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Mr. Brian Swift
<br />May 16, 2001
<br />Page 6of 11
<br />
<br />Total project cost (inci land):
<br />Total hard construction costs:
<br />
<br />$17,350,000
<br />$
<br />
<br />S29,300,000
<br />$X9,700,000
<br />
<br />Bond Financing:
<br />Tax Credit Investors:
<br />Permanent Subsidy by the City:
<br />
<br />$3,100,000
<br />$9,600,000
<br />
<br />$ 8,55O,00O
<br />$ 5,650,000
<br />$15,100,000
<br />
<br />There is a finite supply of tax credit and bond financing that is allocated each year by the
<br />state, so competition for the f'tmds is fierce. Affordable housing projects compete on a
<br />county by county basis. A project in Pleasanton would hnve to compete with projects
<br />proposed for more urban nreus such ns Oakland and Berkeley and the older areas of the
<br />1:~ Bay such as San Lorenzo, San Leandro, and Hayward. Based on their experience,
<br />the sponsor feels that an affordable housing project at this site would likely qualify for
<br />the 4% tax credits and bond financing, but would not qualify for the extremely
<br />competitive 9% tax credit financing, which has historically gone to more urban renewal
<br />type of projects.
<br />
<br /> It ia useful to look at the Ridge View Commons affordable senior housing project in
<br />· Pleasanton to put the above permanent subsidy numbers into perspective. For this 200
<br />onit~ project, the city donated the land and subsidized an additional $900,000 of the
<br />project's cost. The land was "valued" at $3,000,000 at the time it was donated, although
<br />the actual "cost" to the city is unknown to us and was probably less than the $3,000,000
<br />value. Still, even using the land's value and not its cost, the city in essence achieved 200
<br />~dable units for $3,900,000, which equates to a subsidy of $19,500 per unit. In the 70
<br />unit scenario above, the subsidy equates to $137,142 per unit, while in the 130 unit
<br />soenario the subsidy equates to $116,153 per unit. These amounts are six to seven times
<br />higher than the per unit subsidy amounts at Ridgeview.
<br />
<br />As thc editorial article in the Pieusanton Weekly pointed out, the source feeding
<br />Pleasanton's housing fund (fees on new development) is not unlimited, and it is reaching
<br />its end as the city nears buildout. Thus, the city has a finite amount of funds that should
<br />be used in the most efficient and effective manner. We believe that, compared to the per
<br />unit subsidy cost at the Ridge View Commons project, affordable housing on our
<br />property is not an efficient use of the city's money. Although affordable housing has an
<br />altruistic lure to it, we think that trying to do a public benefit project on one of the most
<br />expensive pieces of real estate in the city is not a good use of the public's money.
<br />
<br />The for-profit company and the non-profit sponsor are not related to Chamberlin
<br />Associates in any manner, and they independently developed their own numbers. Bo,th of
<br />them, however, came up with very similar numbers in terms of units for the site (130) and
<br />in terms of total costs and hard costs of developing the property. We believe this
<br />coincidence substantiates that the numbers are realistic and that they Portray an accurate
<br />picture of the feasibility of the site.
<br />
<br />
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