A number of communities contract with private companies to help manage their inclusionary housing programs. Most often, these are realtors or real estate companies engaged to help market inclusionary homeownership units, but a few programs have engaged private developers to help with ongoing monitoring and stewardship of inclusionary housing portfolios.
A report by NCB Capital Impact and Neighborworks America described how the city of Lafayette contracted directly with an independent consultant for a range of services related to administration of their inclusionary homeownership program.
Lafayette’s contractor managed a central mailing list, helped market new development projects, and screened buyers for eligibility. The city charges the developers a fee of $1,000 per unit for this assistance rather than encouraging developers to contract directly with the consultant.
The same contractor was then able to provide ongoing monitoring services to the city’s 70 deed-restricted homeownership units and to help find and screen buyers at resale (homeowners pay the same $1,000 fee at resale). The city supplemented these fees with other city funds and contracted for 20 to 25 hours per month of the contractor’s time for a total of roughly $20,000 per year.
Santa Barbara County, California
In spite of the advantages of outsourcing, Santa Barbara County, after contracting out administration of their program to several private firms, decided to bring the program back in house. They found that their contractors made important mistakes that the county was ultimately held accountable for and decided that direct staffing would improve the effectiveness of the program.
- Allows jurisdiction to access specialized skills without dedicated staff
- Level of work and budget can fluctuate over time as needs change
- Contract services may be less expensive than city staff
- It may be easier to hold contractors accountable for performance
- It is difficult for the contractor to lobby for increases in funding or guide the evolution of a program over time, but no one else has detailed knowledge of program needs
- There is a risk of the program becoming too dependent on a single individual who becomes very difficult to replace