All,
ReArch Company does work for both housing authorities and for our own development projects and I can tell you that construction costs are the exact same. I agree with Kemener in that it is the current market
conditions that are driving construction costs up but the costs are the same for everyone.
I also think everyone is missing the point as the real issue is the extremely high impact and permitting fees. When you factor in the cost of all of the permitting, entitlement, ACT 250, wetland studies, etc.,
etc., etc., it drives up the project cost. The developer merely passes those costs on to the renter in the form of higher rent when most people think it’s the greedy developer trying to line their pockets. We as a state have to scale our impact fees back dramatically
if we want affordable anything. Lowering fees will in fact affect us short term, but we need to be thinking more long term as it will pay huge dividends down the road by increasing our tax base, have a real supply of workforce housing, help attract and retain
the thousands of people leaving our state, etc., etc., etc. The only way to develop affordable housing is with huge subsidies and even that is getting hard.
Until we can change the attitudes at the State and City levels, nothing is going to change and we will continue to struggle building affordable/workforce housing.
Current Impact fees in Vermont = “Unaffordable Housing”
Not the cost of construction.
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Johnny Illick |
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From: vtdevelopment@simplelists.com <vtdevelopment@simplelists.com>
On Behalf Of Kemener Whalen
Sent: Wednesday, September 25, 2019 2:16 PM
To: David White <dwhite@whiteandburke.com>
Cc: Michael Kirick <michael@kirick.com>; Seth Leonard <SLeonard@vhfa.org>; vtdevelopment <vtdevelopment@simplelists.com>
Subject: Re: [VT Dev] Vermont Affordable Rental Housing Cost Study: last call for data!
The cost of construction is rising for everyone. The construction labor shortage is a contributing factor. Material cost increases are a contributing factor. The current tariff environment is a contributing factor. These are issues
that apply across all construction. Steel tariffs are applied to all materials, not materials intended for "affordable vs market rate". There are likely increased legal costs for "affordable housing groups", as generally their projects are reliant on tax
credits, grants, etc - which will result in increased billable hours from lawyers/CPAs and may include fees associated with securing the funding. However, the (land use) regulatory environment doesn't selectively apply fees for affordable vs market rate (and
affordable generally offers some additional benefit - increased density, etc). If the costs are being
perceived as higher by the affordable housing groups, perhaps its a reflection of the increasing cost of construction coupled with a very expensive and time consuming permitting process, without recognition that for-profit developers are experiencing
the same cost related burdens. Perhaps the development community (for profit and non-profit) should work together to advance a unified message of regulatory cost and the impact on the cost of housing overall. Vermont may indeed need more affordable housing
(regulated), but more importantly it needs housing that is affordable (market rate).
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On Wed, Sep 25, 2019 at 1:45 PM David White <dwhite@whiteandburke.com> wrote:
Michael,
There have been some suggestions over the years that non-profit affordable housing organizations have been paying more than for-profit developers for their projects. Although I am not involved in this study, my understanding is that one of its objectives is to evaluate that issue. If affordable housing developers have been paying more than necessary, what can be done to bring their costs into line and thus reduce the amount of public subsidy? Let’s use public funds more wisely.
I hope that helps.
David
White + Burke Real Estate AdvisorsFounded 1990
David G. White, MS CED, EDFP, CCIM, CRRP, CRE
President
PO Box 1007
40 College Street, Suite 100
Burlington, VT 05402-1007
P: 802-862-1225 x13
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From: vtdevelopment@simplelists.com <vtdevelopment@simplelists.com> On Behalf Of Michael Kirick
Sent: Wednesday, September 25, 2019 12:31 PM
To: Seth Leonard <SLeonard@vhfa.org>
Cc: vtdevelopment <vtdevelopment@simplelists.com>
Subject: Re: [VT Dev] Vermont Affordable Rental Housing Cost Study: last call for data!
Excuse me for being an idiot, but by definition, if "affordable" construction costs more, then doesn't that make it less affordable? Help me here on what the question is. What is being defined as affordable vs market?
Michael
From: "Seth Leonard" <SLeonard@vhfa.org>
To: "vtdevelopment" <vtdevelopment@simplelists.com>
Sent: Wednesday, September 25, 2019 9:48:21 AM
Subject: [VT Dev] Vermont Affordable Rental Housing Cost Study: last call for data!
Good Morning,
Earlier this year, VHFA, VHCB and DHCD initiated a study of affordable rental housing development cost factors in Vermont. We are trying to answer a couple questions: is affordable rental housing more expensive to build than market-rate rentals, and if so, why and what can be done about it? Also, can we better understand the relation between public policy goals and their impact on the cost of development.
To make this study as valuable to our development community as possible, we need information on the cost of producing market rate rentals. The more data we have around market rate development, the more meaningful the study will be. We hope you will consider providing project-level development cost data for inclusion in a comparative statistical analysis. Even if you only have information for a small component of the development costs (such as engineering, architectural, or construction), this is helpful. As described in the Use of Data Agreement in the documents linked below, all data you provide will be aggregated and anonymized to ensure confidentiality.
We have put out several requests for data over the past few months, and are hoping to have all participants submit their information this week if possible (please contact me if a slightly longer timeline would be helpful).
Participation is very easy and will not take much time out of your day:
- Download a spreadsheet at https://www.neighborhoodfundamentals.com/s/Market-Rate-Development-Data.xlsx and e-mail to Michael A. Spotts at mspotts@neighborhoodfudnamentals.com.
- Complete the survey at https://www.surveymonkey.com/r/VHFAdata.
- Contact the consultant, Michael A. Spotts (mspotts@neighborhoodfundamentals.com), if you prefer to submit project data in another way.
Thanks for participating in this important effort. We will be sharing the results at the White + Burke developers’ conference in November, will blog about, and can share it in other ways when it’s done late this fall.
Thank you very much!
Seth Leonard | Managing Director of Community Development
164 St. Paul St, Burlington, VT 05401 | 802.652.3403
Vermont Housing Finance Agency
vhfa Affordable homes for a sustainable Vermont.
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Michael P. Kirick
Kirick Engineering Associates, P.C.
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Williston, VT 05495
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