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Affordable Housing Cost Study: Analysis of the Factors that Influence the Cost of Building Multi
Name: Affordable Housing Cost Study: Analysis of the Factors that Influence the Cost of Building Multi
Pages: 73
Year: 2014
Language: English
File Size: 1.16 MB
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October 6, 2014 Page 2 Contents ACKNOWLEDGEMENTS .............................................................................................. 4 EyECUTIVE SUMMARY ............................................................................................... 5 INTRODUCTION .......................................................................................................... 8 The Need for Affordable Housing ................................................................................... 9 What is Affordable Housing .......................................................................................... 9 SOCIAL AND ECONOMIC & & d ^ K & & & K Z > , K h ^ / E ' ...................................... 9 Education ....................................................................................................................... 10 Impact on dropping out ............................................................................................... 12 Impact on Homeless Children ...................................................................................... 13 Effects of Substandard Housing o v ] } v o W ( } u v ..................................... 13 Health ............................................................................................................................ 13 Limiting E posure to En ironmental Hazards .............................................................. 13 Access to Affordable Housing Can Impro e Health Outcomes .................................... 14 Access to Affordable Housing Can Free up Financial Resou ................................. 14 Economics ..................................................................................................................... 15 Impact on the Econ } u } ( } v ] } v v ] ............................................... 15 Impact on Regional Competiti eness ........................................................................... 16 Impact on Property Values ........................................................................................... 17 Other Benefits of Affordable Housing ........................................................................... 17 Impact on Social Ser ice Costs ..................................................................................... 17 En ironmental Impacts ................................................................................................ 18 In Sum............................................................................................................................ 19 STUDY METHODOLOGY ............................................................................................. 19 Fine Print ...................................................................................................................... 20 Data Sources .................................................................................................................. 21 TCAC Data ..................................................................................................................... 21 De eloper Sur eys ........................................................................................................ 22 Public Sources .............................................................................................................. 22 The Final Data Set ......................................................................................................... 23 Cost Measu ............................................................................................................... 23


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October 6, 2014 Page 3 RESULTS .................................................................................................................... 24 Components of De elopment Cost ............................................................................... 24 O er iew of the Affordable Project Data ...................................................................... 25 Costs Ha e Changed O er Time ................................................................................... 26 Location, Location, Location......................................................................................... 29 Sorting It All Out A Statistical Analysis of the Factors that Dri e De elopment Costs . 32 Project Type and Unit Size ............................................................................................ 33 Local Factors ................................................................................................................. 33 De eloper Characteristics ............................................................................................ 34 Ec } v } u ] } ( ^ o ....................................................................................................... 35 Building Yuality and Durability .................................................................................... 36 Determining Impact of Construction Wages on Affordable Housing Costs ................. 37 TCAC v > W } o ] ] .............................................................................................. 37 Other Factors that May Influence Costs........................................................................ 39 Land Costs ..................................................................................................................... 41 COMPARISON TO MARKET Z d W Z K : d ^ ................................................................ 45 CONCLUSION ............................................................................................................ 45 Key Findings ................................................................................................................... 46 BIBLIOGRAPHY .......................................................................................................... 49 APPENDIy 1 DATA DE ^ Z / W d / K E ^ E ^ h D D Z z ^ d d / ^ d / ^ .................................. 51 APPENDIy 2 COMPARIS K E K & ^ D W > d K W K W h > d / K E ........................................... 58 APPENDIy 3 DEVELOPE Z ^ h Z s z / E ^ d Z h D E d E Z ^ W K E ^ ^ ............................. 60 Affordable Housing De eloper Sur ey Instrument ....................................................... 60 Affordable Housing o } ^ ^ u u } ( h o Z } v ........................ 64 APPENDIy 4 DETAILED Z ' Z ^ ^ / K E Z ^ h > d ^ ............................................................ 68 APPENDIy 5 COMPARI ^ K E d K K E ^ d Z h d / K E K ^ d ^ d / D d ^ ............................. 70 APPENDIy 6 PROJECT s / ^ K Z z K D D / d d D D Z ^ .......................................... 71 APPENDIy 7 ABOUT TH > h ^ < z K E ^ h > d / E ' ' Z K h W .......................................... 72


