The pros and cons of large scale small scale and scattered site development

Large-scale development dominated the development of dedicated affordable housing for decades. Beginning in the 1970s, problems associated with this approach became increasingly apparent, leading to the demolition of large high-rise affordable housing projects such as Pruitt-Igoe in St. Louis and Cabrini Green in Chicago. Since the launch of the HOPE VIA federal program by HUD aimed to revitalize decaying public housing projects, often into mixed-income developments. Grants are chosen based on a competition held by HUD. program in the 1990s, there has been a shift toward reducing the concentration of affordable housing. This has often meant developing smaller multifamily buildings. While there are practical challenges involved, some advocate going even further and scattering subsidized units throughout a neighborhood in low-density buildings.^[1] Although massive affordable housing developments containing upwards of 1,000 units are rarely constructed today, questions remain about whether localities should prioritize large-scale development, the development of smaller multifamily buildings or the assembly of scattered-site properties. Each approach has advantages and disadvantages, and in many jurisdictions, there is a role for each. Today, large-scale development is generally defined as a single site containing 50 or more units, which may include multiple buildings.^[2] Other forms of development include small multifamily buildings (21-49 units); very small multifamily buildings (5-20 units); and duplexes, townhouses, and other 1-4 unit buildings (which are typically classified as single-family buildings). Scattered-site development can consist of a combination of single-family buildings and very small multifamily buildings. Some owners create scattered-site portfolios by purchasing and conducting moderate to substantial rehab of individual units (or buildings with fewer than 5 units) across a neighborhood or city. In some cases, housing authorities now own and manage scattered-site public housingA federal program dedicated to providing decent and safe rental housing for low-income families, older adults, and persons with disabilities. There are around 1.2 million houesholds residing in public housing units, managed by over 3,000 housing authorities. Programs differ in types and sizes. as a result of having purchased newly constructed units in scattered inclusionary developments. There can be economies of scale in the development of large-scale projects, making these projects less expensive on a per-unit basis. When the needed infrastructure is not already in place, such as in many greenfields (previously undeveloped areas on the outskirts of a city) it may be cost-prohibitive to build the roads, sewers, and other infrastructure needed for small buildings. Large-scale development can be less expensive to develop and operate than other types of development Large-scale projects are also generally less costly, on a per-unit basis, to operate than the smallest projects because of efficiencies in administrative, maintenance, and other operating costs. There is evidence that operating costs for scattered-site developments are particularly high, because operation of scattered-site affordable housing often involves fewer shared features (heating and cooling systems), disparate housing types, perhaps located in several different neighborhoods. Distance between units can add to maintenance costs and impede property managers’ efforts to monitor properties and maintain relationships with tenants. For scattered-site developments, some property managers recommend that properties be in close enough physical proximity that property managers can reasonably visit each site at least once a week. That said, some owners are experimenting with technology to reduce costs, including smart systems that alert property managers to problems on a property, such as damage or a broken washing machine, and metering systems which can help detect leaks, although there is some concern that these systems may be too expensive for operators of affordable housing, including local nonprofits, to invest in them. Asset management for large-scale developments can also be more efficient than for either very small multifamily or scattered-site development. Real estate asset managers are responsible for tasks including financing arrangements, capital improvement schedules, and reserve funds. They focus on maximizing a property’s value for investment purposes and increasing returns to owners. In a scattered-site portfolio, asset managers may need to monitor multiple financing agreements for different properties, which can place a burden on asset management staff. Small and very small multifamily developments and a scattered-site portfolio are probably less likely than large-scale developments to have a full-time, specifically designated asset manager. These functions may instead be performed on an ad hoc basis by the organization’s management team. If this leads to a less professional approach to asset management, it could have a negative impact on the portfolio’s long-term profitability and, possibly, sustainability.