Many sources for high costs at Jefferson Park, including building family units and new roads
The Jefferson Park Federal project includes “constructing a new neighborhood,”a report says. The neighboring Jefferson Park State project is pictured. (Photo: Marc Levy)
The $900,000-per-unit cost of rebuilding the Jefferson Park Federal public housing development in North Cambridge stems partly from extraordinary factors such as bidding and wage requirements for public agencies, the large number of family-sized units in the new project, deteriorated utilities and hazardous materials at the site, as well as a lengthy construction schedule, according to a detailed analysis prepared by the Cambridge Housing Authority.
The report from CHA planning and development director Margaret Moran was presented to authority commissioners Tuesday. It replies to critics asking for an explanation for the high bill for the development. The total cost of $251.8 million for 278 apartments – 103 more than the current 175 units – works out to $905,000 per unit.
The analysis, though, used a lower unit cost of about $745,000 because it deducted “soft costs” from the total. These expenses, amounting to about $160,000 per unit, include the bill for lawyers, accountants and consultants who enable CHA to get private financing for the project by selling federal low-income housing tax credits to private investors. That’s a crucial element in rehabilitating or building affordable housing since the federal government no longer provides enough assistance. The authority report removed those costs since it compared the cost of Jefferson Park to other affordable-housing projects, and virtually all low-income housing is now financed from tax credits and other private sources.
Soft costs also include the expense for architects, construction loan interest, relocation of tenants during construction and a “developer fee” – for CHA in this case, according to the report. These are also expenses that other affordable-housing developers must bear.
Costs unique to Jefferson Park
Examining the costs that are unique to Jefferson Park, Moran’s report said wage and bidding requirements for public agencies make up a significant part. The authority must pay union wages and deal with bids from subcontractors separately from the bids from general contractors. Union pay can increase construction labor costs by 92 percent to 131 percent, according to a 2016 study cited in the report. In current projects, CHA is paying hourly rates of $106.28 to $123.25 for electricians, $118.32 to $122.35 for plumbers, $107.71 to $113.10 for heating and air conditioning workers, $152.07 to $168.06 for elevator technicians and $108.97 to $116 for carpenters, the report said.
Generally affordable-housing developers hire a general contractor to build a project and the general contractor chooses subcontractors. In contrast, public entities must contract with a general contractor and subcontractors separately. “Taking the general contractor out of the process of selecting subcontractors based solely on the lowest bidder can create and has created dissonance between general and subcontractors on projects and contract administration. These dynamics result in higher costs, with general contractors and subcontractors building in a cushion driving up the project costs to account for any management-related issues around coordination, timeliness and quality of product,” the report said.
The new Jefferson Park will have more large units than other affordable-housing developments – of the 278 units, 130 will have three bedrooms or more – which also adds to the cost “since more space must be constructed,” the report said. The extra expense amounts to an estimated $87,477 per unit.
Building “a new neighborhood”
Demolishing the existing buildings, which contain hazardous materials, and essentially “constructing a new neighborhood” with new utilities and streets is not part of the typical affordable-housing project, the report said, and that will add $51,341 per unit. And almost three years of complex construction is longer than the usual time to build or rehabilitate an affordable-housing development and will increase the cost by $28,500 per unit.
Finally, CHA is building two classrooms at the site for Head Start, the preschool education program, and space for its own management and maintenance employees. That adds $6,000 per unit.
The analysis tacked on two other expenses it described as “premium costs” that may affect other affordable-housing developments. One is pandemic-associated shortages of materials and labor and escalation in the cost of materials, adding about $60,600 per unit. The other is more intensive energy-saving design. “CHA adopted passive-house and net-zero-ready designs for Jefferson Park,” the report said. The cost: an additional $27,356 per unit.
All in all, the report concluded: “The Jefferson Park team has been mindful when designing the new Jefferson Park to be … efficient and economical in its design while still providing comfortable homes for residents and high-quality buildings that the CHA can successfully manage and maintain long-term.”
