BBC Cost Study Overview

                                                                                                                                                   October 6, 2017

In 2016 Colorado Housing and Finance Authority (CHFA) retained BBC Research and Consulting to help identify trends and factors influencing the costs of building and renovating affordable multifamily rental housing in Colorado.

Development cost escalations are not unique to Colorado, nor are they isolated to the affordable multifamily market. However, as the state’s allocating entity of state and federal Low Income Housing Tax Credits (LIHTC), CHFA engaged this study to ensure that it was being proactive in managing and encouraging cost containment in those developments seeking to avail themselves of LIHTC.

BBC’s analysis explored both four and nine percent LIHTC applications submitted between 2011 and 2016 in developments built across the state serving a variety of markets including seniors and special needs populations. In addition, BBC conducted interviews with private and nonprofit developers, general contractors, architects and builders to inform their findings.

CHFA is evaluating findings and recommendations noted within the report. Among the ways that CHFA intends to use this research are:

    • To inform the consideration of cost containment measures in the Qualified Allocation Plan (QAP);
    • To develop training, comparative data, and best practices for LIHTC developers, investors, and trade partners including general contractors and architects; and
    • To raise awareness of the need to consider costs as a key element of the program given the increased demand for the credits and as part of our overall fiduciary duty in managing the program.
Key takeaways include:

    • The average project cost for a LIHTC development in Colorado rose by 59 percent between 2011 and 2016;
    • Lack of adequate and skilled construction labor and increasing construction costs are among the top reasons for increasing development costs;
    • There do not appear to be significant cost differences between developer type;
    • A development’s size influences economies of scale and can help manage costs; yet the size of a development is often reduced by funding constraints, smaller market locations, density limitations, and developer capacity;
    • Market forces are driving “over-amenitization”; and
    • Local regulatory environment including development standards, fees, and lack of coordination among funders are among cost influencers.
Discussion Groups:

To share this information and further inform best practices and QAP adjustments, CHFA will be convening discussion groups with the following stakeholders.

    • Tax Credit Advisory Group (TAG)
      • October 27, Denver

    • Developers and Consultants
      • November 3, Denver
      • Late January/Early February, Grand Junction

    • General Contractors and Architects
      • Week of November 6, Denver

    • Investors
      • Week of December 4, Webinar
If you would like to participate in an upcoming discussion group, please contact Paula Harrison at or Tasha Weaver at

View the Full Report
Please note: Interviewee comments detailed in the report are reflective of that individual’s perspective and opinion. They do not necessarily reflect the opinion of CHFA, it’s staff, board of directors, or other partners involved in the LIHTC program.