the project’s biggest hurdles. McDonald said it will cost more per square foot to renovate the landmarked building than to build the new market-rate homes.
Today, the original structure is barely recognizable, with its roof tar paper peeling and the exterior clad in plywood. Some Planning Board members questioned whether the stripped-down structure still complies with historic landmark rules and suggested it could have been effectively demolished.
As an example of how expensive the project has become, McDonald said that for one affordable duplex, the cost of a building permit was about $89,000, adding about $32 per square foot to the overall cost of construction.
The Planning Board recommended that city council approve the reduced affordable housing requirement and remove the landmark status, citing concerns that maintaining the structure would be a burden on future low- to moderate-income homeowners who may someday live there.
While board members said they were disappointed over the reduced affordability, they acknowledged the realities of building affordable housing in Boulder and the constraints of building on the partially developed site.
“It is not our duty as a planning board to preserve profitability for developers,” board member Laura Kaplan said. “However, the city does have an interest in seeing this property be developed and not remain a largely unfinished construction site.”
Kurt Nordback was the only Planning Board member who voted against the annexation amendment to reduce the number of affordable housing units, suggesting it could encourage developers to make unrealistic promises in future annexation agreements just to advance their projects.
“My concern is that if we modify the annexation terms so significantly that it will provide an incentive for future developers to be very optimistic in making their annexation agreements, knowing that a precedent has been set,” Nordback said.
A 2023 study commissioned by the city found that even Boulder’s baseline 25% on-site affordability requirement is likely financially infeasible for most on-site, for-sale residential developments. Many developers instead pay cash-in-lieu to the city’s Affordable Housing Fund. What made the Saddle Creek development unusually bold was that nearly half the affordable units would be built on site and for sale.
In March, Canyon Creek Villas LLC filed for Chapter 11 bankruptcy, according to court filings. McDonald declined to comment further on the project until after the Boulder City Council discusses the annexation agreement.
John Herrick is a reporter for The Boulder Reporting Lab. His work frequently appears on-air at KUNC 91.5 FM and online at KUNC.org. Contact John at John@boulderreportinglab.org.