Housing on the Sheridan Footprint: What Makes Housing (Un)Affordable?

Housing development costs:

Land (acquisition, cleanup, infrastructure)

Hard costs (construction)

Soft costs (construction loan interest, fees, insurance, profits).

Total development costs (avg.) $300,000 per dwelling unit.

What makes housing (un)affordable?

Total development costs (avg.) $275,000 per dwelling unit.

To finance this cost over a 30­year term, a developer would pay about $14,400 per year. So debt service on one new dwelling unit is about $1,200 per month.

Maintenance and operation (heat, utilities, insurance, cleaning, etc.) is abour $400 per month.

So the total cost to build and maintain one unit is about $1,600 per month.

That’s how much rent the average of all households in a building would need to pay for the development to break even.

What makes housing (un)affordable?

Who can afford to pay $1600 per month?

If “affordable” rent is 30% of a household’s total income, then a family earning about $65,000 per year (a “moderate­income” family) could afford to rent the unit:

30% of $65,000 per year / 12 months = $1625 /month.

Who makes $65,000 per year?

examples:

One income: an experienced nurse, bus driver, police officer. Two incomes: a public school teacher + a cabinetmaker.

One wage earner: School principal, attorney, stockbroker Two wage earners: Subway conductor + school nurse $ 4,431 $ 2,127 $ 85.22 $ 40.90 $ 177,250 $ 85,080 120% ­ 250% Middle Income One wage earner: Veteran police officer, nurse, bus driver Two wage earners: Teacher + cabinet maker $ 2,127 $ 1,418 $ 40.90 $ 27.27 $ 85,080 $ 56,720 80 ­ 120% Moderate Income One wage earner: Rookie teacher, mail carrier, skilled manufacturing worker Two wage earners: Taxi driver + retail clerk $ 1,418 $ 1,064 $ 27.27 $ 20.45 $ 56,720 $ 42,540 60 ­ 80% Low Income (2)NEW YORK CITY MEDIAN HOUSEHOLD INCOME = $40,000One wage earner: Caseworker, cabinet maker, EMT Two wage earners: Prep cook + F/T child care worker. $ 1,064 $ 886 $ 20.45 $ 17.04 $ 42,540 35,450 50 ­ 60% Low Income (1) One wage earner: Child care worker, taxi driver, baker Two wage earners: Retail clerk + home health aide. $ 886 $ 532 $ 17.04 $ 10.23 $ 35,450 $ 21,270 30 ­ 50% Very Low Income One wage earner: Home health aide, retail worker, manicurist Two wage earners: Day laborer + P/T child care worker Senior citizen on Social Security, family on public assistance $ 532 $ ­ $10.23 $ ­ $ 21,270 $ ­ 0 ­ 30% Extremely Low IncomeHousehold To From To From To From Sample Affordable Rent Hourly Wage Household Income % of AMI

You’re the developer!

You have: Enough land for about 800 units.

Brownfield tax credits to cover the costs of remediation and new infrastructure.

Some mix of subsidies totaling about $50,000 per dwelling unit, for about 400 units.

Low-­Income Tax Credits

NYC HPD programs (New HOP,

NYS Housing Trust Fund and other DHCR programs (you’ve gathered up a total of about $20,000,000, so you must be pretty good at this!).

You want to build units that are affordable to a broad range of local people.

How can you mix:

households with different incomes.

+ subsidies from different sources.

Your total development costs:

800 units @ $270,000 per unit = $220,000,000

Total subsidy dollars = $20,000,000

Total debt service for 800 units =

Average per unit: $1200 / month

M & O per unit: $400 / month

Average “break­even” rent = $1600 / month

If “break­even” is $1600 per month, then:

You could house 800 families who can each pay $1600 per month in rent.

Or

having one family who can pay $2000 per month.

makes it possible to house one family who can pay $1200 per month.

Or

having two families who can pay $2000 per month each.

makes it possible for one family to pay $800 per month.

Or

You can use $100,000 of subsidy to lower one family’s rent from $1600 to $800.

Or

You can use $50,000 of subsidy to lower one family’s rent from $1600 to $1200.