Affordable Housing: An Oxymoron?

If we truly see homelessness as a crisis, we would be instituting emergency rules that would temporarily breakdown bureaucratic barriers, overcome expensive rules and streamline the process.
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This past week, I sat in public meetings to negotiate an affordable housing development in a large urban community. The usual neighborhood responses were spoken into the microphone.

From fearful neighbors: "I am not against helping homeless people, just not in my neighborhood." "We have children in the area. This project is not appropriate here." "You will scare away my customers."

From advocates for the homeless: "It is not big enough. We need more housing." "Why can't you double the size?"

And implied from local political leaders: "Get both sides to acquiesce, and you have my vote."

I felt like King Solomon, trying to resolve how to split the baby in half. No development at all? Or a project so big that it would overwhelm the neighborhood?

Then a gentleman stepped up to the microphone, with a long list of questions clipped to the board in his hand. He went through his list, like he was a child sitting on Santa's lap describing his desires for a better neighborhood.

His last question, however, was poignant. "Why are we paying so much money per unit for this affordable housing?" The leaders at the daises looked at each other without a comment. He was basically saying the king has no clothes.

The average cost for an affordable housing unit in California can be anywhere from $250,000 to $400,000 per unit. The City of Berkeley recently supported a 54-unit affordable housing development at a cost of $388,000 per unit.

I know most people will say that the high price of real estate forces us to build expensive affordable housing units. Isn't "expensive" and "affordable" in the same sentence an oxymoron?

But in today's economy, that same affordable housing unit -- same size and same location -- would be sold at a market rate of $150,000 to $200,000. I stood next to the land where we are building and checked on Refin, an iPhone app that gives you the price of housing within the vicinity you are standing. The going rate for similar housing was cheaper.

So, why so expensive?

I ran into the same man the next day at a city Planning Commission meeting. He came right up to me, asking the same expensive question.

I told him I have been blogging about this for months.

I then when on to explain several reasons why affordable housing can be expensive:

Cost of land. You can't simply strong-arm a land owner to lower the price despite the difficulty of selling in this economy. If public funding is used to build housing, the land has to be purchased at the going rate of market values.
Cost of accessing public funding. No housing can be built and offered at affordable rent rates without public funding from local, state or federal funding sources. The application process is arduous, time-consuming, and political. The cost to put together a complicated housing development can be expensive. You almost need a PhD degree in finance, politics and housing to be successful in public funding.
Building and planning codes do not cater to affordable housing. A city in the Los Angeles region mandated that we provide two parking spaces per unit, even though we all knew that the building was designed for formerly homeless persons who would be lucky to have one car. That one requirement cost us more than 1 million dollars in building a garage larger than what was needed. Other codes mandate unit sizes that are larger than what could be used in affordable housing.
Prevailing wage ordinance requirements. Most states mandate that if a development receives public funding, the developer must pay their construction workers prevailing wages. These wages are higher than minimum wage and are geared toward insuring that low-income workers are paid high enough to prevent poverty. Builders believe this requirement increases construction costs by 10-50 percent.

After hearing a five minute dissertation on affordable housing costs, this gentleman realized that those of us in the affordable housing arena encounter the same frustrations he is asking about.

The real truth: the cost to house this country's homeless population could be cheaper.

If we truly see homelessness as a crisis, we would be instituting emergency rules that would temporarily breakdown bureaucratic barriers, overcome expensive rules and streamline the process.

I wanted to whisper to this community advocate to keep telling the king that he has no clothes. But in the world of building affordable housing, you have to play by the rules in order to win public funding. It is a catch 22.

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