Q&A
Explanation of cost difference between homeowner and rental units
2:12:57
·
101 sec
Council Member Sanchez asks for clarification on why developing homeowner units costs twice as much as rental units. HPD officials explain the factors contributing to this cost difference, including funding sources and affordability considerations.
- Affordable rental housing has access to funding sources not available for homeownership projects
- Rental projects can include a mix of affordability levels, allowing for cross-subsidization, which is not possible in homeownership projects
- Maintenance costs for affordable homeownership units need to be kept low to ensure long-term affordability, requiring more upfront city capital investment
Pierina Ana Sanchez
2:12:57
Does that mean that I lived?
2:13:00
I did just want to clarify one point that you made commissioner.
2:13:04
You said that developing homeowner units are twice, it's twice the cost as a rental unit produced.
2:13:11
Can you explain why that is?
Adolfo Carrión Jr.
2:13:14
Kim, do you want to come up and talk a little bit about Yeah.
2:13:19
That it's it's a little shocking when you think about it.
2:13:22
But
Kim Darga
2:13:23
Yeah.
2:13:23
I'm happy to do so.
2:13:24
So Couple I think there are a couple big things.
2:13:27
1, there are lots of other sources that can support creation of affordable rental housing that are not available for homeownership.
2:13:38
2nd, in affordable rental projects, we can set a mix.
2:13:44
We can create a mix of affordability, which allows us to get pretty deep, but it basically allows some cross subsidy with slightly more expensive units, still affordable.
2:13:58
You can't do that with affordable homeownership.
2:14:01
So we are largely creating affordable or limited equity cooperatives through our programs.
2:14:09
And the maintenance needs to be equalized.
2:14:12
So you wanna make sure that maintenance is really gonna be affordable for the people that you're trying to house.
2:14:18
And so, for example, in the affordable neighborhood cooperative program, we set maintenance at 40% of their median income.
2:14:25
As a result, we can't bring in as much private sources.
2:14:33
So private debt, for example, and we have to invest for a more city capital.