Cost Per Unit: The High Price of Non-Profit Subsidized Housing

I’ve been pointing out the high cost of affordable housing for awhile now. I have referred to the cost by talking about the cost per unit, and highlighting the 12th Avenue Arts project on Capitol Hill in particular. What I have found interesting is how often I am told, “That’s not a fair way to state the costs.” What’s also true is that everyone also seems to agree that the project is very expensive. At a meeting last week I heard the head of the Washington State Housing Finance Commission (WSHFC) — the agency that allocates tax credit equity (money) —  actually does talk about housing costs in per unit terms. The WSHFC actually has a cost per unit limit. Anyway, I’m not sure exactly what this means so I asked Herman to clarify. Here’s my email. And these questions are also the reason we’ve requested help from the State Legislature to help get to the bottom of the costs  of non-profit. More on that soon. 
Hello Kim,
I was interested to hear that the Commission pays attention to costs by-the-unit. I’ve been critical of Capitol Hill Arts because, using dumb guy math (I majored in philosophy and religion, sadly), the total unit costs comes out to over $500K per unit ($47 million divided by 88 units is $534,090.91). 
When I have made this criticism I keep getting told, “Well, yeah but that’s not a fair way of looking at it….” Then I ask the person to explain how to understand the cost in relative terms I get no response. Somehow they want a discount to unit cost based on the retail or whatever. I’ve never found any way to do that; furthermore in my time in the non-profit development world we ALWAYS talked in terms of cost per unit.
I think you’d agree, notwithstanding any justifications, that this project was extraordinarily expensive. So I think it’s worth getting to the bottom of it as part of this process or just in general. Why was it so expensive? And why so few units?
Can you help me understand the TDC limits and whether, based on the calculations in this document, Capitol Hill Arts got a waiver and what that waiver was based on?

I am perfectly wiling to admit that I don’t know what the hell I’m talking about, but I’ll keep playing Columbo until I can understand what’s going on here. And I feel like I can trust you not to hand wave this question away like others have.
This is project is a case study, I think, in where we run into self-imposed limitations that drive up costs. Why, for example, if the project enjoyed such political support, did it not get an up zone to build more units on that site? I get that there is a condominium of various elements of the project that might ameliorate that sticker shock, but given the zoning it seems like much more housing could have been built here for the cost.
Again, it’s really hard to look our builders and developers in the eye and explain that they’ll be paying fees that will either make their projects infeasible or, when they do pencil, that their product will be more expensive and that those fees will be poured into a system that produces projects at this expense. Until Seattle backs off MIZ (either because it’s the right thing to do, or because a judge tells them to) I have to keep asking these questions.
I love the project. It’s beautiful. I just don’t think our customers should be paying for it with higher rents and purchase prices when we have no common language for understanding the costs and why it is so high. And as I said, I wish I could get as much enthusiasm from the Commission, AHAB and the wider non-profit housing world to lower costs, especially regulatory ones that push up ALL housing costs. Imagine us all going to the Mayor and demanding a suspension of design review until the “crisis” has passed. Too bold? I guess.
Maybe you can help me understand.

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