Affordable Housing Is An Industry, Too

On September 30, Minneapolis Councilmember Alondra Cano hosted an energetic public forum on the topic of gentrification. “Gentrification is lurking,” said one speaker. Almost everyone agreed about who to blame: rich private housing developers, eager to make an easy buck on luxury condos. And the panelists mostly agreed about the solution, too: more affordable housing in Phillips and other central city neighborhoods.

But building affordable housing in the central cities isn’t cheap. And a big part of the reason why is that private developers drive up costs, the mirror image of the for-profit luxury builders that anti-gentrification activists so deplore.

Last year, I helped put together a study about the cost of constructing affordable housing in the Twin Cities. The results proved somewhat controversial, in part because they challenged the prevailing wisdom about where affordable housing money is best invested.

It turns out that subsidized housing in the central cities of Minneapolis and Saint Paul costs a premium compared to housing with identical characteristics situated elsewhere in the region. The average unit of affordable housing cost $227,660 in Minneapolis and $224,157 in Saint Paul. Elsewhere in the region, the average unit cost is $194,174. The basic trend is easily seen in the map below, which uses data from the study. Costs are visibly higher in the central cities.

c7_SubHouCost9912

But straightforward averages don’t control for things like unit size, land acquisition, or intended income level. Once you do, it becomes apparent that the cost gap is even wider than it first looks, because construction in the suburbs is much more likely to be multi-bedroom units intended for moderate incomes, which is comparatively more expensive to build. Units produced in the cities, by contrast, are usually one-bedroom or studio apartments intended for individuals and families with very low incomes. After controlling for these factors, the cost gaps grow: compared to identical housing in the suburbs, projects in located in Minneapolis cost an extra $30,000 per unit, while projects in Saint Paul cost an extra $38,000 per unit.

In other words, the trend–higher costs in the central cities–shows up pretty much any way you slice the numbers, ranging from straight averages to inflation-adjusted regression models like ours.

This pattern creates a puzzle. Minneapolis and Saint Paul contain slightly less than one-quarter of the seven-county metropolitan area’s population. Despite this, in the previous decade, about 57 percent of the region’s new subsidized affordable housing has been produced in the two central cities. So why would a largely-private subsidized housing industry build disproportionately many housing units in the areas where construction costs the most? This seems to run counter to the simple logic of the market, in which production declines as cost increases.

The answer, it seems, is that the affordable housing market doesn’t look–or work–anything like a traditional private market. What’s more, affordable construction takes very different forms inside and outside of the central cities.

In Minneapolis and Saint Paul, a large industry has grown up around affordable housing construction, with yearly expenditures ranging into the hundreds of millions of dollars. Individual projects tend to function as collaborations between many different private and public entities within this industry. For instance, a single project might include participation from a community development corporation (or CDC), a second, smaller, minority-run “partner” CDC, a nonprofit financial intermediary organization, various lawyers and financial professionals, a land bank, a syndicator for monetizing low-income housing tax credits, private for-profit investors acting as limited partners as part of the syndication process, the general contractor, an architectural firm, the state housing finance agency, local community development agencies…the list goes on and on.

affordablehousingorgs

This project brought to you by…many, many different people.

Very few of the entities actually building housing have much incentive to cut costs. After all, nobody’s paying for affordable development out of pocket; everyone involved is relying heavily on government grants and lending. This funding is distributed after development costs are calculated, and matched to that cost–in other words, a developer determines how much it needs to build a particular project, and then the various funders help produce that amount. Subsidies are paid out with the understanding that some fraction will be spent on employee salaries and other organizational overhead. If a project costs less overall, there’s also less cash available to pay salaries at the various participating organizations.

Put more succinctly, in the world of subsidized housing, the best way to bring more money into an organization is to build bigger, more expensive, and more numerous projects. Now take those incentives and spread them across an entire network of organizations, all of which are funded, directly or indirectly, by the same government subsidies, and which taken together dominate almost all affordable development in the central cities. Little wonder, then, that the projects being proposed for these areas cost an arm and a leg.

