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Get Government Out of the Construction Business

Summary:
USA Today: Nearly three years after city voters approved a .2 billion construction program over 10 years, the city has  yet to see the first building completed. Average per-apartment costs have zoomed more than 0,000 past prior predictions, the study by city Controller Ron Galperin finds. …At an average cost of 1,373 per unit – with many apartments costing more than 0,000 each –  building costs of many of the homeless units will exceed the median sale price of a market-rate condominium. …Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing. Those items comprise up to 40% of the cost of a project, the study found. By contrast, land acquisition costs averaged only 11% of the total costs. Based on

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USA Today: Nearly three years after city voters approved a $1.2 billion construction program over 10 years, the city has  yet to see the first building completed. Average per-apartment costs have zoomed more than $100,000 past prior predictions, the study by city Controller Ron Galperin finds.

…At an average cost of $531,373 per unit – with many apartments costing more than $600,000 each –  building costs of many of the homeless units will exceed the median sale price of a market-rate condominium.

…Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing. Those items comprise up to 40% of the cost of a project, the study found. By contrast, land acquisition costs averaged only 11% of the total costs.

Based on a recent audit of the program.

It’s absurd for a government to be building houses, a task for which it is manifestly unsuited. What the government should be doing is easing restrictions on building, improving public transportation which increases the supply of effective housing and dealing with any shortfalls by using housing vouchers.

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Alex Tabarrok
Alex Tabarrok is Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University and a professor of economics at George Mason University. He specializes in patent-system reform, the effectiveness of bounty hunters compared to the police, how judicial elections bias judges, and how local poverty rates impact trial decisions by juries. He also examines methods for increasing the supply of human organs for transplant, the regulation of pharmaceuticals by the FDA, and voting systems.

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