Tiebreaker Example

Example

For this example we are going to assume the Committee decides the following are the only four adjustment modules needed to level the playing field and incentivize good housing policy.

Projects that rehabilitate units that are not “At-Risk” don’t deliver as much public benefit as newly constructed units and should not receive full value for such units. Therefore, reduce their unit count to the  proportion of rent benefit achieved in the next 40 years as compared to a newly constructed project in the same county.

Projects located in high resource areas that average more than 2 bedrooms per unit make a greater impact for households with children and should be considered more valuable. Therefore, increase their unit count by 10%.

Projects located in densely populated areas, areas with high rents, and areas with high median incomes are inherently more costly to develop in but should not be disadvantaged. Therefore, fully offset the average historic cost difference to level the playing field between higher and lower density areas.

Projects that provide more square footage cost more to build but should not be disadvantaged. Therefore, offset the average historic cost difference to level the playing field between senior, special needs, and family projects, except that no offset shall be provided for building more than 200 square feet per unit above the TCAC minimums.

For this example let’s assume we have four new construction applicants.

The Red Road project requests $12 million credits to develop 60 units with the average square footage (787 per unit), located in a normal resource area that is slightly more densely populated than the state average.

The Green Gardens project requests $12 million credits to develop 58 units with an average 787 sq. ft. per unit, located in a normal resource area that is slightly less densely populated than the state average.

The Blue Boulevard project requests $14 million credits to develop 50 units with 900 sq. ft. per unit, located in a normal resource area that is slightly more densely populated than the state average.

The Orange Overlook project requests $14 million credits to develop 60 units with 900 sq. ft. per unit, located in a high resource area that is as densely populated as the state average.

Compared to Red Road we’d expect Green Gardens to score worse as it provides 2 less units and does so in an easier to develop area for the same amount of credits.

Blue Boulevard provides more square footage than Red Road but fewer units in the same area while asking for significantly more credits.

Orange Overlook also requests more credits than Red Road but includes more square footage and is located in a high resource area.

In the end the most effective projects at delivering public benefit using the least resources were Orange Overlook and Red Road. Blue Boulevard needs to request less credits or provide more units to be competitive. Green Grove is close but needs to take better advantage of its lower than average population density or get more state/local financing.

Calculations

Red Road serves as our baseline. It enjoys a small reduction in the denominator for being in an area with slightly higher density/rents/median income than the state average.

Green Gardens has its 58 units multiplied by 100% for being new construction and then 100% for not being in a high resource area. It’s score is worsened with the small increase in the denominator for being in an area with slightly lower density/rents/median income than the state average.

Blue Boulevard achieves the lowest score by proposing less units and requesting more credits. The fact that it has larger units is offset by a denominator reduction of 300 per square foot (300 * (787 - 900) * 50). While this levels the playing field regarding costs, the low unit count kills the score.

Orange Overlook achieves the highest score by proposing a good amount of units per million credits. It’s raw score without adjusters would be 4.3 units per million (60 / 14). It’s score after leveling the playing field for its larger units sizes would be 5.0 units per million (60 / (14 – 2)). At this point it would still have a lower score than Red Road’s 5.2 units per million. The difference being Red Road is in a more difficult to develop location. However, after taking the high resource area into account Orange Overlook score jumps to 5.5 units per million (60 * 110% / (14 – 2)).