(There are limits, of course. Truly exorbitant projects might run into trouble with funders. But the upper bound is higher than you might expect: lately, there have been a spate of local affordable projects with per-unit costs exceeding $500,000 or even $650,000 per unit.)

By comparison, much of the subsidized housing outside Minneapolis and Saint Paul is built directly by public agencies, such as county development agencies. Rather than outsourcing every stage of project development to one of a half-dozen organizations, who are each aiming for a slice of the pie, suburban subsidized housing frequently takes a much more direct path from conception to creation. As a consequence, it frequently costs far less to build, with average project costs running under $200,000 per unit.

Affordable developers are entitled to fair pay for their work, just like anyone else. But it’s important to recognize that these organizations are not purely altruistic. They are economic entities operating in a specialized industry. This industry has distinct financial incentives, similar to the private for-profit developers who are so frequently villainized in public debate.

Indeed, in certain cases, it’s the exact same developers. Some individuals operate both a for-profit market-rate development company and a nonprofit community development corporation. (Nonprofits have access to a larger pool of potential subsidies.)

And while market-rate developers have an obvious interest in promoting certain policies, the same is equally true for the affordable housing industry. Several speakers at CM Cano’s anti-gentrification, pro-affordable housing forum were closely affiliated with the Equity in Place coalition, an organization composed heavily of community developers that advocates for increased affordable development in central city neighborhoods. (One had served as the program director of no fewer than three development nonprofits.) It was also probably not a coincidence that some of the glossy material handed out at the forum was sponsored by Urban Homeworks, a mid-sized community developer based in North Minneapolis. That organization’s executive director happens to chair the Metropolitan Consortium of Community Developers, which lobbies local and state government for more affordable housing funding for nonprofit development.

Nor are nonprofit community developers especially representative of the low-income groups they purport to serve. After last week’s forum, CM Cano noted that many neighborhood associations–which are presumed to be pro-development–do not much resemble their neighborhoods:

It’s a fair point, worthy of discussion. But what’s left out is that the exact same critique could be made of the affordable housing industry. One survey showed that 78 percent of community development corporation members are white, including 85 percent of managers and executives. What’s more, the largest organizations, which are doing most of the heavy lifting in housing development, are even less diverse.

It’s understandable that community activists worry about private interests transforming their neighborhood for financial gain. But the debate over affordable housing rarely boils down to “residents v. outsiders” or “private benefit v. the public good.” Instead, it often reflects a battle between well-funded and influential interest groups, with cities and neighborhoods caught in the middle.


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34 Responses to Affordable Housing Is An Industry, Too

  1. Eric Anondson
    Eric Anondson October 8, 2015 at 9:35 am #

    Thank you for this! So many implications and conversations come from this data.

  2. Adam Miller
    Adam Miller October 8, 2015 at 10:15 am #

    Yet further evidence that deriving your policy views based on who is “good” or “bad” is not a good idea.

    There seems to be something substantial missing from the discussion of costs at the beginning of this post, however, and that’s the “value” of location. If the central city locations allow future residents much better access to transit and/or can be livable without a car, they may very well be worth the extra cost to build.

    • Will Stancil
      Will Stancil October 8, 2015 at 10:21 am #

      That’s true, and I absolutely wouldn’t say affordable housing should be sited based on cost alone. I think cost is a window into the mechanics of the industry more than anything else.

      With that said, if you look at what low-income families prioritize most in housing, it is NOT access to transit or walkability. It’s the same things that high-income families prioritize in housing: access to high-quality schools and safety from crime. Those things are actually more readily available in the suburban locations where construction costs less. I think it might be worthwhile to do a followup post on this specific topic at some point, actually.

      • Monte Castleman
        Monte Castleman October 8, 2015 at 10:46 am #

        That’s interesting, is there some stastics that show what the poor value as far as housing, as opposed to what planner, urbanists, and those that are not poor think they do?