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October 6, 2014 Page 4 Acknowledgements T Z } Z ( } } ( o ] ( } v ] P v ] ] Z } v ] ] o ] ( } ( ( } o Z } ] v P Z o ] ( } v ] ] o o } ] } v } u u ] ~ d U Z o ] ( } v ] o ] u ] o o } ] } v } u u ] ~ > U Z u v } ( Z } ] v P v } u u v ] o } u v ~ , U v Z o ] ( } v ] Z } ] v P ( ] v v P v ~ > , & } v v o ] } v D Z E u v U ^ Z v o } U v ^ v t } } } ( Z o l } v o ] v P P } X v ] } P } } v ] ] v P } ( ( ( } o Z } ] v P o } U } v } Z P ] Z ( ( } } ( Z u X o ] } ( ] } ' } u u ] } ] ] v v ] X Cynthia Kroll, v ] } P ] } v o } v } u ] v ] ] } ( } ( ( Z h X X l o Z v ( } Z o v h v } v } u ] U v Z } l Z v U ^ v ] } Z Z } ] Z , ^ Z } } o } ( ] v h X X l o U v P P Z v P P v ] } } ] ] } ( Z Z } v ] v ] v Z } X v Z ] v Z } l } ] v u } Z o ( o P P ] } v ( } } ] u } Z } v v o ] X We also recei ed assistance from de elopers of affordable and market rate housing who offered P P ] } v U ] v ( } u ] } v U v t u } ] u } v o t P } } u o } v } ] ] o ] v ( } u ] } v } Z } i Z o } X In addition, we are grateful to the staff of the state s housing agencies, who pro ided access to state U v ] } v U Z o ] v ] ( u ] ] v P } ] v } u o ] v ( } u ] } v v } Z ] Z o } u l Z Z ] } i } o X


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October 6, 2014 Page 5 EXECUTIVE SUMMARY California v P } u } v P Z Z ] P Z ] v Z v ] } v X & } o } income Z } Z } o U Z ] P Z Z } ] v P } v o } } o u Z ( v u } Z ] v ( ] Z Z ] o v o ] ( } } o ] ] v v Z o Z v Z } ] v P X To reduce Z } o u } ] ] Z Z ] P Z Z } ] v P } U ( o U v o } o P } v u v Z v } ( o ] } P u ] v v } v Z o } ( v o Z } ] v P ( ( } o } o } income California households. ] v ] v P Z o } ( ( ( } o Z } ] v P U Z P P Z Z } o ] ] Z Z o } ] u } Z ] } v o ] v u v v Z o Z } ( ] v Z ] o ] v ] v P } v } u ] ] ] v ] v P } ] o ] } X These benefits notwithstanding, costs for de eloping affordable housing ha e been a subject of interest u } v P } o ] u l v Z o ] o ] l X / v } } v v Z ( } Z ] Z } } ( o } ] v P ( ( } o u o ] family rental housing in California, the state s four housing agencies Z o ] ( } v ] d ] o o } ] } v } u u ] ~ d U Z o ] ( } v ] > ] u ] o o } ] } v } u u ] ~ > U Z u v } ( , } ] v P v } u u v ] o } u v ~ , U v Z o ] ( } v ] , } ] v P & ] v v P v ~ o , & t i } ] v } P Z } } u u ] ] } v } ( Z ] ] u } v } ] X Working o er the course of a year, the study team collected and analyzed data from hundreds of multi family projects completed in California during the past decade U o ] v P ] v Z o P v u } } u Z v ] } ( ] l ] v u o ( } Z X d Z ( ( } } ( Z u P ] Z o } ( Z v P P v ] o o v ] } } u u ] U } u ] } ( ( ( } o Z } ] v P o } U } U v } Z i u X d Z ( ( } o Z } ] v P o } u v v o v ] } ( } i Z v Z v } ] Z } ] v P } ] } ( ] v U ] v o ] v P ] v P o ] v ] ] o U o P ( u ] o ] U v v ] } X d Z ] ] ] v } ] Z v ] v P U Z v o ] u o } ] o ] ] o Z v ] } ] v ] ( o ( } Z } o ] Z ] ] v P } o } ] v P Z } } ( o } ] v P ( ( } o Z } ] v P ] v o ] ( } v ] X The following are Z l ( ] v ] v P ( } u Z ] v o ] W Local factors ha e an impact on costs. Specifically, projects with more community opposition, ] P v ] ( ] v Z v P ] u } o } o ] P v re iew re u ] u v U } Z ] ( v ] v P ( } u o } u v P v } u } U ] v P v U v U v v U ] o U } Z } v ] U } v P X Certain types of p l ] v P v ] P v ] ( ] v o } o } u v } X ^ ] ( ] o o U } i ] Z } ] u } v v l ] v P } v u } U } v P U o ] } } Z o } u v ] Z } Z ] } ( l ] v P X


