Affordable Housing FAQs

What is Affordable Housing?

We define affordable homes to…

  1. Include public subsidies
  2. Be available to people who qualify based on their income
  3. Have rents based on 30% of a community member’s gross income
  4. Often include services
  5. Allow for only one person per room (no overcrowding)

There are three major types:

  1. Rental – public housing that is owned and operated by non-profits of governmental agencies. These homes may also targeted to specific populations like: family or workforce housing, seniors (62+) citizens, and special needs or permanent supportive housing (PSH)
  2. Rental Assistance – homes that accept Section 8 and other similar vouchers
  3. Ownership – homes made available for purchase below market rate (bmr) by community members within a specific income group

What does affordable housing look like? Exactly like market-rate housing!

Where do we get the cash needed to build affordable homes?

There are three major categories that help finance our affordable homes:

  1. Private Equity – money from a fund that is raised from investors by a firm that is used to either invest in new housing developments or to acquire and preserve existing affordable housing communities
  2. Private Debt – loans from financial institutions
  3. Public Subsidies
    1. Federal
      1. Low Income Housing Tax Credits (LIHTC) – tax credits for the acquisition, rehabilitation, or new construction of affordable rental housing for low- and moderate-income families
      2. Section 8 – housing subsidy for assisting low income families, senior citizens, and disabled residents in their rent. The subsidy is paid directly to a landlord and community member pays the difference between the actual cost of rent and the amount subsidized by the program
      3. Community Development Block Grant (CDBG) Program –  annual grants to be used for the development of viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities for low- and moderate-income community members.
      4. HOME Investments Partnership Program – grants for the exclusive purpose of creating affordable housing activities to benefit low-income households
    2. State
      1. Bond funded programs – current funding set to run out in 2022. These programs provide both for-profit and nonprofit developers access to tax-exempt bonds to help finance affordable homes. Can be used to help meet eligibility requirements for the previously mentioned LIHTC program.
      2. State tax credits – used to facilitate private investment into the creation of affordable rental homes.
      3. Affordable Housing and Sustainable Communities Program (AHSC) – i.e. cap & trade funding. Grants and/or loans that can be used to fund affordable housing that contribute to the reduction of greenhouse gas emissions.
      4. Property tax exemption – owners of affordable housing properties don’t have to pay property tax on homes rented to low-income resident
    3. County & City
      1. Inclusionary Fees – also known as “in-lieu” fees. A private developer is assessed if it chooses to not include the minimum required number of affordable homes within a housing community. The fee is placed in an affordable housing trust fund established by a city or county to then be used to finance the construction of affordable homes at an alternate location.
      2. Commercial Linkage Fees – commercial developers of new office and retail may be required to pay a fee to help a city or county address it’s future need for more affordable homes due to the influx of new employees.
      3. Measure K – ½ cent sales tax in San Mateo County that may be used to fund the construction of affordable housing.
      4. Deferred fees – used to encourage the creation of affordable homes by deferring residential development fees.