Kolaski cited the case of one of his clients who is facing $133,000-per-unit construction costs to build an addition to an existing elderly apartment building in the city. The project is modestly priced for the area, but it is still too expensive to qualify for an FHA loan.
“With unemployment rising and wages not keeping pace with rising rents, it’s especially important that the FHA program be available to provide much-needed affordable housing to our cities’ working families and individuals,” he said. “There are few, and oftentimes, no alternatives in the market available to them.”
Ruping, who is in the planning stages of developing a 180-unit, garden-style walk-up apartment in the Boston area, has pegged his development costs at $176,000 per unit. That far exceeds current FHA loan limits for high-cost areas.
Twenty percent of Ruping’s units are earmarked for senior citizens with no higher than 80% of the area’s median income.
“I have struggled to find ways to save on construction costs and have already reduced my budget by $2 million,” he said. “If I am unable to finance the project with an FHA-insured loan, I plan to sell the land to a large real estate investment trust (REIT).
“The REIT will build a luxury, high-end apartment or condominium because this market can support such a development. The community will lose the opportunity to provide quality, affordable rental housing for seniors and families.”
Immediately following the hearing, the housing subcommittee approved H.R. 1985 and the bill was subsequently passed by the full committee the next day.
To read H.R. 1985, click here and type the bill number in the box at the upper left.
Photos by Herman Farrer
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