This completely sidesteps the real question: what is the goal here, housing people or building something? If the goal is to house people, is this the most economical way to do it? To refuse to answer that question strongly implies that the goal is something else.
The question of cost and the gain in net affordable units has been asked and answered. The CHA clearly and comprehensively explained the cost and their unique funding source and have stated that the gain of 278 family units was worth the cost. Supporters of affordable housing are moving on in their advocacy in favor of several affordable housing opportunities that are already in process or on the drawing board. I hope that the Cambridge community can join the fight for those desperately needed affordable units.
Area4 illustrates the correct usage of begging the question. Is the CHA omniscient? Or does the CHA perhaps have institutional biases? I support affordable housing, and I think we need to know whether this is the best we can do with this much money. Just saying that this is why it costs such a gobsmacking amount doesn’t answer that question.
The CHA are evidently embarrassed about the extremely expensive cost per unit of their proposed redevelopment. At the Planning Board Hearing, a member of the Planning Board asked why the CHA weren’t seriously considering “adaptive reuse.” Complete demolition of all eleven existing buildings and new construction adds to the cost, and using the “AHO” limits the opportunity to renovate or replace (build new) buildings of greater than four-story height. (Not to mention all of the “embedded energy” being dumped in landfills.) A different approach would result in a better plan that would be a better stewarding of public dollars for affordable housing, in Bono’s humble opinion. Are “soft costs” really so “soft”?? How much are the lawyers who specialize in these new and complicated “deals” getting paid (per hour)?? How much are the myriad “consultants” getting paid for things like the unwieldy apparatus for “relocation” of existing tenants? (Let’s not talk about it; let’s talk about “construction costs,” instead…) This is all a bit surprising, given that the “attraction” in this location is that the CHA do not even have to pay for the cost of “land acquisition” (since they already own it.) For the record, it’s not a “gain” of 278 units. It’s an increase of 103 units, which will be mostly 3-bedroom units, which are described as more expensive to do. In any case, those who live in these new projects will pay the price of a significant increase in density (or compression) – of 50 percent – an aspect of this plan, interestingly, that people who claim to “care” about people who live in affordable housing seem to not give a whit about. For the record, 57 basement units were vacated only recently after many years of flooding. Replacing these would restore the total number to 175 units, opening up possibilities for a much more reasonable – and likely also more affordable – plan, if you believe lower income people deserve reasonable places to live, too. Bono isn’t sure any of the “virtue signaling righteous” of Cambridge really understand or care about any of this.
The more we distort the housing market the more expensive things will get. At these prices you’d be better off just giving tenants money to balance out rent and build as much as possibly in the areas of the city current “soft” and ready for development.
PatrickWBarrett. You got it right. The more we distort the housing market, the more expensive things will get. However, so many in the city, including the City Council, do not understand this. The amount of money spent on useless expenditures boggles the mind, at the very same time needed expenditures are required e.g. fixing our roads; closing the gap on the city’s immense unfunded health insurance costs for city workers.
But the problems and the hypocrisy continue particularly at the Council level. We want affordable housing in the city, but have to remember that everyone who wants to live here,
doesn’t have a right to do so if they can’t afford it
even with the city’s help.
And the council members who want to see rent control implemented once again, should be honest enough to say that if the city wants to subsidize rents “that’s fine”, but don’t require landlords to do so.
This is almost a really good analysis. Ms Reinert explains all the difficult reasons why $900K seems expensive compared to what a relatively wealthy person might expect to pay for their own home. But leaves out one “small” detail–although Jefferson Park has some extra admin and other unavoidable costs, the land is FREE!
So maybe the engineers for this project are not incompetent. But that does not mean that our strategy is correct or that our housing planners are wise. Building $900,000 homes for those in need is just absurd, no matter what the cost drivers might be.
As Patrick notes, at these prices, let’s just cut some checks for people and be done. $100,000 per family towards down payments would help 9X as many families…