Colorado Housing and Finance Authority retained the services of BBC Research and Consulting to investigate factors that influence costs of building and renovating affordable multifamily rental properties across the state. CHFA plans to use the research to inform cost-containment measures in future QAPs as well as develop best practices and raise awareness of the issue of increasing development costs.

CHFA has already released the following key findings from the study:

  • The average project cost for a LIHTC development in Colorado rose by 59 percent between 2011 and 2016;
  • Lack of adequate and skilled construction labor and increasing construction costs are among the top reasons for increasing development costs;
  • There do not appear to be significant cost differences between developer type;
  • A development’s size influences economies of scale and can help manage costs; yet the size of a development is often reduced by funding constraints, smaller market locations, density limitations, and developer capacity;
  • Market forces are driving “over-amenitization”; and
  • Local regulatory environment including development standards, fees, and lack of coordination among funders are among cost influencers.

Several discussion groups with stakeholders are planned for the near future, including the following two for developers and investors:

  • Developers and Consultants
    • November 3, Denver
    • Late January/Early February, Grand Junction
  • Investors
    • Week of December 4, Webinar

If you would like to participate in an upcoming discussion group, please contact Paula Harrison at pharrison@chfainfo.com or Tasha Weaver at tweaver@chfainfo.com.