Affordable Housing case study

REVENUES Rental Income 12 x4 x $1,050 Coin Operated Laundry Income Total $50,400 $ 1.600 $52,000 EXPENSES Loan $350,000 @3.67%20yrs 524,372/ Legal/Accounting $ 3.000 Management Fee (10% of Rental Income) $4.320 Garbage $ 2,680 Utilities ($275/mo/apt for heat, A/C. electricity/gas times 4 times 12) $13,200 Water/Sewer (S80/M0 X 4X 12) $ 3.840 Repairs/ Maintenance $ 4,020 Plowing/Mowing/Supplies $4,500 Taxes/Insurance (18% of Expenses $10,788 Contingency (5%) 53,536 Total $74,256 NET INCOME ($22,256 The City HRA pays for the utilities, garbage, and water/sewer as part of the rent One of the difficulties in providing affordable housing is the rising costs of expenses, especially property taxes (see online what mul family owners pay compared to single family owners), not to mention keeping revenues at what people can pay for rent. There is a lot of talk about affordable housing but the numbers must work for affordable housing to be built. As you now know from your readings It takes more than one funding source to build affordable housing, but once built, the question becomes one of how do you keep rents affordable? The situation above is typical of this problem and one in which I faced as an incoming Housing and Redevelopment Authority OHRA! Executive Director for the City that operations deficit is at about 30 of revenues, so it needs to be closed or the City will sell the plex (and 6 6 others like it that they own). Remember, the City just needs to breakeven, not make a profit of 18%, which is the average for a developer, for the 4-plex to remain affordable. Your job here is to balance the proforma, so that there is no loss to the City of Metrostatepolis HRA in keeping this 4 plex affordable and the other like it). That is what would you do to make that deficit. since the City Council will likely sell them if you don't meet this goal? Your answer should include a revised pro-forma te show where you'd make cuts or raise revenues to close this deficit to zero REVENUES Rental Income 12 x4 x $1,050 Coin Operated Laundry Income Total $50,400 $ 1.600 $52,000 EXPENSES Loan $350,000 @3.67%20yrs 524,372/ Legal/Accounting $ 3.000 Management Fee (10% of Rental Income) $4.320 Garbage $ 2,680 Utilities ($275/mo/apt for heat, A/C. electricity/gas times 4 times 12) $13,200 Water/Sewer (S80/M0 X 4X 12) $ 3.840 Repairs/ Maintenance $ 4,020 Plowing/Mowing/Supplies $4,500 Taxes/Insurance (18% of Expenses $10,788 Contingency (5%) 53,536 Total $74,256 NET INCOME ($22,256 The City HRA pays for the utilities, garbage, and water/sewer as part of the rent One of the difficulties in providing affordable housing is the rising costs of expenses, especially property taxes (see online what mul family owners pay compared to single family owners), not to mention keeping revenues at what people can pay for rent. There is a lot of talk about affordable housing but the numbers must work for affordable housing to be built. As you now know from your readings It takes more than one funding source to build affordable housing, but once built, the question becomes one of how do you keep rents affordable? The situation above is typical of this problem and one in which I faced as an incoming Housing and Redevelopment Authority OHRA! Executive Director for the City that operations deficit is at about 30 of revenues, so it needs to be closed or the City will sell the plex (and 6 6 others like it that they own). Remember, the City just needs to breakeven, not make a profit of 18%, which is the average for a developer, for the 4-plex to remain affordable. Your job here is to balance the proforma, so that there is no loss to the City of Metrostatepolis HRA in keeping this 4 plex affordable and the other like it). That is what would you do to make that deficit. since the City Council will likely sell them if you don't meet this goal? Your answer should include a revised pro-forma te show where you'd make cuts or raise revenues to close this deficit to zero