If you are like a lot of people, your eyes may start to glaze over at the mere mention of “Opportunity Zones,” but stick with me as there is a fascinating story of apparent desperation, questionable motives, and possibly deceitful tactics in order to stem any growth in Boulder.
What are Opportunity Zones anyway?
Opportunity Zones were created by the 2017 federal tax reform package, the Tax Cuts and Jobs Act, as a way to incentivize investors to improve and revitalize communities across the country that have languished while the rest of the US enjoyed a terrific boom. Specifically, an Opportunity Zone is a census tract that Congress designated as eligible (read struggling) to receive private capital investments through “Opportunity Funds,” which allow investors to receive a deferral, reduction, or possibly even elimination of federal capital gains taxes, depending on how long they keep their money invested in a qualifying property and how much they improve it.
This is where the story gets interesting. Gov. Hickenlooper, seemingly with support from Boulder at the time, designated a Boulder census tract that runs from 28th to 55th Streets and from Iris to Arapahoe Avenue as an Opportunity Zone. While virtually every other municipality welcomed these designations as an opportunity to revitalize their struggling communities, the Boulder City Council placed a moratorium on its Opportunity Zone, blocking investment. And did I mention that this is a limited time offer?
If you are new to the area or have not been following local politics closely (and who could blame you?), it might seem surprising that Boulder would block such investments. However, as discussed in a previous column, a majority of the Boulder City Council appears to be beholden to Boulder’s CAVE people (Citizens Against Virtually Everything) who do not want growth of any kind. It seems they want things to be like it was “back then,” an apparently bygone era with fewer people, fewer businesses, etc. When viewed through this lens, their actions, though by definition counter productive, make sense.
And now for the master stroke of the CAVE people: make it look to the public like they are lifting the moratorium, when they are actually downzoning large parts of the city. Under the guise of lifting the Opportunity Zone moratorium and updating “use table standards,” the city will effectively downzone thousands of properties (not just in the Opportunity Zone), limiting office uses to 25 percent of floor area in the BR, BMS, and TB business zones, and limiting small office uses in residential zones. This will make any existing building in an affected business zone with more than 25 percent office space a “non-conforming use,” meaning that changes or expansions to this use would require city approval through a non-conforming use review. And what do you think the chances of getting approved would be?
This proposal by the city council runs counter to its stated positions on the environment, not to mention its own Boulder Valley Comprehensive Plan policies supporting creation of 15-minute walkable neighborhoods and other policies favoring mixed-use planning, smart growth, and pedestrian uses.
If you are so inclined, you can share your opinion with the city council at firstname.lastname@example.org, or if you are really motivated, you can attend the council’s public hearing at 6 p.m. on Sept. 3 at 1777 Broadway.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
Colorado ranked as the No. 5 most innovative state in the U.S. and the achievement comes with perks.
For example, innovation is a principal driver of U.S. economic growth, reports WalletHub, which points toward good news for Colorado’s economic outlook.
“In 2019, the U.S. will spend an estimated $581 billion on research and development — more than any other country in the world and about 25 percent of the world’s total — helping the nation rank No. 6 on the Global Innovation Index,” writes WalletHub in its recently released study of Least & Most Innovative States.
The study compared 50 states and the District of Columbia across 24 indicators of innovation-friendliness, ranging from share of STEM professionals to tech-company density.
The top five states and their corresponding scores out of 100 are:
No. 1 Massachusetts, 72.31
No. 2 Washington, 68.03
No. 3 District of Columbia, 67.47
No. 4 Maryland, 64.06
No. 5 Colorado, 63.35
“Certain states deserve more credit than others for America’s dominance in the tech era. These states continue to grow innovation through investments in education, research and business creation, especially in highly specialized industries,” notes WalletHub.
Colorado also ranked in the top 10 for six metrics, including tied for No. 1 in eighth-grade math and science performance, No. 5 for share of STEM professionals and share of technology companies, No. 6 for projected STEM-job demand, and No. 7 for venture capital funding per capita.
What makes Colorado so innovative?
WalletHub compared two dimensions across 24 metrics, “Human Capital” and “Innovation Environment.”
