Tackling the question of how to lower the cost of developing long-term affordable rental housing has important financial and policy implications. As federal subsidy sources come under threat, either specifically targeted as being wasteful of taxpayer dollars or as part of a general retrenchment in support for tax expenditures or tax code simplification, identifying opportunities to lower the cost of providing affordable homes is increasingly necessary.
Enterprise Community Partners and the ULI Terwilliger Center for Housing have recently launched a new joint research project to examine the various factors that impact the cost of affordable rental housing projects and develop policy recommendations for developers, financiers, and policymakers. The project, titled Lowering the Cost of Developing and Preserving Affordable Rental Housing, will result in actionable recommendations for cost reductions that can be shared with practitioners and policymakers and move towards a more efficient and lower cost affordable rental housing delivery system.
The project team recently concluded a series of roundtable discussions hosted in Denver, San Francisco, Chicago, New York City, and Los Angeles. The roundtable discussions allowed the project team to engage with over 100 key stakeholders in the five selected cities to identify several elements that are common to driving costs in all markets and other items that are local or regional challenges. Working within a framework of understanding and detailing the process of moving from development (or acquisition) concept to occupancy, we have been able to probe into the following aspects of cost:
- The impact of site availability/selection, unit size and project density on costs
- Improving and realigning incentives in funding programs
- The role that federal, state and local regulations play in driving costs
- The role that complex deal structures play in increasing costs
- The impact of local/regional market conditions on costs
The next phase of work will involve the development of case studies and the analysis of project level data to further explore this set of issues. The final report will be delivered at ULI’s Fall Meeting in Chicago, Illinois in November 2013.