Remember when the developers of Hidden Hills were asking for special funding from the feds and TIFs to build four blocks of block like apartments on North Cliff? $680 a month is NOT affordable housing. If you were lucky enough to make a living wage as a single person in Sioux Falls, you would have to work a week and half to just pay the rent (no utilities included. Let’s say you make $12 an hour, you would have to work 2 weeks to just pay the rent. Sorry folks, this is NOT affordable housing. The property tax payers of this town were duped again.
A quick look at apartments in Sioux Falls show a cost of anywhere between $500 on up. Most of the ones I saw were in the neighborhood of $700 for a two bedroom apartment. Two people sharing an apartment could get one for anywhere from $250 – $600 each from what I saw. The prices you show do not look like they are outside of the norm in Sioux Falls. You get what you pay for.
Affordable housing in Sioux Falls is non-existent for the “average Joe.” That is why we are seeing family being tripled up to make ends meet. This is very stressful for the children living in these environments. They lack sleep, concentration, food, and privacy, yet we expect these children to perform at the same levels as the “above average Joes” children. Equality is not happening for our children!
While I haven’t looked at the details of the project, I can say based on the rents that they fall right around where one would expect them to fall based on a percentage of area median income given the city. I say that based on the fact that I work in affordable housing and see these sorts of numbers come by me all the time.
Seriously, if I’m ever back in Sioux Falls, I’ll buy you a beer and explain to you how these projects get financed (hint: there’s way more to it than TIF, your usual whipping boy) and why your endless complaining about it is just you looking for a unicorn that doesn’t exist.
If you think that you can find more revenue from the state or federal government to further subsidize the projects so that the rents will be lower, go for it. Please. On behalf of the legions of people who work every day on this issue, be my guest. You will be the only one to succeed where everyone else fails. Because that’s what it’ll take. Greater subsidy dollars.
You know how much the federal government contributes to these projects? Zero, aside from allowing developers to sell 4% and, if they’re lucky, 9% tax credits to investors.
But you’re absolutely right on one thing. There are lots of shitholes in Sioux Falls where people can live for less than this. Problem is, building housing to compete with dilapidated, half-century old rat-traps in the center of the city is not possible unless we’re going to start putting up roof-optional buildings and letting the rats loose just prior to the ribbon cutting.
Please stick to kvetching about the things where you actually have some knowledge. You’re a smart dude, but not on this topic. Sorry. And I know it’s like your schtick to just pretend like there’s some magical better way to do everything and the people who actually do shit for a living are just too stupid to figure it out. But you’re grade A, 100 percent wrong on this one.
Horndog, while I believe what you are saying I ask, “Why give them any subsidies?” If they are just going to build crappy apartments and charge whatever they want, why should my taxdollars go to support that? And I disagree about affordable housing. 14 years ago I bought my house, I was locked in at a 30 year mortgage and had a $600 a month payment. I refinanced to a 15 year a few years ago, shaved 9 years off my mortgage and reduced my interest rate. Even though my property taxes are 3x what they were 14 years ago (I know, sucks) my mortgage payment has been reduced to $585 a month. Sorry, $680 dollars a month for a crappy one bedroom apartment, in a crappy part of town (I find the patios ironic, because the stench coming from JM’s would prevent you from using it) is highway robbery, and no developer deserves one red cent of subsidy. I have argued all along, want to solve the affordable housing issue in Sioux Falls? Start giving tax breaks and federal grants and loans to small apartment owners who are fixing up place in central and proper Sioux Falls. Other cities have done it with great success, but instead in SF, we just like to give handouts to developers who will sell the property before the TIF’s run out.
Let me be very clear about what I’m saying.
There’s nothing crappy at all about what’s being built. It’s the same developers, the same workers, the same materials that would be used if this were a market-rate project. Where costs get scaled down is on finishes. So you get high-wear carpet instead of the super-plush stuff, or the cheaper laminate flooring, basic appliances, laminate or low-end solid surface countertops, high-wear siding, etc. But corners absolutely do not get cut on the bones of the building. Go tour them when they open. They’ll be good, solid, nice rental units that’ll be comparable to things that would rent for $200-300 a unit higher in a market-rate setting.
But in order to get affordable housing at the rents that Scott wants, you’d have to build leaky, roof-optional shacks with three walls. He’s of the delusion that you can do affordable housing and then charge everyone $300 a month for rent and have those numbers work in perpetuity for all parties involved.