        My stepfather owns a “Buy Here / Pay Here” lot in Shakopee. The cheap stuff always sells better than the more expensive stuff. He had a piece of junk someone traded in that kept overheating, so he listed it for $750 to get it off the lot, and it was sold within days and he got a phone call from North Carolina about it. One person had a vehicle to “trade in” towards it. He knows for a fact that some of his customers drive without insurance too, This implies that a lot of the poor will do whatever it takes to get a car, either because they need it for where they work, because the convenience is worth it relative to not having one, or because they have other considerations in selecting housing other than being car-free.

      • mplsjaromir October 9, 2015 at 12:03 pm #

        I disagree that people prioritize schools and safety first when choosing housing, what people choose first is access to jobs. If you can’t afford your housing, you won’t be living there long. People who have ample income and can afford an automobile they choose to live near schools that are well regarded.

        It is correct that most people do make enough money to operate at least one car. But car ownership is not binary experience. The costs associated with maintenance are difficult to predict and can cause severe stress on families’ finances. Keeping a car running eats into the savings from subsidized housing. For that reason one sees immigrant and migrant populations willing to live in substandard living arrangements (multiple families and unrelated people living in one unit, favelas, etc.) in order to have access to jobs in walking distance or via transit. No one does this to be in a particular school district. This is not a local phenomenon, rather it is the worldwide norm.

        Policy makers seem to have it wrong in what people actually prefer. I am sure if asked people if they wanted good schools and safety, they would respond affirmatively. But money talks and BS walks. Access to jobs should be priority one in subsidized housing decisions. Raising peoples’ incomes and ensuring they have the ability to provide a stable environment for their children should be the policy goal. Unfortunately this region has an atomized job distribution, and for most owning an expensive automobile may be the only option.

        Second recommendation would be to integrate the faculty and administration of suburban school districts.

        • chip halbach October 9, 2015 at 12:53 pm #

          What are you basing your notion that people prefer to live near jobs versus schools and in areas of low crime? The state housing agency published a report in 2012 that indeed supported the notion that people likely to utilize housing assistance were most interested in finding homes near good schools and in areas with low crime. See http://www.mnhousing.gov/idc/groups/administration/documents/document/mhfa_012251.pdf

          • mplsjaromir October 9, 2015 at 1:22 pm #

            Like I said, surveys tell an idealized preference.

            The linked survey doesn’t ask the participants if they prefer a job they can access. The primacy for heads of household is work. There is a significant difference between having a short commute or being able to get to a job. If someone had the option of having $0 income but a prestigious school district or making a living but having to compromise on schools and safety stats one would choose the former every time.

            I would not use that survey as a smoking gun anyhow. If you are basing policy on a survey that only got through to 48 people in the critical TC Metro / Low-Moderate / Renter group.

            Also LOL at the how 20.7% of Grtr MN / Low-Moderate / Renter responded that having five plus acres was critical.

            • chip halbach October 9, 2015 at 1:29 pm #

              That was the info I could find about locational preferences in MN (not being presented as a smoking gun), I was asking if you had anything that backed your assertion. Certainly jobs are critical and access is important, although there are a number of low income people (seniors and those with disabilities) that are not seeking employment.

              • mplsjaromir October 9, 2015 at 2:06 pm #

                I don’t have a study or survey in front of me, but if you look at migration and emigration patterns for the past few hundred years you see that people move to new areas for work. Again it is common to see people live in substandard and often illegal living arrangements in order to have access to jobs. Tenements on the Lower East Side in New York, the walled city of Kalwoon in Hong Kong, the slums of Mumbai. Heck even Riverside Towers have had many instances of more than one family sharing a unit.

                From my experience no one has ever put themselves in conditions like that to live in a leafy suburb with a “good” school.

                The best way to improve your children’s future earning potential is to raise your own income and provide resources that aid in learning. The parents’ income of a child is the best predictor of their academic success.

                Seniors do not care about what school district they live in, they are done with school and do not have any school aged children generally. That is why so many senior housing complexes going up in rural Minnesota. The residents are not seeking to improve their economic opportunities, so staying in an area with a low average income is inconsequential.

                Those with disabilities I would assume would avoid driving if possible, so that reinforces my point, I think.

