Quote:
Originally Posted by Frankenberries
It says $85M toward the 2550 new units. I assume there are other funding sources that are also going toward those units.
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I would infer that to mean that partnerships will be struck with development project proponents to incorporate affordable housing into market buildings. The project's CAC's (Community Amenity Contributions) would be allocated in-kind for the units to be incorporated into the building and the City's affordable housing funds would be applied to make up the difference between the CACs and the full cost of building and fitting out the units.
On-site in-kind CACs are always preferable since they represent free land and a lot of cost efficiencies of rolling in the soft and hard costs of the amenity into the overall project management and construction budget.
Here's a made-up scenario to illustrate this: Say an affordable housing apartment costs about $300,000 if the City were to build it in a free-standing 100% affordable building of 50 units. They would either use their own land, which would be 'free' but have an opportunity cost of no longer being able to sell it or use it for other purposes, or buy the land, which may be preferable to meet certain geographic equity policy goals. The City would then need to hire professional design and engineering services, a project management company, and then obviously build and commission the thing.
Now, say there's a proponent looking to build a 30 storey condo tower through a rezoning. The CACs would be calculated and let's say that the rezoning-created land lift would produce $7.5 million that could be applied towards affordable housing along with other CAC-funded things like park space, transportation improvements, etc. The City could take that $7.5M and apply all of it to the affordable housing project it wants to build on land it already owns but the building will cost $15M ($300Kx50 units) so the City will need to wait for more development to occur to generate the CACs to get to $15M, or it could use available capital to make up the difference.
Now, if through negotiations between the City and the Proponent the rezoning project were to be allowed an increase in height and density to be able to accommodate 50 units of affordable housing on site and provide the additional market units to create more CACs, then the City can 'piggyback' its affordable units on the sunk project costs of the market housing project. Say the extra density and height bump the CAC up to $9M, and the efficiencies (they already have the land capitalized in the market units, there are already architects and engineers hired, etc.) reduce the cost of building each unit of affordable housing to about $225,000 (down from $300,000 if the City were to build it in its conventional method). Then $9M of CACs could create 40 units of affordable housing. The City wants 50 units so it makes up the difference out of its affordable housing fund at the hard cost of $225,000 per unit for a total City expenditure of $1.65 Million, or $33,000 per affordable unit for the 50 unit affordable housing part of the market condo project. The City gets its 50 units of affordable housing and it's out of pocket $1.65 million and the $9 million CAC money is used on-site and in kind for a total project cost to the City of $10.65 million as a result of this public private partnership, versus a $15 million cost for the same number of units were the City to have done it on its own.
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