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October 6, 2014 Page 6 Choices made by de elopers matter. Some de elopers are able to build less e pensi e projects Z v } Z X > P o } v o } Z u o } P v o } v } Z o o ] o } i o v ] o o ] } } u o o } Z } v ] X , } U o ( } } ] } v Z o ] ] o ] } ( Z ] ( ] v ] v P X ] o ] v P o ] v ] o ] } } X ] o ] v P Z u } o U u } v P ( ( ] ] v U } ] o } Z ] P Z v } ( o ] } u } } o } X ^ ] ( ] o o U ( } Z 9 ] v ] v } o ] u ~ X P X U ( } u ^ o } _ } ^ u ] u _ } ] v } v U } v P X Affordable housing is characterized by economies of scale, with larger projects costing less per v ] Z v u o o } i X } ] v P } } o U ( } Z v ] v ] v Z v u } ( v ] U Z } v ] o ] v X v Different } ( v ] Z ] ( ( v o } u v } X t Z ] o ] u } ] } U o P v ] U Z Z } ] Z } u } } } u U o o } u } v ] } o } X ^ u o o v ] U Z ] v P o } } u } v } ^ ^ Z K _ v ] U } o v ] u } ( } } } o } X ^ ] ( ] o o U } P ] } v v o ] P P Z ^ Z K } ] u o v o v ] v ] } } v o ] } o P ( u ] o v ] U Z ] o v ] ( } v ] } } v o v ] v ] o ] } o P ( u ] o v ] X Land costs ] v ( o v Z } } ( o } ] v P ( ( } o Z } ] v P v Z v Z o v } Z u o o ( } u Z o } u v } u ] o ( X d Z ] ] ] u ] o Z ] v ] o ( ( Z } ( } i Z ] ] o U o } u } o ] l o } ] o o o Z ] v o v P } v } } ] u l ] v P } v o v Z ] u } v ] } Z X From these empirical findings some con o ] } v v v X & ] U Z ( } ] v ( o v ] v P } u o ] ( U ] Z v } ] v P o ( } o ] v ] v P o o } v u } } ( Z } } ( o } ] v P ( ( } o Z } ] v P X d Z ( } U v } Z } o } ] v P } u o } } l } u o ] o ( } U Z Z v ( } ] v P } v ] v P o ] X E U Z } ( Z } ] v Z o } u v } t o } o } u u v ] ] U o } U v ( o P v ] t o } o ] v ] v ( o v ] v P Z } u Z } i ] o o } } o } X Taken as a whole U Z } U Z ] v o ] P P Z o } u v } } o o } ( } ( ( } o Z } ] v P ] v o ] ( } v ] U v Z ( o o ] v v ] ] v Z ] } } } Z ( v ] v P } } o o } P } v ] X d Z } ( ( U Z } U } ] u o o } ] v P o } u v } X & } u o U Z P P Z ] o ] v P } i } o } o ] } ] o ] v } o } o X d Z v o ] o } P P Z } u Z v P } o o } } ] Z } ] v P } i ] o ] } o ] U Z v } P ] v P o P } i Z Z ] } ] o o Z } o v ] } o } o ] } u o o } i X ^ ] u ] o o U } o P P Z } u o } ] o } i o v ] o Z v } Z v ( } v } o o ] v P ( } ] o ] v P U o ] U v o } ] } v X / ( Z Z v ]