                • Will Stancil
                  Will Stancil October 9, 2015 at 2:28 pm #

                  I’m hoping to revisit this in a followup post, but I just think this is completely wrong.

                  1. There are lots of job opportunities in the suburban areas where schools are strong; the economies in these places are heavily reliant on the sort of entry-level commercial and service jobs that are frequently most appropriate for lower-income families. You’re vastly overstating the tradeoff here.

                  2. As you point out, many low-income people have access to a car anyway.

                  3. Transit works best when it is used to bring people from more distant housing to more-densely developed job centers, instead of from dense residential areas to sprawling suburban employment opportunities. See: http://ppic.org/content/pubs/report/R_211Jkr.pdf

                  4. One of the strongest predictors of future income, college attendance rates, incarceration rates, etc., for children is school quality. Giving children access to high-quality schools is the single best way to break the cycle of intergenerational poverty.

                  5. Racially and socioeconomically segregated schools severely depress neighborhoods; if they are not addressed they create a feedback loop that exacerbates the very problems low-income families are trying to avoid. Without question, the easiest way to address these problems is to provide low-income families adequate housing opportunity in good school zones.

                  6. Subsidized housing residents are MORE likely to have school-age children than the average person, not less. Education is, if anything, a higher priority, when siting affordable housing than market-rate housing.

                  7. Finally, your assertion that families never consider schools when considering where to live is strange. School quality is probably the single biggest consideration for families with children when making housing decisions. Comparing the decision about which part of the metro to live in to the decision of poor families in the developing world to move to urban areas seems very off-base to me — it’s not like people moving to Mumbai are abandoning quality neighborhood schools. It’s just not a comparable situation in any respect.

                  • mplsjaromir October 9, 2015 at 3:06 pm #

                    1.Job sprawl is a serious problem, hopefully suburban public housing is built with the idea that individuals can walk to the retail centers that have jobs.

                    2. I think you missed the point I was making. Operating a motor vehicle is expensive, 100% of time more expensive than transit or walking. Owning a car isn’t a one time payment. Every extra marginal mile driven costs real money. Encouraging people with the least amount of money to drive more is unwise.

                    3. I agree with this point. Regional planning should focus on concentrating jobs along transit routes.

                    4. School quality is a fungible statistic. “School Quality” is best predicted by the average income of the households sending children to school.

                    5. I agree with this. But getting significant amounts of people of differing income levels to live next to each other seems to be quite difficult. Can you provide an example of a US metro area that has done this well?

                    6. Well yeah, hopefully the criteria to be eligible for housing assistance is correlated to the number of minor dependents.

                    7. That is not what I implied whatsoever. Your inference skills are on full display. My point is that people will choose to have a job over everything else.

                    I would dare say that some people even choose weather over the school reputation as evidenced by the migration patterns in this country.

                    • Will Stancil
                      Will Stancil October 9, 2015 at 3:21 pm #

                      I don’t really want to get into a lengthy back-and-forth here, but at the bare minimum I think you’re badly conflating inter- and intra-regional migration, which have very different dynamics.

                    • mplsjaromir October 9, 2015 at 3:31 pm #

                      sure thing

                  • Adam Miller
                    Adam Miller October 10, 2015 at 10:48 am #

                    As to 1, there are jobs, but they are expensive to get to. That expense either falls on the low income people whose housing we’re subsidizing, thus reducing the value of the subsidy, or falls on the public in the form of transit, thus costing more subsidy.

                    Which was my original point. Cost of construction is not the only cost, and comparing them without considering how residents can get around is missing a very big part of the cost picture.

                    As to 4, Jaromir has already said it, but given how strongly “school quality” correlates with income, we should be very wary that it is actually a property of a school. That said, 5 is probably correct, although I’d state it as proximity to affluence rather than “good school zones.”

                    • Will Stancil
                      Will Stancil October 10, 2015 at 12:09 pm #

                      But people already have to pay transport costs associated with those jobs, though. It’s not like they’re going unfilled. People are either just buying cars or suffering through two-hour commutes: http://www.startribune.com/job-recovery-yes-shorter-commutes-maybe-not-in-reverse/266955181/

                      And again, when you ask low-income people what they want in housing, access to high-quality schools ranks first, and transportation and proximity to jobs is lower on the list.

