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Q&A
The impact of development delays on the cost and availability of affordable housing subsidies
0:22:04
·
124 sec
Commissioner Carl Weisbrod inquires about the connection between project delays and the need for city subsidies for affordable housing. Professor Vicki Been confirms that longer timelines increase project costs, necessitating greater subsidies per unit or resulting in fewer affordable units being built.
- Development delays increase costs due to factors like carrying land, rising interest rates, and changing regulations.
- Increased costs require larger subsidies to fill the funding gap for affordable housing.
- Delays in the subsidy pipeline itself (sometimes years long) further exacerbate cost increases.
- Ultimately, delays mean either fewer affordable units can be funded with the available pot, or more money is needed per unit.
Carl Weisbrod
0:22:04
I wanna just explore for a minute the correlation, if there is one, between time and subsidy.
0:22:12
Mhmm.
0:22:13
And as you and others have said, time is money.
0:22:19
And the more time it takes to get projects approved, the more expensive it will be.
0:22:24
But how does that, if it does at all, affect the pot of money potentially that the city has to support affordable housing, especially given, as you noted, the likelihood that that pot may well shrink going forward?
Vicki Been
0:22:44
So the worry is that the longer time goes by, the more risks like increased interest rates, etcetera, can raise the price of of developing.
0:22:54
Right?
0:22:54
And so that will require more subsidy or, you know, something has to fill that gap.
0:23:00
And it's not just the sort of market changes like for interest rate changes, but, you know, I I don't know what it is now.
0:23:08
But when I left city government, we had a pipeline of about six years.
0:23:13
And so you could get all the way through Euler and then wait for six years for subsidy to be freed up of the available pot, right, to fund that project.
0:23:24
In those six years, plus the time that was taken for Euler, interest rates may have gone up.
0:23:30
The term sheets may have changed.
0:23:33
Regulations may have changed to make building more costly.
0:23:36
So the more time goes by, the higher the cost per unit is gonna be.
0:23:41
So you're either gonna be able to to fund fewer units or or you're gonna need more money.
Carl Weisbrod
0:23:48
And just to clear just to be clear, that principally would affect affordable housing, I would think.
Vicki Been
0:23:56
It will principle the the housing, subsidies will certainly be affecting, affordable housing sub income restricted housing.
0:24:05
Right?
0:24:05
But it's driving up the cost of even the market rate housing as well.