News & Analysis

608 California-Funded Apartments Built for Over $1 Million Each

608 state-funded apartments under construction in California cost over $1 million to build, casting doubt on the effectiveness of what is the largest publicly-funded housing program in the nation. 

Officials blame a bevy of factors, ranging from supply chain issues to worker shortages and labor and material prices, but evidence suggests the government may be playing an outsize role in ballooning project costs. 

The U.S. Government Accountability Office, which conducted an analysis of California’s housing program in 2018, found 14% of the total cost of publicly-funded housing in California goes to administrative costs like consultants and fees, “the highest in the country and more than developers spend on land.” 

Local officials also have involved themselves in projects, directing funding towards key constituencies and modifying projects to meet their preferences. In Oakland’s Roosevelt project, for example, local officials required the addition of commercial space, which meant developers had to redesign the project to include another elevator and even more costly underground parking. 

After factoring the cost of two levels of underground parking, a fully unionized workforce and the U.S. Green Building Council’s highest level of environmental certification, per unit prices for the 80-unit building easily exceeded $1 million — for reference, the cost to purchase the median house in California today is $760,000

In San Francisco, where state-funded housing projects cost over $1.3 million per apartment — the state record — officials have mandated the inclusion of public art, more access for those with disabilities, and the hiring of workers from local disadvantaged neighborhoods. 

“Each of these issues has its own constituency and has its own advocacy and its own social benefit,” said Lydia Ely, a San Francisco housing official. “Each one on its own is worthy, and added up all together, they start to make an impact.”
Meanwhile, as Californians face a 3.5 million unit housing shortage, California Governor Gavin Newsom has requested another $2 billion in housing funding for the 2022-2023 budget, the negotiations for which are under way in Sacramento.