Low-Income Housing - Built at Twice the Cost of Market Rate Homes

The high costs of subsidized affordable housing is classic BIG government at work....

This is why low-income housing is so costly in the Twin Cities

New low-income housing can cost as much -- or more -- as any other kind. 

Ironically, government-subsidized "affordable housing" is often built at twice the cost of market-rate homes. 

"They are so expensive because of the dysfunctional nature of how they are produced," said Alan Arthur, CEO of nonprofit housing developer Aeon in the Twin Cities. 

The homes are called "affordable" because low-income people can afford the subsidized rents. But they are more expensive to build, with the government paying the cost.  

Critics say giving low-income people such expensive homes is like feeding the hungry with caviar. It's wasteful, they say, at a time when affordable housing is becoming a crisis. 

"The shortage is devastating. It is definitely getting worse," said Eric Hauge, tenant organizer with Homeline, a nonprofit Minnesota advocacy group. 

Low-income apartments in St. Paul's Green Line Hamline Station are being built for $400,000 each. That puts them among the top 12 percent of comparable units for sale in St. Paul, according to the website Zillow.com. 

For every one of those units built, two median-priced homes in St. Paul could be purchased.
Other affordable units also cost more than market-rate housing. For $296,000 apiece, affordable units were built in the Project for Pride in Living in St. Paul. In Minneapolis, the Franklin-Portland Gateway project in 2012 produced 97 affordable units for $260,000 to $341,000 each.

Why does low-income housing have such high price tags?

Developers and housing advocates say it's because of high financing costs, expensive urban locations, housing regulations and a failure to embrace lower-cost types of housing.

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