7/21/2011 CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE ALLOCATION COMMITTEE Cost Containment and the LIHTC Program July 2011 Public Forums Agenda • Purpose of Forum • Problem Statement and Goal • Problem Statement and Goal • Presentation and discussion of Costs per Unit in 2010 and 2011 – Historical cost data – Line item data – Local issues – Other metrics (cost per unit vs. cost per square foot) • Discussion of moving forward to meet the goal • Closing comments 1
7/21/2011 ywvutsrqponmljihgfedcbaYXWVUTSRQPONMLJIHGFEDCBA Problem Statement and Goal Occasionally, TCAC and other funding sources make awards to extremely costly sources make awards to extremely costly projects. TCAC-awarded projects generally may be more costly than necessary, fostering the public perception that affordable housing is too expensive. Effective in 2012 TCAC reservations Effective in 2012, TCAC reservations would go only to cost-reasonable projects, and outlier-cost projects would no longer be awarded by TCAC or other funders. Average Per Unit Costs: 2005 - 2011(First Round) $400,000 er Unit $350,000 Total Development Cost pe $300,000 All 9% Projects $250,000 9% New Construction (Adaptive Resue in Acq-Rehab) $200,000 $150,000 9% Acq-Rehab (Adpative Reuse in Acq- Rehab) $100,000 $50,000 $0 2005 2006 2007 2008 2009 2010 2011 Year *2011 only includesr awardees from the First Round. Note: Historically, TCAC has used “total development cost” when calculating per unit cost. To accurately depict all six years together, the above chart is based on total development cost, which includes commercial cost. 2
7/21/2011 CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE Total Federal and State Credits per Unit (9%) 2005 – 2011(First Round) $200,000 $199,334 $193,490 $189,502 $187,543 $186,732 $180,000 $160,000 per Unit Credit $155,732 $140,000 $138,325 $120,000 $100,000 2005 2006 2007 2008 2009 2010 2011* *2011 only includes awardees from the First Round CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE Total Low Income Units Awarded Credit, 2005-2011(Estimate Based on First Round) 7,000 6562 6,000 5,000 4,840 4,761 4,640 4,424 4,000 Total Units 4,170 4,098 3,000 2,000 1,000 0 2005 2006 2007 2008 2009 2010 2011* * 2011 only includes awardees from the First Round and is doubled for comparison with prior years 3
7/21/2011 YEAR TO YEAR COMPARISON : 2010 to 2011 First Round 2010 Results 2011 First Round Results Number of Projects 75 53 Total Units Total Units 4,245 3,353 (includes manager units) Avg. Residential Cost per Unit $311,772 $286,664 Avg. Credit per Unit $188,370 $138,325 Avg. Public Funds per Project $7,484,612 $8,722,569 Avg. Public Funds per Unit $132,237 $137,875 Public Funds for 2010 and 2011 are based on the Requested Public Funds Points Section of the awarded applications. 2011 FIRST ROUND DATA (AWARDEES) NEW ACQUISITION- ALL CONSTRUCTION REHAB NUMBER OF PROJECTS 53 37 16 AVG COST PER UNIT* AVG. COST PER UNIT* $286,664 $309,889 $241,175 (RESIDENTIAL COST) TOTAL UNITS 3,353 2,189 1,164 AVG. UNITS 63 59 73 HIGHEST RESIDENTIAL $614,849 $614,849 $440,655 PER UNIT COST LOWEST RESIDENTIAL $95,192 $150,089 $95,192 PER UNIT COST *Average residential cost per unit reflects applications as applicants self identified- adaptive reuse projects self reported as acquisition-rehabilitation. 4
7/21/2011 2011 First Round Residential per Unit Cost by Region ALL NEW CONSTRUCTION S SAN FRANCISCO C SCO $35 $351,774 , $379,720 $3 9, 0 CENTRAL COAST $214,826 $428,609 CAPITAL & NORTHERN $259,002 $259,002 SOUTH & WEST BAY $473,446 $598,128 ORANGE COUNTY $336,291 $337,860 INLAND EMPIRE $288,473 $288,473 SAN DIEGO COUNTY $346,780 $344,647 NORTH & EAST BAY $274,710 $350,232 CENTRAL REGION $232,630 $237,870 LOS ANGELES COUNTY $356,880 $ , $333,715 $ , RURAL $209,395 $255,549 MOST COSTLY REGION LEAST COSTLY REGIONS Analyzing the Most Costly Projects Histogram 2011(First Round) Residential Cost per Unit 12 10 8 Freqeuncy 6 Frequency 4 2 0 0 Range - Residential Cost per Unit Note: The horizontal axis indicates projects up to each listed amount. For example, the first bar at “$100,000” includes all projects between $50,000 and $100,000. There are no projects below $50,000 or above $650,000. 5
ywvutsrqponmljihgfedcbaYXWVUTSRQPONMLJIHGFEDCBA 7/21/2011 Analyzing the Most Costly Projects Histogram 2006 - 2011(R1) Total Development Cost per Unit 80 70 60 50 Frequency 40 30 Frequency 20 10 zyxwvutsrqponmlkjihgfedcbaYXWUTSRPONMLJIHGFEDCBA 0 0 Range - Total Development Cost per Unit Note: Historically, TCAC has used “total development cost” when calculating per unit cost. To accurately depict all six years together, the above histogram is based on total development cost, which includes commercial cost. Development Budget Line Item Analysis Land Cost ◄ Acquisition Cost ◄ Off-Site Improvements Total Rehab Cost Total New Construction Cost Total New Construction Cost ◄ Site Work ◄ Structures Total Architectural Cost ◄ Total Survey and Engineering Total Construction Interest and Fees Total Perm Financing Cost Total Attorney Cost Total Reserve Cost Total Reserve Cost Total Appraisal Cost Total Contingency Cost ◄ Total Other Cost ◄ Local Development Impact Fees Total Developer Cost Total Residential Project Cost TCAC has begun by analyzing items marked with ◄ “ ” 6
7/21/2011 Discussion The Local Component The Local Component Discussion Metrics 7
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