Nope. The end result of that pie-in-the-sky fantasy is that no new affordable housing would be built by anyone, ever.
Rents are the last factor calculated in determining an affordable housing project. All of the other financing is squared away and then the remaining question is “what do we have to charge to make the project viable?”
When we bid a project last year here in the suburban Twin Cities, our bids came back 15-25% higher than they would have even 12-18 months earlier. The issue? So much construction right now. Demand for labor, demand for materials, demand demand demand. That increases project costs. Like I said earlier, whether it’s market rate or affordable, from a building standpoint, we’re all fighting for the same stuff. There isn’t some lot filled with marked-down, clearance lumber and concrete that we have access to. Which means that absent increases in other funding sources, developers can’t afford to do many units for people at 30% of area median income, which is what I’m sure Scott would prefer. So most units are at 50% or 60% of AMI. Some projects will even include a handful of market-rate units in an attempt to provide additional revenue to subsidize the affordable units.
I appreciate your creative ideas for how federal funding *should* work. Here’s the thing. That isn’t how it works, and it’s not likely to change. These federal grants that you allege exist would be in a scale that’s absolutely meaningless relative to need. The only major tools the federal government provides for affordable housing are 4% and 9% credits. The 9% credits are insanely competitive relative to demand, and the 4% credits are total junk and most investors don’t want them.
Renovating homes that are already old is a time and money suck that isn’t nearly as efficient or effective as you think, for a dozen reasons I could get into that will turn this into a 10,000 word missive. That sort of activity is often done through non-profits, community land trusts, etc. It’s worthy stuff to be sure but needs to be done on a homeowner level through low-interest rehab loans, etc. On a macro level, we’d end up having to require four-plex owners who took your hypothetical grants to accept 15-to-30 year rent restrictions. When their income property goes tits-up in the water because they don’t have enough market-rate stuff in their portfolios to subsidize their operating costs (and this will absolutely happen, I guarantee it), we’d have to buy them out. And then we’ve got housing agencies owning tens – if not hundreds – of thousands of small, old, crappy buildings in varying degrees of disrepair.
See, that’s the key you’re missing in your plan. The reason affordable housing works is because the people doing it – either local government agencies, major developers, non-profits – have alternative sources of revenue that they can use to offset the long-term rent reductions they’re agreeing to when they take the tax credits.
Developer-owned stuff, they can increase rents at market-rate properties. Government? They can levy taxes. Non-profits? They can raise money in the community. A small-timey landlord with a couple of income properties has precisely none of those resources at hand. What you’re proposing, respectfully, would be as irresponsible as those no-money-down mortgages that fly-by-night brokerages were selling ten years ago and then bundling into CDO’s for investors.
So huge maintenance costs, tons of red tape managing that many units. Can. Not. Imagine. That’s why we build new. No surprises, energy efficient, economies of scale from operating an 80-unit building instead of ten 8-unit buildings, on and on.
Building new is a better deal for everyone in the end – taxpayers included. And absent subsidies – be it the 4 or 9% credits, deals on land, TIF districts, waiving development fees, paying remediation costs, on and on – zero units of affordable housing would be built, ever. It’s just not a cost-effective use of a developer’s time or resources.
So while it’s nice that you think there are all these other cities out there doing stuff, you are here with anecdotes and I am here with mountains of data and heaps of institutional knowledge. The plural of anecdote is not data.
And if you believe what I’m saying but then just go back to believing whatever poorly-founded stuff you showed up with that sounds good in your head, you are really doing yourself a disservice. You might as well say “facts don’t matter.”
Go swing by your local housing agency sometime and arrange to speak to a project manager for 30 minutes. Ask lots of questions. I’m sure it’ll be an eye-opening experience. It certainly was for me when I started working in the field!
Um… I hate to be the bearer of bad news BUT from a Bank or Lending perspective, your DTI or Debt to Income should be around 40%-50% of one’s income so if it takes 2 weeks of pay to pay the rent that’s pretty typical. While I can understand being frustrated about finding truly cheap housing it doesn’t exist in that it either would need to be Government Subsidized or a Tax Credit property but unless your a single parent or disabled you won’t qualify. I would suggest saving for a year if possible to try and build a nest egg to help offset the cost of housing.