Another important parameter for developers to consider is development cost per unit. All things being equal, projects with lower development costs per unit will require less tax credit. And as we saw in a previous post, tax credit per unit is an important tiebreaker criteria employed by the North Carolina Housing Finance Agency. In the table below we present development cost per unit for projects awarded credits in 2012.
For projects that received awards in 2012, the average development cost was $121,667 per unit. Age restricted (elderly) projects averaged $121,796 per unit, while general occupancy (family) came in at $121,603. New construction deals averaged $122,455 per unit, while rehabilitation came in at $118,402. There were no adaptive reuse projects in North Carolina’s 2012 allocation.
The graph below shows the distribution of awards.
The majority of projects were clustered between $110,000 and $130,000 per unit. Only a few exceeded this amount; a handful came in between $100,000 and $110,000. In order to be competitive, sponsors should attempt to keep their development costs below $130,000 per unit.
Allen & Associates Consulting, Inc. specializes in development consulting. Feel free to contact me (Jeff Carroll) at 704-905-2276 with any questions you may have regarding your project.