Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date:...
Transcript of Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date:...
![Page 1: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/1.jpg)
Carol Galante
CASA Technical Committee PresentationOctober 25th, 2017
![Page 2: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/2.jpg)
The mission of the
Terner Center for Housing Innovation
is to formulate bold strategies
to house families from all walks of life
in vibrant, sustainable, and affordable
homes and communities.
![Page 3: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/3.jpg)
The Housing ChallengeWe’re not building enough homes
We need to build 180,000 homes a year in California to keep up with demand, or 1.8 million by 2025 (HCD)
3
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
![Page 4: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/4.jpg)
The Housing ChallengeWe’re not building enough homes
While we’ve seen an uptick in production in recent years, we are well below historic homebuilding rates
4
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
![Page 5: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/5.jpg)
The Housing Challenge
5
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Attracting jobs without the homes
Jobs added to housing permitted, 2010-2015
• San Francisco-Oakland-Hayward: 6.8 to 1
• San Jose- Sunnyvale- Santa Clara: 5.5 to 1
![Page 6: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/6.jpg)
The Housing Challenge
6
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Cities that produced the fewest housing units between 2000-2015 tend to have larger price increases
![Page 7: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/7.jpg)
The Realities of Development
7
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Because of cost, new construction limited to highest rents
$5/6-psf
New constructionworks only at highestrents serving fewest people-as costs rise,
fewer people can afford new
construction
East Bay demand at various rents and new construction rents (2015- Concord Group)
![Page 8: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/8.jpg)
The Realities of Development
To explain the challenges facing the production of housing, we’ve developed two
“prototype” developments
– Market Rate and Affordable • Affordable: 50% AMI (Alameda County)• 4% LIHTC
– 100 units– 1:1 parking– 5 over 1 construction (stick over podium)• Least expensive infill construction type
8
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
![Page 9: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/9.jpg)
The Realities of Development
Assumptions
9
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
• Prototypes are an average Bay Area location
• $6.5 million land price• No EIR*• No demolition*• No environmental
remediation*• No inclusionary zoning
• No offsite infrastructure improvements*
• No exactions*• Standard approval
times• Prevailing wages• Current
construction costs
* Rare that infill projects avoid these costs. Any combination of these
costs plus current inflation could add as much as $100,000/unit
![Page 10: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/10.jpg)
The Realities of Development
Total Development Cost
10
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
$578,424/unit $621,280/unit
$57,842,411$62,127,966
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Market Rate Affordable
![Page 11: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/11.jpg)
The Realities of DevelopmentPer Unit Development Costs
11
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
$65,400 $65,400
$382,463$411,550
$41,000$41,000
$55,223
$68,979$26,314
$28,428$5,888
$4,424
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Market Rate Affordable
Tax, Title, Escrow
Consultants
Financing
Fees
Hard Cost
Land
![Page 12: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/12.jpg)
The Realities of DevelopmentDevelopment Funding Sources
12
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
35 41
5065
9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Market Rate Affordable
Equity Public Funds Debt
![Page 13: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/13.jpg)
The Realities of DevelopmentRents required with prototype
development costs
13
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
Market Rate
Affordable
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
Studio 1 bedroom 2 bedroom 3 bedroom
$1,988
$2,858
$4,161$4,696
Market Rate Affordable
![Page 14: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/14.jpg)
The Realities of DevelopmentThreshold requirements to make
Market Rate prototype feasible
14
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
1. Return on Cost must be at least 5.5%
Return on Cost is determined by dividing project’s Net Operating Income (income minus expenses= $3,179,685) by total project cost ($57,842,411)
Market Rate Prototype Return on Cost: 5.50%
2. How much debt can I raise?
We assume that our debt requires a 1.3% Debt Service Coverage Ratio (DSCR) and a 65% Loan to Cost, which means we can obtain $37,597,567 in debt (at 5% interest rate)
3. Equity required
With 65% of costs covered with debt, we must raise $20,244,844 in equity (8% preferred return, 17% Internal Rate of Return)
![Page 15: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/15.jpg)
The Realities of Development
To reach 120% AMI with similar returns,significant cost reductions must be achieved
• Reduce impact/utility fees by 50% ($1,750,000)• Reduce parking requirements by 50% ($1,950,000)• Construction innovations savings ($4,00,000)
– As costs are reduced, so are other items (contingency, consultants, etc)
– Total cost savings: $9,466,158 ($94,661/unit)– New ROC: 5.20%
15
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
![Page 16: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/16.jpg)
Cost Reduction Strategies
• Reducing overall cost of housing is paramount
– Pursue construction innovations– Right size fees– Streamline approvals process– Revisit parking minimums– Utilize public lands
16
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
![Page 17: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/17.jpg)
Terner Center Development Dashboard Development Calculator
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY17
![Page 18: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/18.jpg)
Terner Center Development DashboardPolicy Gauge
TERNER CENTER FOR HOUSING INNOVATION UC BERKELEY
18
![Page 19: Carol Galante CASA Technical Committee Presentation 7CASA...Sara Draper-Zivetz Created Date: 10/24/2017 3:44:43 PM ...](https://reader034.fdocuments.net/reader034/viewer/2022051722/5aa70b757f8b9a50528bd876/html5/thumbnails/19.jpg)
Thank you!
Carol Galante, Faculty Director
David Garcia, Policy Director