| Exploring The Cost of Affordable Housing|
|What does it cost to build affordable housing? It's a question that The Voice of San Diego (TVSD) reporters hoped to answer as they dug into construction and other expenses of affordable housing developments in their area. This summer, TVSD published the surprising results on its web site. The report brings up important issues and information regarding housing development costs and the importance of keeping those costs under control.|
The Voice of San Diego piece, which was first published in July, found that affordable housing units in San Diego County cost significantly more to build than market-rate housing. At the extreme end, the five most expensive affordable housing projects cost between $422,000 and $510,000 per unit - and some of those units were studio apartments of less than 500 square feet. In comparison, market-rate units in the city are being developed for about half that price. The disparity is significant, and as TVSD dug further into the information, they found some of the causes.
TVSD discovered that the state's current method of scoring development proposals encourages the addition of amenities and green technology but does not take into account the per-unit cost of the project. As a result, projects are intentionally designed to include things like rooftop fire pits and biodegradable carpet, because those items add points and increase the chances that a project will be funded; but they also add to the overall price tag. In addition, affordable housing projects are required to paid construction workers "prevailing wages," which means unskilled workers who would normally be paid $14 or $15 per hour to sweep the floor or dig holes are instead paid between $35 and $44 per hour.
The development of affordable housing units is a vital part of this nation's housing market. However, the unusually high costs discovered in San Diego could make approval of future developments across the country more difficult. Developers often face uphill battles already because of persistent misconceptions regarding low-income housing and its residents. Advocates work hard to counteract beliefs that low-income developments drive down property values or increase the crime rate. But attitudes are slow to change.
The TVSD investigation led the California Tax Credit Allocation Committee (CTCAC) to conduct a series of public hearings across the state regarding affordable housing construction, its costs and the drivers of those costs. As a result, CTCAC has promised to conduct an investigation of its own.
Given the nation's current economic climate, the CTCAC's reevaluation of its allocation progress is timely. If reforms aren't made, and costs reduced, some affordable housing advocates fear that the tax credit system could - as a whole - be targeted for significant budget reductions or outright elimination. And in our current economic climate, reductions in affordable housing development to put thousands of families at risk of becoming homeless.