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Comparing Costs and Characteristics of Housing Assistance Programs Proposed Final Report

Comparing Costs and Characteristics of Housing Assistance Programs Proposed Final Report. Joint Legislative Audit & Review Committee January 7, 2009 David Dean and Joy Adams JLARC Staff. S T U D Y M A N D A T E. Why JLARC Did This Study. 2007-09 Operating Budget directed JLARC to:

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Comparing Costs and Characteristics of Housing Assistance Programs Proposed Final Report

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  1. Comparing Costs and Characteristics of Housing Assistance ProgramsProposed Final Report Joint Legislative Audit & Review Committee January 7, 2009 David Dean and Joy AdamsJLARC Staff

  2. STUDYMANDATE Why JLARC Did This Study 2007-09 Operating Budget directed JLARC to: Conduct an evaluation and comparison of the cost efficiency of rental housing voucher programs versus other housing programs intended to assist low-income households SHB 1128 § 103(3) Housing Assistance Programs January 7, 2009

  3. Developed a Life-Cycle Cost Model • To answer the Legislature’s questions, JLARC developed a model for analyzing the life-cycle costs of low-income housing developments • JLARC then compared the costs for capital developments to the costs for vouchers for units with the same number of bedrooms in the same general location Housing Assistance Programs January 7, 2009 Report page 1

  4. What JLARC Found • In an analysis that accounts for all direct costs and funding sources, JLARC found that voucher programs generally cost less than capital programs • While this result might imply that state support for capital programs should be eliminated in favor of vouchers, JLARC does not support that conclusion for two main reasons Housing Assistance Programs January 7, 2009 Report page 1

  5. Caution About Shifting State Funding Entirely to Vouchers • First, housing professionals believe both approaches have unique benefits and both are necessary to address specific needs • Second, there is a risk that some developments receiving state funding may not be economically feasible without the state’s share of funding Housing Assistance Programs January 7, 2009 Report page 1

  6. JLARC Focused on Five Questions STUDY METHODS Research for this report centered on the five questions included in our March 2008 Scope and Objectives statement Housing Assistance Programs January 7, 2009 Appendix 1

  7. 1) What Do Capital Programs Cost? A U D I T R E S U L T S Capital Programs: Cost per Unit Average Monthly Cost (2008 Dollars) Average Tenant Share $439 40% 60% Average Subsidy $671 Average: $1,110 Source: JLARC analysis of 50 developments completed in 2006. Data from the Housing Finance Commission and the Department of Community, Trade and Economic Development, Housing Division. Housing Assistance Programs January 7, 2009 Report page 7

  8. 2) What Do Vouchers Cost? A U D I T R E S U L T S Voucher Programs: Cost per Unit Average Monthly Cost (2008 Dollars) Average Tenant Share $314 36% Average Subsidy $569 64% Average: $883 Source: JLARC analysis of data from Washington housing authorities. Housing Assistance Programs January 7, 2009 Report page 9

  9. 3) How Do Costs for Capital and Voucher Programs Compare? A U D I T R E S U L T S Capital Unit Costs Exceed Comparable Voucher Costs by 26% $1,200 $1,110 • Tenant Difference: $227 (26%) $1,000 • State $883 $439 • Non state-funded $800 $314 $29 $600 $400 $642 $569 $200 $0 Voucher Capital Projects Source: JLARC analysis of 50 developments completed in 2006. Data from the Housing Finance Commission and the Department of Community, Trade and Economic Development, Housing Division. Housing Assistance Programs January 7, 2009 Report page 11

  10. 4) How Many Developments Get State Funding and How Much Do They Get? A U D I T R E S U L T S State Contributions to Capital Developments As a Percent of Contributions from All Sources State funds > 20% (6) 12% State funds> 10% and < 20% (8) No state funds (19) 38% 16% 62% State funds(31) 34% State funds < 10% (17) Total: 50 Source: JLARC analysis of data from the Washington State Housing Finance Commission and the Department of Community, Trade and Economic Development, Housing Division. Housing Assistance Programs January 7, 2009 Report page 13

  11. A U D I T R E S U L T S 5) Other Than Cost, What Other Factors Should Be Considered? • Aside from cost, housing professionals suggest there are advantages to both voucher and capital programs • Capital programs increase the supply of affordable units and they provide additional services for persons with special needs • Vouchers may provide more freedom for recipients to live in a location of their choosing Housing Assistance Programs January 7, 2009 Report page 14

  12. CONCLUSIONS JLARC Conclusions • Vouchers generally cost less than capital programs • Do not recommend elimination of state support for capital programs because they may be the best option to address specific needs • Better cost data and analysis are needed to fully understand costs and compare alternatives Housing Assistance Programs January 7, 2009 Report page 15-16

  13. RECOMMENDATION What JLARC Recommends CTED’s Housing Division and the Housing Finance Commission should include life-cycle cost analysis as part of their processes for evaluating proposals for state-administered funding Housing Finance Commission, CTED’s Housing Division, and OFM concur Housing Assistance Programs January 7, 2009 Report page 15-16

  14. RECOMMENDATION Agency Responses However, agency responses suggested life-cycle cost analysis is only useful for comparing similar projects JLARC would like to clarify that projects do not need to be similar in order to compare costs Life-cycle cost analysis allows funders to compare costs for proposals competing for limited funds Housing Assistance Programs January 7, 2009 Report page 15-16

  15. Questions? Contact Information: David Dean Joy Adams 360-786-5293 360-786-5297 dean.david@leg.wa.gov adams.joy@leg.wa.gov www.jlarc.leg.wa.gov Housing Assistance Programs January 7, 2009

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