                      As for school quality, it’s largely a property of the demographic mix of students attending a school. But the important thing to understand is that traditionally disadvantaged groups — i.e., lower-income and minority children — fare better at schools with lower concentrations of those groups. So while a low-income kid attending Minnetonka High School might have a harder time than his or her wealthy peers, he or she is still much more likely to succeed compared to an equivalent child in a segregated North Minneapolis school.

                    • Will Stancil
                      Will Stancil October 10, 2015 at 12:12 pm #

                      Oh, and school zones are independently important, not just as a proxy for affluence. For instance, look at how, in the housing market, neighboring properties can have starkly different values because they fall in different school attendance zones. Schools matter, a lot.

    • Janne Flisrand
      Janne October 8, 2015 at 8:19 pm #

      Another thing this post (I haven’t yet fully reviewed the report) doesn’t address is the difference in who is being housed. I heard a radio story about a homeless shelter with services breaking ground while this was open on my laptop. Clearly, that is going to be more expensive than townhomes in Dakota County. Based on my experience with similar projects in the past, I predict it includes commercial kitchens, office space to offer health care services, office space for case management, etc.

      It’s a messy, complex question, and I want to know more.

      Did you control for supportive services in the study?

      Another aspect that isn’t addressed are local jurisdictional differences in overseeing the process.

      Did you control for the development process/compliance cost variations between jurisdictions? Minneapolis and St. Paul tend to have greater reviews than other cities for a variety of reasons.

      • Rosa October 9, 2015 at 1:51 pm #

        Even if it’s not homeless people with services – a lot of the people who need subsidized housing are old or disabled, often single people. It’s easy to focus on families with kids, but if those exact same people need lifelong support, they’re going to end up back in one-bedroom or smaller apartments. Kids don’t stay home forever. People’s priorities also change as their family changes.

  3. Derrick October 8, 2015 at 10:54 am #

    One big difference is that affordable housing construction means less displacement pressure on low-income residents of a growing neighborhood; market-rate construction means more displacement pressure. Hmm.

    • Peter Bajurny October 8, 2015 at 11:02 am #

      Why is that? Do you have any evidence of that? If so, what can be done to prevent it?

    • Peter Bajurny October 8, 2015 at 11:05 am #

      Displacement is bad, so how do we explain something like Glendale Townhomes where the current plan to replace the public housing there with more public housing would displace the existing residents?

      • Derrick October 8, 2015 at 11:25 am #

        Affordable housing advocates are against Glendale Townhomes getting bulldozed. My understanding was that the replacement would be a private development with a mandated percentage of affordable units. Explanation is easy: that a private developer wanted to make some money by redeveloping the Glendale Townhomes site. Throwing in some affordable units is still worth it, if it means you still get to displace the current residents AND have at least a fighting chance at diffusing public scrutiny. And no, I’m not saying that’s not bad because money is always evil, but because displacement is the thing that we should measure the success or failure of housing policy on.

        • Peter Bajurny October 8, 2015 at 11:45 am #

          Well it’s more expensive to replace than to repair, and the housing agency doesn’t have the money to replace, much less repair. Would “you” or “affordable housing advocates” be in support of a plan to replace the 184 units if it was done purely by the public housing agency, even if it required flattening the site and displacing all the existing residents?

          My understanding of the situation is that these aren’t going to be 184 inclusionary zoned units, but replacing the 184 public housing units with new public housing units financed, in party by proceeds from the private developer.

          Would “you’ be in support of a plan to redevelop the site with the same or more public housing units AND private development if it didn’t result in displacement? I was thinking about this this morning, and I think it’d be a good idea to do this in a number of phases, shuffle people around to empty a specific building, tear that down and build something bigger in its place, move people into that building, replace the now cleared buildings, etc etc.

          Is the only acceptable option to pay the higher amount of money to rehab the existing units (money that we, by the way, don’t have).