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October 6, 2014 Page 8 INTRODUCTION In California, h ] P Z Z } ] v P } v ] u } v } v } u ] v o ] } o ] ] X t Z Z Z i ] Z } u } v P P o ] v P } u l u } P P u v } v ] v P o family Z } u } v ( ] v P Z } } ( ] v P o P } ] } v } ( Z ] ] v } u ( } v U Z ] P Z Z } ] v P } } ] P Z ( u ] o P v Z ] ] } v } Z } o ] v } l X & } o } income ] v } ( Z U Z } U Z ] P Z Z } ] v P } u ] P P } o u U Z ] v P } u ( u ] o ] ] v } v Z o Z v Z } ] v P } ] v P ( v u } Z ] Z v v u ] v Z ] o v ] o v o ] } ( ( ] ] o o ] l Z } P Z } o } u v } ( Z o ] v P Z v } v o } X / v ] } ( Z ( ( } U Z Z ] P Z } } ( o } ] v P Z } ] v P u ] v v ] u } v } v v X To v v Z ( } Z ] Z } } ( o } ] v P u o ] family v o Z } ] v P ] v o ] ( } v ] U Z v P P v ] Z o ] ( } v ] d ] o o } ] } v } u u ] ~ d U Z o ] ( } v ] > ] u ] o o } ] } v } u u ] ~ > U Z u v } ( , } ] v P v } u u v ] o } u v ~ , U v Z o ] ( } v ] , } ] v P & ] v v P v ~ o , & t i } ] v ( } } } u u ] ] } v } ( Z ] ] u } v } ] X Working o er the course of a year, the study team collected and analyzed data ( } u u } Z v ( } Z v ( ( } o u o ] family } i } u o ] v o ] ( } v ] ] v P Z X d Z } i v Z v ] U v ] v o ] } ( ] o ] v P U ( } u o P ( u ] o v ] ] Z Z } u } } } u } ^ Z K ~ ] v P o } } u } v } v ] ] v P } ( ] v P o } } u X ( } Z } i } o o ( } u Z d o ] o o ] v ( } u ] } v ( } u ] Z ] v ] ] } v U v ( o P } v u v o P v ] X In addition to the empirical analysis of u o ] family Z } ] v P o } u v } ] v o ] ( } v ] U Z ] o } u ] v Z } ] o v } v } u ] ] u } ( ( ( } o Z } ] v P } v v Z ] v ] v ( ] ( } u Z ] v u v ] v ] ] ( ( } o Z } ] v P X The study team Z o } ( Z v P P v ] o o v ] } } u u ] U } u ] } ( ( ( } o Z } ] v P o } U ( v U } v o v U v } Z i u X K v o ] ] v ( } u Z ] v ] P Z ( } u Z ] P } U o o Z } } P Z ] } ( Z o ] } v ( ( } o Z } ] v P X d Z ] } v Z o } ( Z ] long research effort.


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October 6, 2014 Page 9 The Need for Affordable Housing According to the national Center f } , } ] v P W } o ] U u } Z v } ( } l ] v P v v ] } v o o v Z o ( } u } } ( Z ] ] v } u } v Z } ] v P v X1 / v o ] ( } v ] U v } ( } l ] v P v v Z o ( } u } } ( Z ] ] v } u } v Z } ] v P U } ] v P } Z u } v } ( } u Z v ( } , } ] v P W } o ] X u } v P o o U o ] ( } v ] Z Z Z ] P Z ( ] } v } ( } l ] v P v Z } v Z o ( } u } } ( Z ] ] v } u } v Z } ] v P X d Z v ( } , } ] v P W } o ] } Z Z ] Z } ] v P v } v ] v P Z ^ P ] } v _ ] v } u ( o o v Z } ] v P v ] v X2 In addition to the financial stress Z Z ] P Z Z } ] v P } v o } v Z } Z } o U Z P P Z u Z } ] v P v v u ] v ] } v o ] v u v v } ] ] Z } } Z o Z } } u v } Z } ] o Z } o } P ] X3 In response to these (and other) concerns, federal, state and local go ernments ha e de eloped } P u } } ] ( ( } o Z } ] v P ( } o } income renters. Th ( o P } v u v ] v P } Z Z o } income v v Z o u l v o u v } ] o v o } v ~ } ] ] v P ( v ] v P ~ ] u ] o ] v Z ( } u } ( ] } ] v } ] } v } ( ( ( } o Z } ] v P X4 What is Affordable Housing? In this report, the term affordable housing" refers to housing units de eloped in whole or in part with o ] ] ] v ( } o } income ] v X & } } } ( ] v P Z } ] o v } v } u ] ( ( } ( ( ( } o Z } ] v P U Z u ] o } } ] Z } ] v P } ] v ] Z } Z Z } ( ( v o ] v } o } income Z } Z } o X SOCIAL AND ECONOMIC EFFECTS OF AFFORDABLE HOUSING Each Z v o } o } u u v ] ] ] v o ] ( } v ] ] v v ] o } } Z o ] v ( ] v ( ( } o Z } ] v P X5 Z } Z P ] v v ( } Z ] ] v u v M 1 Viveiros, Janet and Maya Brennan +RXVLQJ IMQGV MSH 2013B FHQPHU IRU +RXVLQJ 3ROL B 2 As measured by the Center for Housing Policy for the period 2008 to 2011. 3 6HH Social and Economic Effects of Affordable Housing OMPHU LQ POLV UHSRUP IRU M PRUH Rmpete explanation of these effects. 4 Federal funding for other programs such as the HOME and CDBG programs has been declining in recent years. 5 These investments come in the form of foregone tax revenues from tax credit financed projects and tax exempt bonds as well as direct expenditures from local property taxes and other sources.


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