1. Washington State Department of Community, Trade and Economic Development Affordable Housing Cost Study May 15, 2009

2. Legislation In consultation with the affordable housing advisory board, housing development organizations, and affordable housing advocacy groups: Identify and analyze all costs associated with affordable housing development projects financed through the Washington housing trust fund: legal and architectural services, permitting and impact fees, land acquisition, and general construction costs. Make recommendations for strategies to reduce the costs identified and potential performance measures appropriate for each strategy. Analyze the fiscal impact of public policies of the state and of local governments, Washington housing trust fund policies, and general market forces on affordable housing development.

3. Project Participants Cost Study Steering Committee PAT & AHAB Research Analyst: Lea Mitchell Third Party Research Consultant: Jim DeLisle, PhD.

4. Project Sample ItemNumber Type of Project New Construction41 Rehab24 Total Projects Reviewed65 Scale Under 24 units20 24-48 Units25 Over 48 units 20 General Cost Categories - % of cost New Construction Acquisition6.30 % Construction70.50 % Development14.20 % Other Development8.80% Rehab Acquisition35.20 % Construction42.40 % Development12.90 % Other Development9.40% HTF Investment per Project Average share of total cost26% Projects over 48 Units11% Projects 24-48 units25% Projects w/special needs population(s ) 52 % Project Sponsor Government18 Non-Profit47 Financing Tax Credit63 % HTF Set Asides24% Operating Subsidies46% Number of Sources5.5 Special Needs Populations Served Non-Profit Projects targeted special needs25 (53%) Government Projects targeted special needs7 (39%)

5. Preliminary Data: Cost Snapshot DollarsShare Acquisition Costs64,837,871 15.0% 997,506 Construction Costs268,653,863 62.2% 4,133,136 Development Costs59,800,768 13.8% 920,012 Other Development38,945,795 9.0% 599,166 Total Residential Costs432,247,847 100.0%6,649,967 Components Total Costs Avg $/Project

6. Preliminary Data: Development Cost Average Cost% Total Cost 6,338 $ 0.1% 273,268 $ 4.1% 8,732 $ 0.1% 3,156 $ 0.0% 8,399 $ 0.1% 45,050 $ 0.7% 410,155 $ 6.2% 81,032 $ 1.2% 19,643 $ 0.3% 46,646 $ 0.7% 29,913 $ 0.4% 920,012 $ 13.8% Per Project Costs

7. Preliminary Data: Rehab Vs. New Construction ItemNewRehab Non Profit Sponsor71%75% Sponsor is Developer29%25% Developer Hired61%50% Tax Credit Financing63% Project Amended46%25% HTF Set Asides41%29% Special Needs Tenants56%46% Community Space63%46% Urban vs. Rural63% West vs. East WA63%79% HTF Share Total Cost24%30% Operating Subsidy49%42% Rent % of Market40%41% Market Share Averages/ProjectNewRehab Residential SF37,073 29,604 Number of Units39.2036.33 Number of Bedrooms1.9061.459 Unit Size in SF946 765 Total Residential Cost7,378,021 $ 5,405,510 $ Housing Trust Fund $1,062,977 $ 848,366 $ Total Cost/Unit176,204 $ 131,398 $ Total Cost/Bedroom103,579 $ 97,694 $ Total Cost/SF188.29 $ 174.90 $ Type of DevelopmentCost Categories Averages/ProjectNewRehab Acquisition467,040 $ 1,903,718$ Construction5,209,444 $ 2,294,444 $ Development1,048,890 $ 699,845 $ Other Dev.652,840 $ 507,473 $ Total Cost7,378,447 $ 5,405,479 $ Share/Project Acquisition11%42% Construction68%38% Development13%12% Other Dev.8% Total Cost100% Type of DevelopmentSources of Capital Average %/ProjectNewRehab Housing Trust Fund24%30% State, Local, Grant 14% Federal21%15% Tax Credit Equity29%32% Equity7%2% Permanent Loan6%8% Total Capital100% Market Share

8. Report Outline Executive Summary Study Scope, Methods, and Limitations Overview: Affordable Housing and the Role of HTF Data Analysis Current conditions and cost implications/impacts Affordable Housing Costs –address the core research questions Case Study: Market Rate Development vs. Public Development Strategies to reduce development cost/ performance measures Literature Review

9. Next Level of Data Analysis Stratification Tax Credit Bridge Loan Rural/ Urban Outliers Pairing Size of Units / Geographic Special Needs Market Rate Benchmarks

10. Opportunities/Strategies for Reducing Cost Regulatory Process Federal, state, local overlays Financing Tools, Mechanisms & Process Number of sources, length of pre-development, uncertainty of funding levels and market Construction Design, process & durability

11. Next Steps Website Survey Committee Interviews Draft Report – July 1 st Final Report to the Governor and Legislators– Sept. 30 th Questions?