          I think there has to be a way to rebuild this site with an equal or greater number of public units, without displacing tenants, and with adding private units, because more housing is better than less housing, and the private housing may be needed to finance the public housing.

          • Derrick October 8, 2015 at 11:55 am #

            Yes, I think a gradual, shuffle-around of existing residents, as smaller-scale density projects go up around the neighborhood, would definitely be the preferable long-term outcome. There is plenty of space around the existing structures, so planners could easily start introducing more housing options into the neighborhood before any of the townhomes had to be replaced. But understand that scenario is anathema to private developers current preferences. Public needs to intervene somehow to prevent it from just being the cheapest, level-everything-all-at-once-and-build-a-giant-thing option. Or build political momentum to actually fund (and build) public housing permanently.

            • Serafina October 8, 2015 at 1:43 pm #

              MPHA’s high-density plan for razing Glendale Townhomes is currently off the table because of resident pushback at being displaced. The city council cancelled the public hearing on it back in July and directed MPHA to work with residents on coming up with a better plan. Glendale residents have repeatedly underscored the safe, well-connected location with ample green space and ready access to the outdoors for preferring rehabilitation to redevelopment. They–and residents of the larger Prospect Park–are skeptical that MPHA could secure appropriate family housing in the community during a large-scale redevelopment.

    • Janne Flisrand
      Janne October 8, 2015 at 8:22 pm #

      There’s also the question of housing quality.

      Housing can be affordable for a variety of reasons. It might be old and run down and unpleasant to live in. The market forces low rents. It might be in an undesirable location. Again, the market forces lower rents. Or it might be subsidized, where contractual obligations force low rents — AND regulation forces high(er) quality.

  4. Alex Cecchini
    Alex Cecchini October 8, 2015 at 11:29 am #

    Nice piece, Will.

    Can you help clarify something that the study maybe doesn’t make clear for me? It looks like the impact of share of multiple bedroom units has a relatively small impact on cost per unit (in the low-hundreds per unit for 1-3 BRs), while land acquisition cost included makes up a $27k cost adder. The latter would be the bulk of the added cost for a typical Minneapolis unit ($27k vs $30k), but I know land acquisition costs in the suburbs aren’t zero. Do you know a typical land acquisition cost (total or per unit) in Minneapolis vs the suburbs for these developments?

    The study notes that in Minneapolis, 0 & 1 BR units make up 21% and 22% of total, respectively, while it’s 10% for both in the suburbs. 2+ BR units make up 47% of Minneapolis developments vs. 68% of suburban ones (and 4 BR units actually are slightly more common in the city). Certainly a gap, but not so large in my mind to nail the city, especially if a goal for families would be to look in suburban school districts.

    I’d be curious to compare these mixes to recent market rate development in the metro – my hunch is that 2+ BR mix is higher than what the market is producing.

    • Will Stancil
      Will Stancil October 8, 2015 at 12:07 pm #

      So a few points here.

      1. Because land acquisition is controlled for by the model, it theoretically accounts for zero percent of the city/suburban cost differential. The same goes for share of units of different sizes.

      2. Unfortunately, there is not good data on actual land costs. So we were forced to use a dummy variable instead, which means that differing average land costs between the cities and suburbs might indeed explain some of the differential.

      3. However, it is very important to keep in mind that land acquisition for affordable development in no way resembles land acquisition in the private market. (This is part of why this data is so difficult to come by.) In a majority of cases, there were no land acquisition costs whatsoever. Moreover, even when there is some cost, it is often greatly reduced; e.g., foreclosed properties are provided to developers at below-market rates by financial institutions, governments entities sell land to developers at a nominal price, etc. Certainly, most affordable developers aren’t just buying a parcel of land on the private market like a traditional developer would. That’s why land acquisition only adds, on average, $27,000 to the cost of a project — less than a sixth of a single unit.

      4. Finally, these unusual arrangements to defray land acquisition cost are probably more likely in infill development, which is the norm in the cities, than they are in greenfield development, which is far more common in the suburbs. So it’s entirely possible that using a dummy actually conceals an even greater city/suburb cost differential. But without more data, it’s impossible to say for sure.

