Bending the Cost Curve:
Research Overview and Investor-Related Issues
Agenda
•  Why focus on containing costs in affordable housing?
•  Overview of Bending the Cost Curve research
•  The role of investors in cost control: concerns, challenges and
opportunities
Why focus on containing
costs in affordable housing?
The need for affordable housing is growing
•  As of 2012:
•  41 million cost-burdened households (increase of 9 million in last
decade)
•  Nearly ! of renters are cost burdened
•  More than " of renters are severely cost burdened
•  From 2001-2011, 12.8% of low-cost rental inventory lost
•  Despite significant increases in demand, under " of eligible
households receive federal rental assistance
Source: Harvard JCHS State of the Nation’s Housing 2014
While demand grows, resources decline
Program
FY 2010 Enacted
FY 2014 Enacted
Percent
Change
Transportation, Housing and Urban Development Appropriations Bill
HUD Programs (total)
46,059,233,000
45,462,476,000
-1.30%
Housing Choice Voucher Program Tenant Based Rental Assistance (TBRA)
18,184,200,000
19,177,218,000
5.46%
Project-Based Rental Assistance
8,557,853,000
9,916,628,000
15.88%
Public Housing Capital Fund
2,500,000,000
1,875,000,000
-25.00%
Public Housing Operating Fund
4,775,000,000
4,400,000,000
-7.85%
200,000,000
90,000,000
-55.00%
HOME Investment Partnership Program
1,825,000,000
1,000,000,000
-45.21%
Community Development Fund (CDBG account)
4,450,000,000
3,100,000,000
-30.34%
Community Development Financial Insitutions Fund (CDFI)
246,750,000
226,000,000
-8.41%
(CDFI Program Financial Awards/Technical Assistance)
107,600,000
145,400,000
35.13%
HOPE VI/Choice Neighborhoods Initiative
Financial Services Appropriations Bill
Treasury Department Programs
Perceptions matter in zero-sum budgeting game, tax reform
How will the affordable housing delivery system respond?
•  Many stakeholders already instituting changes
•  Greater budgetary oversight
•  Cost control regulations, incentives
•  Examination of standards
•  Efforts to shift or mitigate both costs and risks
•  What do trends mean for affordable housing investors?
•  Interventions can have an impact on the long-term physical and financial
viability of a development (positive or negative)
Bending the Cost Curve: ULI-Terwilliger Center – Enterprise
research to support effective policy responses
Motivations
Research Goals
•  Duty to be responsible
stewards of public
resources
•  Declining resources,
growing need
•  Reduce over-corrections,
unintended consequences
•  Identify drivers of cost
•  Provide informed
recommendations on
improving costeffectiveness while
maintaining quality
Cost-effective, quality housing: Not all costs are created equal
Investments
Connected
Benefits
Inefficiencies
Basic expenses
TDC
Bending the Cost Curve Initiative Overview
•  Roundtables & interviews with nearly 200 key stakeholders in:
•  Chicago, Denver, Houston, Los Angeles, Minneapolis/St.
Paul, New York City, Pittsburgh, San Francisco, Seattle
•  Publications
•  Nov. 2013: Bending the Cost Curve Discussion Brief
•  Jan. 2014: Bending the Cost Curve Full Report
•  Additional research, implementation work to follow