Talking Points

The industry needs to figure out how to talk about development costs.

2 MIN READ

If a local news reporter calls and asks why your new affordable housing development costs what it does, do you have a good answer? Can you provide a concise explanation to adequately tell the story of your development and its costs?

Explaining affordable housing isn’t easy. You may know all the expenses inside and out, but being able to articulate the reasons for them is another story.

As development costs rise and more scrutiny falls on affordable housing, the industry needs to be able to explain costs in a candid and cogent manner. That was one of the messages sounded at AHF Live: The Affordable Housing Developers Summit, in Chicago, this past November.

I’m reminded of a story I covered back in my newspaper days. A city was borrowing funds from its redevelopment agency. The same city leaders oversaw the agency. Now, it almost didn’t matter if it was kosher to bum the money. The story became a much bigger deal when officials couldn’t provide a strong, coherent answer for their complicated financial moves.

A better example comes from Bryan Zises of the Illinois Housing Development Authority. During AHF Live, he pointed out that the federal HOME program became a target and its funding reduced after one, just one, news article. Not being able to explain development costs is dangerous.

There’s good reason to be concerned. Construction costs are rising. There’s a push for developments to be located in more expensive, high-opportunity neighborhoods. And federal officials are taking a close look at housing programs.

I understand that each project is unique, but there are some common cost factors that can be articulated, such as land, regulatory requirements, and the use of green technology and quality materials that have long-term benefits. This coming year, one of the tasks of the industry should be to come up with strong talking points to clearly explain costs.

After all, what would you say if someone asked why one apartment in your development cost more than a new single-family home?

About the Author

Donna Kimura

Donna Kimura is deputy editor of Affordable Housing Finance. She has covered the industry for more than 20 years. Before that, she worked at an Internet company and several daily newspapers. Connect with Donna at [email protected] or follow her @DKimura_AHF.