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84 Alameda Countywide Homeless and Special Needs Housing Plan The cost assumptions utilized in creating Table 7 follow. Please note that all estimates are stated in 2005 dollars and have not been adjusted for inflation. 1. Per unit capital development costs for rental housing production: Capital costs for the production of affordable housing in Alameda County vary widely. This estimate assumes total development costs ranging from $160,000 for a studio apartment to $320,000 for a three- or four~bedroom unit. This estimate assumes that approximately one-third of all capital development financing will come from local government sources. State and federal programs, local lending, and private contributions will make up the balance. New construction is often the most cost-effective means for creating supportive housing, especially when local governments are able to help nonprofit developers locate and secure additional sources of subsidy. The acquisition and rehabilitation of existing housing can be less costly than new construction, but depending on the location, condition, and configuration of the building and attractiveness of the neighborhood, it can also be equally expensive. Investing in the development of permanently affordable housing owned by nonprofit organizations means that these units will be permanently affordable to people in need, regardless of future changes in the housing market or in resources available for affordable housing. Making deep capital investments in construction or acquisition and rehabilitation of permanently affordable housing reduces the amount of ongoing operating subsidies needed by the project, by reducing the debt needed. Even with deep capital investment, however, subsidies of operating costs or tenant rents will be needed for the life of the project when residents' incomes fall below 30% ofthe area median, which is the case for virtually all of the people targeted by this plan. 2. Per unit capital development costs for master leasing are estimated at $3,000 per unit for modest repairs and accessibility accommodations. 3. Annual operating cost subsidies are estimated to be $6,200 per unit per year. Please note, however, that this represents only the operator's costs. In the case of master-leased or other private-market units, the actual rental amount could be as much as double, based on unit size, age, amenities, and location. Tenant households are projected to pay 30 percent of their adjusted gross household income, the standard payment formula for Section 8 and supportive housing properties. These additional rental subsidies will have to come from a combination of local, state, and federal sources, such as the Housing Choice Voucher program (Section 8), which is administered by local public housing authorities, and the Shelter Plus Care program, which is administered by Alameda County Housing and Community Development, local city governments, and some housing authorities. 4. Annual support services costs are estimated to range from $2,000 to $6,000 per year for individuals and $3,000 to $9,000 for families, based on the level of services required on site. These estimates were derived from the experience of local area supportive housing providers and the Corporation for Supportive Housing. This chapter of the Alameda Countywide Homeless and Special Needs Housing Plan presents permanent housing goals for the target populations and outlines the estimated costs to ensure housing stability for more than 15,000 of the Alameda County's most vulnerable citizens. Supportive housing is a key strategy, and both existing and newly constructed units of various sizes will be needed to meet the needs of individuals and families. Due to the high costs of housing in the Bay Area, the vast majority of these units will be found in the private rental market, and will require long-term rent subsidies to assure affordability.