Human Capital includes:
- Share of STEM Professionals
- Share of Science & Engineering Graduates
- Projected STEM-Job Demand by 2020
- Scientific-Knowledge Output
- Eighth-Grade Math & Science Performance
- AP Exam Participation
Innovation Environment includes:
- Share of Technology Companies
- R&D Spending per Capita
- R&D Intensity
- Invention Patents per Capita
- IP Services Exports as a Share of All Services Exports
- Business Churn
- Jobs in New Companies
- Net Migration
- Entrepreneurial Activity
- Number of Startups “Accelerated” per Total Number of Start-ups
- Venture-Capital Funding per Capita
- Average Annual Federal Small-Business Funding per GDP
- Industry-Cluster Strength
- Open Roads & Skies Friendly Laws
- Average Internet Speed
- Share of Households with Internet Access
- Adoption of K–12 Computer Science Standards, Note that this metric was chosen because WalletHub considers most future innovation will be tech enabled.
For more information visit https://wallethub.com/edu/most-innovative-states/31890
Originally Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, April 16th, 2019
Sellers in the Front Range housing market enjoyed a blistering spring season. Everything seemed to be breaking in favor of sellers — brisk appreciation, multiple offers, favorable terms, and generally quick sales. However, several trends are emerging that could derail (or at least diminish) a seller’s summer home sale plans. Here are three of the biggest trends likely to affect our summer market:
1. Rising Interest Rates. For the past several years, economists have been predicting that interest rates will rise from their historic lows (in the 3.5 percent range for a 30-year conventional fixed mortgage). It turns out that the eggheads finally got it right. Compared to this time two years ago, interest rates are at least a percent higher — and with the Fed raising their Funds Rate again at their last meeting (and with more raises on the horizon), it seems that even higher rates are coming. It seems now is an appropriate time to refer back to my article discussing the 1 percent Equals 10 Percent Rule, which is a rule of thumb that for each 1 percent increase in mortgage rates, your buying power decreases about 10 percent. When you consider this with the fact that average home prices in Boulder County have risen about 21 percent in the past two years, it means that the same buyers from two years ago can now afford 31 percent less than they could have back then.
If you’re thinking, “but I’m a seller, it doesn’t affect me.” Think of it in these terms: that pool of buyers who would have bought your 2,000 square-foot, three-bedroom house two years ago? They can now only afford a 1,380 square-foot, two-bedroom condo. That is, the pool of buyers for your home is significantly smaller today.
2. The market hates uncertainty. To say this has been the least conventional presidency of the modern era is an understatement. Setting aside the human side of the geopolitical uncertainty caused by the Trump administration (alienating the G7, backing out of the UN Human Rights Council, separating families at the border, etc.), the president has decided to wage trade wars on multiple fronts. And while these acts might be appeasing his base, they are starting to have a negative effect on the economy. As of mid-June, the stock market has given back all of the gains it made in 2018, due in large part to the trade wars started with China and other countries. Speaking of China, its investments in the United States have dropped 92 percent this year, and less foreign cash means less money to invest in the housing market.
The effect of this is straightforward — when people feel uncertain and less wealthy (i.e., watching their world turn topsy-turvy and stock portfolios drop), they are less willing to take risks and make changes. And while home ownership might be the best investment you’ll make, it still represents a risk, especially if you’re a first time home buyer. Thus, the uncertainties in the economy will produce fewer buyers than a steadily rising market.
3. What the frac? The fracking industry in Colorado has flourished since a Colorado Supreme Court ruling in 2016 held that state laws trumped local bans and regulations limiting fracking. In Weld County alone, there are approximately 23,000 fracking wells, and fights are currently raging over applications to drill near highly populated parts of Boulder and Broomfield counties. Wells are being placed within 1,000 feet of schools, and this encroaching boom has generated growing health and safety related concerns, from a Colorado School of Public Health study reporting that living near fracking wells may increase the risk of cancer, to a home in Firestone that literally exploded from a leaky underground pipeline.
As the concerns grow, so will buyers’ reservations about buying homes near fracking, which could slow demand in these areas. Longmont took the extraordinary step of paying two oil and gas companies $3 million to leave town and prevent future drilling. To be sure, there are competing property rights at issue, but if compromises are not reached that make people feel safe, then homeowners could see their home values fall.
In sum, our market has been red hot this spring, but there are issues on the horizon that could dampen summer sales prospects. Some of these are likely beyond our direct control, but I encourage you to make your voice heard where you feel you can make a difference. Your home’s equity (and your conscience) will thank you.
Jay Kalinski is broker/owner of Re/Max of Boulder.