2. Suppose, in the prior problem, that your agency had a
preference for projects which generate new employment
for low-income people (weight=2.O). Suppose, further, that
the next priority was leveraging private money (weight=1.5).
The third priority is providing general employment (weight=1.0).
Now which project is more cost-effective?
3. Suppose two alternatives for the same project have been
proposed to the Housing Redevelopment Agency in Fairmont. One
alternative, costing $1,440,000 (annual debt service of $205,750),
will provide 10 one-bedroom units, 25 two-bedroom units, and 5
three-bedroom units. (A one-bedroom unit rents for $325/month,
a two-bedroom unit rents for $400/month~ and a three-bedroom
unit rents for $475). The second project, costing $1,465,000,
will provide 40 two-bedroom units. Assume that average occupancy
for a one-bedroom unit is 1.3 persons; for a two-bedroom unit
it is 3.0 persons; for a three-bedroom unit it is 4.2 persons.
4. Chisago County maintains 371 miles of collector highway
(2-lane blacktop). With current maintenance practices,
a highway can be expected to last 50 years before it must be
reconstructed. During that time, it should receive 5 applications
of SealCoat (at 7-year intervals) and 2 applications of 3-inch
overlay (at years 20 and 40). SealCoat costs $3.68 a running
yard (assuming 12 feet per lane) and 3-inch overlay costs
$25.76 a running yard. Omitting the SealCoat would require
a new overlay in years 15 and 25, and would require reconstruction by year 35 (reconstructing the road costs $138.40 a running yard).
5. Suppose you are on the staff of North-South Neighborhood
Development Corporation, in the Twin Cities area. You own a
property, which costs $32,800 to acquire and clear. Now you
want to move a house onto the site. You could acquire a shell
and move it to the site for $8,000, and then rehab the whole thing
for another $50,000. You could also acquire and move a better
house for $17,000, and only spend $35,000 for rehab. Or, finally,
you could acquire and move a house for $40,000, with no rehab
costs. The city will finance half the rehab costs, charging
0% for 1/3 of the rehab loan and 2% for the remaining 2/3 (the
rest of the rehab will have to be financed from conventional sources
at 9%). [As a measure of benefits, figure that a comparable house
in your neighborhood would sell for $95,000.]
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