Two overriding conclusions are clearly indicated by an analysis of the Aided Construction Program:

1. There are housing producers in the County capable
of building quality housing at costs much lower
than have so far been generated in government
housing programs.

But-

2. The design and implementation of existing govern-
ment housing programs effectively discourages
these producers from participating.

The factor which accounts for this discouragement stems from a straw-that-breaks-the-camel's-back situation in which a variety of apparently minor requirements of the programs combine to create a situation where any possible benefits to the developer are outweighed by aggravation.

Among such factors are the following:

1. Too many requirements are made a part of the housing programs which are not directly related to the efficient production of quality units for a target market. These requirements are in the areas of:

Environment
Employment

Architectural Design
Marketing

Each of these demands increases costs, paperwork, development time, and developer exasperation.

2. Complexity of the legal requirements demand expertise not readily available from the lawyers who usually work for mediumsized developers. This forces the developer to change a member of the "team" he is comfortable with and trusts--a move not undertaken lightly.

3. Federal financing requirement discourage participation by small savings and loans. Again, a developer may be forced to go outside of a familiar and trusted development team.

4. The working capital requirement makes it impossible for

the developer to "mortgage out".

Significant amounts of cash

required in front reduce the number of developers who can participate in the program.

5. The requirement of government programs for access to a developer's books and records as well as for the disclosure and regulation of a great deal of detail in regards to the project creates resistance. Medium-sized successful developers rightly attribute their success in the private sector in large part to their own control over their projects as well as their willingness to be accountable for their product.

Most legitimate developers are more than willing to submit their product for evaluation according to "bottom line" criteria: value of product in relation to net costs. Unusual regulation is perceived by the developer, however, as increasing his own risk by transferring control over important project elements into the hands of persons who are perceived to be adversaries with lessthan-competent judgment.

The government housing programs are simply not designed with the successful medium-sized developer in mind.

A third conclusion drawn from the analysis of the Aided Construction Program relates to the manner in which a housing program is administered. The key factor in attracting costconscious developers appears to be the establishment and maintenance of good faith between the developer and the government agency.

Its

Although intangible, this element is essential! maintenance must be a prime objective of the agency during both the selection and the implementation phases of the program.

It would seem that some situations are more conducive to the establishment of good faith than others. The Aided Construction Program, for instance, has been geared to a small geographical area where agency, developers, and community officials can relate on a personal basis in the pursuit of mutually defined goals.

It is geared to local developers and to medium to small projects. It is geared to small, flexible staffs both on the part of the agency and on the part of the developers. It is geared to the willingness of the funding source to allow flexibility in the use of funds and autonomy in making funds-related decisions.

How reproduceable these factors are in other settings is open to conjecture. They do seem to have worked in the Turtle Creek Valley on a limited basis.

While the Aided Construction Program does not presume to offer a panacea for housing, perhaps it does harbinger new directors which might hold promise.

COMPARING ACTUAL AMOUNTS TO CORRESPONDING FRODABLE HUD SECTION 236 ATOMits
FOR THE FARKSIDE APARTMENT DEVELOPMENT (WILMERDING)

Developers Equity Contrib. (1,111 ) ( 1,869) (40,000 ) ( 67,268 ) (

75827,268)

Outside Capital Required 16,639

19,411 599,015 698,806

2,772

99,791

NOTES: (1)

Architect's fees for the HUD units were assumed to be 6%. (2) Total construction time for both units is 12 months.

(3) Total Development costs for the HUD units were assumed to be $18,112 for

a one-bedroom unit and $21,735 for a two-bedroom unit plus $27,090 for
change order for unusual subsurface problems encountered.

(4) Land and structure amounts for the HUD units is the residual of all

other items.

OPERATING STATEMENT ANALYSIS OF THE KIULU HER CUPS EYE CA
COMPARING ACTUAL AMOUNTS TO CORRESPONDING PRODABLE HUD SECTION 236 ANGGRIS
FOR THE PARKSIDE APARTMENT DEVELOPMENT (WILMERDING)

NOTES: (1) Rental income amounts assume that the tenant will directly pay his own electric costs (units have gas heat).

(2) HUD unit rents were based upon a monthly rent of $140.63 for a one-bedroom unit and $154.69 for a two-bedroom unit less estimated monthly electric

costs of $10 and $12 respectively, plus $2 per month (exception limits) for change order for subsurface problem.

(3) Vacancies were computed at 5% for HUD units.

(4) Operating expenses for HUD units are the residual of total income over
mortgage payments and net income for builder-sponsor.

(5) Mortgage payments are based upon 30 year, 8.5% mortgage for the actual
units and a 40 year, 1% mortgage for the HUD units (with a market rate
of 9%).

(6) HDC amounts are for a 25-year period while HUD amounts are for a 40-year

period.