The bloated costs of publicly funded housing projects continue to astonish me, and from the number of calls I receive from others in our industry, it is clear that they are amazed as well.
The most recent example is the announcement that Modesto, through the Housing Authority of Stanislaus County, will build 11 apartment units on Downey Avenue, spending $2.4 million. These units will each be 650 square feet and the complex will have a "community room for tenants to share."
A home of 650 square feet is tiny. Many single-family homes have living and family spaces that large.
Amazingly, the cost calculates to $334 per square foot. Custom homes in very upscale neighborhoods sell for half of that, and reading the fine print, the cost does not even include the land, which the city already owns.
The small construction company that I work with can build you a decent home for $100 a square foot and a really nice one for $150. Boost that past $200 and we are talking some high quality construction, with top-notch materials. Is anyone talking high quality materials and workmanship in these units? I doubt it.
In November, The Bee reported that Modesto plans to spend about $500,000 (of your money) to transform a boarded up airport district duplex into a community center for kids. This little number worked out to $230 per square foot, another excessive amount.
Don't get me wrong, I am all for providing a place for at-risk kids to come and have a safe place to hang out and enjoy recreational benefits. I am a longtime board member of The Salvation Army and the Red Shield Center where we provide those services. I also served for many years on the board of a west side group home which is now a community drop-in center. These are essential, and we need many more.
But at these costs? Think of how many needy tenants and wandering street kids for whom we could provide services if we used the carefully budgeted methods employed by our local nonprofit organizations. With these kinds of dollars, I am confident that we at The Salvation Army could, for instance, easily double the effect of the monies spent.
This is not the first time I have challenged local housing folks on this topic, and they always have lots of good answers: We have to pay prevailing wages. You just do not understand all the costs related to these projects. There are more regulations than you can imagine.
And my answer is real simple. If you have to spend these amounts to accomplish your goals, then give the private sector these dollars and we will give you far more value for your money.
In fact, if you gave us those same dollars, we could easily provide twice the benefits and still make a profit.
It is obvious that "other people's money" is easy to spend. In the private real estate world, we would never get the first project off the ground with this mentality and-or set of rules and restrictions. My banker would laugh me out of the building if I proposed such a budget for a project.
But even with the governmental and agency hurdles we face, we continue to produce our products at half the cost of what the government spends. We could only hope public funds could be more wisely and appropriately expended.
Hagerty is an Oakdale developer active in community nonprofits. Send comments or questions to email@example.com.