Joe Cortright who writes for City Observatory has corroborated what I’ve been saying for quite some time now: the non-profit housing industrial complex produces subsidized housing very, very inefficiently.

The costs are substantial. In San Francisco, one of the largest all-affordable housing projects, 1950 Mission Street, clocks in at more than $600,000 per unit.  That number isn’t getting any lower: new units in that city’s Candlestick Point development will cost nearly $825,000 each, according to recent press reports. Brown’s point is that at that cost per unit, its simply beyond the fiscal reach of California or any state to be able to afford to build housing for all of the rent-burdened households.

You can and should read the whole post here.

Locally, I’ve pointed out that two projects, one built on Beacon Hill and the 12th Avenue Arts project on Capitol Hill produced 200 units of housing for a total cost of $92 million dollars, or about $460,000 per unit. Taken by itself, the 12th Avenue Arts project produced 88 units for $47 million or $534,090,91 per unit. To give you a sense of how ridiculous this is consider this townhouse for sale in the Greenwood neighborhood in Seattle:

That’s right. For roughly the same price that the non-profit complex produced 200 units, that cash could have bought those 200 families three bedroom homes, free and clear with no debt. Done! Imagine a household just being given a house or if the funding was used to purchase existing assets rather than using the money to buy pricey land, high cost labor, and lots and lots of transaction fees. The system used to produce free standing subsidized housing is grossly inefficient but very politically powerful.

What makes this worse, is that here in Seattle, the non-profits are now strong arming the City to impose a fee scheme to wring money out of the private development of housing to fuel their excesses. Mandatory Inclusionary Zoning (MIZ) is being deployed because the non-profit costs are skyrocketing. Far from being some kind of Bargain, MIZ is nothing more than an extortionary scheme to raise the funds for ridiculously expensive housing.

Ironically, the townhouse in Greenwood will be taxed and the only way to pay for those taxes is to raise the price of the house. That means that incrementally, all new housing will go up in price. While it may not seem important to many in town, those incremental boosts mean some families will not be able to complete financing. And some projects won’t get built. And many, many more people will be faced with fewer choices. The real toll is the households who might want to buy but won’t be able to, so they’ll stay in an apartment that would be affordable to someone else. This stacking effect of deferred purchases, fewer apartments and houses, and increasing demands means even higher prices and sustained scarcity.

And every candidate for Mayor supports “higher developer fees.” I’ll have more on the Mayor’s race tomorrow.