      5. I’d also be interested to compare this to market-rate development, although it’s worth noting that lower-income families are comparatively more likely to have children.

  5. Chip Halbach October 8, 2015 at 2:09 pm #

    Stancil is right in writing that production of affordable housing is produced by economic entities in a specialized industry. However, so many factors impacting what gets built through this industry are not included in the article that I question whether Stancil has a good understanding of it.

    For example, in comparing suburban to central city development costs Stancil cites that “any way the numbers are sliced” central city costs come out higher. Yes, there might be some cost differences because urban redevelopment is typically more expensive than the greenfield development occurring in many suburban areas. But the analysis should at least factor out supportive housing (housing for homeless people often including extra cost service space) and redevelopment of historic properties, both types of development more likely found in central cities. On a related note, I would guess that $500-600,000 per unit costs Stancil cited are associated with historic preservation where the majority of the costs and revenue sources are not found in typical affordable housing.

    As it is, affordable housing development is very competitive and market rules do apply. It’s just that the primary buyer — here the state housing agency — requires quality, long term durability, and often expensive service space. But given these specs the state agency looks for lowest costs. And since there is typically 4x the demand as there is availability of state development funds there is cost competition. For those interested the state agency just published a report on its cost containment practices (search for at mnhousing.gov)

    A final point, Stancil states that central city costs are higher because of all the actors involved in the development process there when compared to public agency developed suburban affordable housing. All the public agencies working in the suburbs that I’m aware of use the same architects, investment syndicators, contractors, etc.as do central city developers.

    Development costs are important to investigate as is the location of affordable housing. Also it is important to support creation and continuing viability of decent quality market rate rental housing, particularly in the tight rental market the Twin Cities is experiencing. Stancil adds some to this discussion but because of his many omissions I don’t think that he has contributed to a healthier, cost competitive housing market.

    Reader alert: I work for Minnesota Housing Partnership, a nonprofit working statewide, and with a board membership reflecting nonprofit, for-profit, and public providers of affordable housing in central city, rural, and suburban areas.

    • Atticus Jaramillo October 8, 2015 at 5:01 pm #

      I would echo all of Chip’s points, and add that no research has found that affordable housing in suburban communities substantially improves the lives of residents compared to affordable housing located in central city areas.

      In a previous comment Stancil rightly points out that low-income people prioritize education, and that there are more opportunities to attend quality schools in suburban communities. But recent research from Chetty, Hendren, Katz (2015) found that college attendance only increased 16 percent among children who moved to “better” neighborhoods before the age of 13 via the MTO program. But what about the other 84% of kids under 13, or all of the kids who were over 13 when them moved? Maybe there’s more opportunity, but that doesn’t always translate to an improved life situation.

      • Jay WIlkinson October 12, 2015 at 8:38 pm #

        16% improvement is something folks will pay millions for. MPS would do great to get these kind of results.

  6. Morgan October 8, 2015 at 3:09 pm #

    Excellent article. I want to read it a second time before commenting though.

  7. Thatcher Imboden October 8, 2015 at 10:54 pm #

    Did you control for parking costs? For example, the core cities tend to place any desired/required parking in underground parking stalls while suburban projects may use surface parking or enclosed ground-level parking. That would drive up costs in the core areas. Should a policy discussion take place about where affordable housing should go and cost is a factor of that discussion, it’d make sense to also include whether or not parking requirements and expectations should change to help offset those costs.

    In chatting with housing developers previously in MSP, I heard them share that their higher end market rate housing cost about 15%-20% less in the suburbs because of the difference in parking costs as well as the increased ability to use more non-union labor…which they felt often was not possible in the core cities. That said, using less expensive labor could have impacts on the demand for affordable housing…

    An interesting dilemma for urbanists is that affordable housing programs typically require that the cost of parking be rolled into the equation when figuring out the maximum rent that can be calculated.

  8. Jay WIlkinson October 12, 2015 at 8:40 pm #

    what an excellent discussion, unlike too much of the debate around these issues.