Study: Parking, Local Opposition Increase Affordable Housing Costs

The California Department of Housing and Community Development, the California Tax Credit Allocation Committee, the California Housing Finance Agency, and the California Debt Limit Allocation Committee recently released a year-long cost study measuring the factors that influence the cost of building affordable rental housing in California. The state and federal Low Income Housing Tax Credit Program — which contributed $160 million to 113 projects around the state last year — is one of the largest pools of money available to fund affordable housing in California. The study was designed to find ways to make it more efficient.

The state agencies found that the average apartment built with low-income housing tax credits in California from 2001 through 2011 cost $288,000, with a variety of factors contributing to push that up. It also concluded that the factors influencing costs are multifaceted, with no single factor explaining all or even most of the cost of developing affordable housing. As such, the authors conclude that any approach to lowering costs must look across multiple factors, rather than focusing on a single issue.

According to the report, community opposition, design changes, and parking are among the factors driving up the cost of building affordable housing in California. Projects that faced significant community opposition saw their costs go up by 5 percent, the study estimated. Changes mandated by local design review added an average of 7 percent. And underground or podium parking added 6 percent to the cost of projects. Projects that received funding from local redevelopment agencies also tended to cost more.

Higher-quality construction and energy-efficiency requirements also added to the cost, the study found, though it noted that in some cases those factors would save money over time. Larger projects, those built by larger developers, and apartments for senior citizens tended to have lower costs per unit.