The Urban Land Institute Terwilliger Center for Housing and NHC member Enterprise Community Partners, Inc. released a report, “Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals,” earlier this month. The report focused on identifying affordable housing cost drivers and recommendations on how housing developers can reduce these costs while still building and maintaining quality housing. The report was released on January 16 after over a year of research and interviews with 200 experts from Chicago, Denver, Los Angeles, New York City and San Francisco. Researchers held roundtable discussions in these cities, with follow-up conversations taking place in Boston, Houston, Minneapolis, Pittsburgh and Seattle. These discussions formed the basis of the research, which examined how to overcome the many barriers associated with creating affordable rental units, such as financing, zoning, processing delays and code restrictions.
“Drivers of cost come at all points in the development process and are deeply intertwined, but the need for more affordable rentals compels us to take on the challenge of understanding the drivers and work to mitigate them,” Lynn Ross, executive director of the Terwilliger Center, said in a press release.
To combat these challenges, the report offers several recommendations for keeping affordable housing affordable, while maintaining quality for residents. Suggestions include: promoting cost-effectiveness through consolidation, coordination, and simplification; removing barriers to reducing construction costs and delays; supporting the development and dissemination of information and best practices and facilitating a more efficient deal assembly and development timeline.
NHC has explored the various factors that affect housing development costs, including location and building type. Our 2013 paper on Lifecycle Underwriting, cited in the ULI/Enterprise report, found that the combined cost of developing and maintaining affordable multifamily housing is between $40,000 and $70,000 lower per unit when existing properties are rehabilitated versus developing new properties. Our Affordable Homes Toolkit can be found at HousingPolicy.org and provides resources to learn more about what states can do to expand development opportunities, generate capital for affordable housing, and counteract some of the cost barriers discussed in “Bending the Cost Curve.”
We will also be participating in a Twitter chat discussing the report, hosted by Enterprise on Feb. 5 at 1pm. Follow @EnterpriseNow for more details and to participate!
The joint report will be used “to spark federal, state and local conversations that lead to policy change and financial innovation, ultimately stretching limited resources for affordable housing,” Enterprise’s Senior Vice President of Public Policy and external affairs, Ali Solis, said in a press release. “At the same time, we must maintain high quality, green standards so that affordable homes can be sustainable for the long haul. That is our challenge as an industry.”