Case: Douglas Plaza.

Housing is the most important single investment of most US families -- and home ownership in the US is high relative to most of the world. But not everyone can afford to own his/her own home, and urban lower/middle-class home ownership is often not feasible without subsidies of one form or another. This raises important social issues -- as well as development process issues -- which we will seek to address in this class.

This case is about a developer seeking subsidies to permit the building of condo-apartment building in the South End/Roxbury area in 1986. The case provides an introduction to the subsidized housing market and insight into the skills required to work that market. Because subsidy programs are constantly changing, our prime focus will not be on the details of the particular programs in force at that moment, but on the underlying logic of these programs, their operation, and their role in the development process.

As you prepare this case, please consider these issues:

• How should one estimate the size and nature of the potential market for the subsidized and non-subsidized portions of this project? How do they differ?
• What are the most important demands of each of these market segments? Based on the limited information in the case, how well do you think the original and final designs of the project meet these demands? Is there anything significant you would change? What financial projections can you make?
• How did this situation develop? What were the key decision points in the process? What did the developer do at each of these points? Do you essentially agree with these decisions to date? If not, what would you have done differently?

• What is the role of housing in our society/economy? Why is it so important?
• Why do we have subsidy programs for housing? What else is subsidized in our society? Why? Do housing subsidies "make sense"? Why?/Why not? Alternatives? Would they be better?
• If there is a need for subsidy programs for housing, what should be the prime objectives of these programs? How should the programs be structured to best accomplish these goals? To minimize cost and undesirable side-effects?

EXERCISE: Please prepare – for your own use in class – but not to be graded – a revised pro-forma for the project.  We will provide a starter spreadsheet for this task.  No pre-class hand-in.