CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 8 of 13 In all cases, affordable housing projects benefit from being located near services and transit so that residents who may have limited or no access to a private vehicle can meet their basic needs, or travel to other locations. Affordable Housing, Construction Types Traditional or Stick-Built Permanent Construction Traditional “stick-built” (constructed on-site) construction is the most common way to build affordable housing, but also the most costly. California has high construction costs due to the cost of materials, stringent energy, and seismic design standards, and, in the case of publicly- funded projects with complex multi-layered financing and lengthy build periods (typically 12-18 months or longer), higher labor costs due to requirements to pay prevailing wages. However, these types of permanent units can provide housing opportunities over the very long-term, including over many decades. To date, all the City-restricted properties in Pleasanton were built using traditional construction. While stick-built construction remains the most common form of providing permanent affordable housing, other construction methods for multi-family housing have been gaining popularity, primarily due to cost-effectiveness and shorter construction timelines. Modular construction is a process in which a section of a building is constructed off-site and that prefabricated component, comprising repeated sections called modules, is delivered and installed onsite. Modular construction is known for its speed, resulting in shorter schedules and significantly reduced construction costs. In terms of project characteristics, permanent affordable units, whether stick-built or modular construction, are costly to build. A survey of recently completed affordable housing projects that (among other sources) utilized County Measure A1 funds, showed typical construction costs for range of projects built in the last 1-4 years, to be between more than $700,000 and over $1million per unit to construct.2 The Sunflower Hill Project in Pleasanton, with a total construction cost of approximately $751,000 per unit, falls within this range. As a result, affordable housing projects typically require a “mosaic” of funding – local funds, grants, tax-credit financing, developer contributions, or other outside sources. Further, because of high costs and typical funding program requirements, permanent, stick-built housing most commonly provides a relatively large number of units (75+) to achieve economy of scale and be a competitive project applying for tax credit funding, and, depending on parking requirements and other on-site needs, requires a site of at least 1-2 acres to construct. Short-Term/Temporary and Pre-Fabricated Units In recent years, many communities have sought even more rapid and cost-effective ways to meet their most critical housing needs, particularly with respect to housing opportunities for the populations experiencing homelessness. An innovative solution embraced by a number of Bay Area communities has been the use of converted, non-traditional pre-fabricated units – such as “TufSheds” or shipping containers, to create short-term housing, typically sited on public land, and with basic amenities and services provided in mobile/modular units on site. 2 Source: https://measurea1.acgov.org/rental-project-summaries/ Page 73 of 90