Prompted by rapidly rising rents, increases in development costs, national and local concerns over the cost of developing affordable housing, and increased demand for affordable housing, this study examined trends in the Low-Income Housing Tax Credit (LIHTC) development costs in Colorado. The analysis aimed to identify cost trends, explain why development costs are increasing, and consider solutions for the challenges created by rising development costs.
Results show recent cost increases are due to a handful of factors, but the primary driver is construction costs (labor and materials). Overall, findings from the study recognize CHFA’s ability to balance innovation and flexibility with cost containment.
Identified Strengths: Through our research, we found that CHFA is a well-trusted and strong local partner in LIHTC development.
Industry Engagement: We conducted more than 20 interviews with developers, builders, architects, and nonprofit housing providers, resulting in a variety of perspectives on rising costs and strategies to manage development challenges.
Policy Recommendations: BBC also proposed some modifications to the QAP to help incentivize cost-conscious developments without imposing rigid cost caps.