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<br /> <br /> <br />7 <br /> <br />Point of indifference or Amount developer is willing to pay: $14,400,000 <br />Price per affordable unit: $423,529 or ($14,400,000 / 34 affordable units) <br />Price per market rate units: ($14,400,000 / 191 market rate units) <br /> <br />15% Very Low Income development with density bonus <br />The formula is slightly different when accounting for the density bonus. <br />[Profit with no requirements] - [Profit with density bonus and affordable units] = [Point of indifference] <br />Point of indifference / Amount developer is willing to pay: [31,740,000] - [29,600,000] = [$2,090,000]8 <br />Price per affordable unit: $61,500 or ($2,090,000 / 34 Affordable units) <br />Price per market rate units: $10,900 or ($2,090,000 / 191 Market rate units)9 <br /> <br />Methodology - <br />Our assumptions are based on a median quality Type III construction project for rental and V for <br />ownership without unusual site work, construction or parking requirements, and that the project is built <br />without a prevailing wage requirement. Affordable rates are priced ten percentage points below the <br />maximum permitted rents to ensure an adequate pool of potential renters. <br />Sources: <br />Rents, unit size, amenities and operating assumptions: Databases (CoStar and Axiom Metrics). <br />Interviews with sales brokers, managers of completed projects and developers. Review of city records <br />on projects in various stages of development in Redwood City. General internet research. <br />Interest rates and terms: Interviews with mortgage brokers and developers. <br />Sales prices of completed rental developments, land price and capitalization rate: Databases (CoStar, <br />Chicago Title, Old Republic Title), Mortgage firm reports. Interviews with land brokers, developers. <br />Profit thresholds: Interviews with developers, sales brokers and mortgage brokers. <br />Construction costs: Interviews with active developers in Redwood City and general contractors. <br /> <br />8 Numbers may not add up do to rounding <br />9 This is based on the number of market rate units without density bonus because in the in lieu fee example, the <br />developer would no longer be entitled to the extra units. <br />7.A. - Page 55