What is Affordable Housing?
We define affordable homes to…
- Include public subsidies
- Be available to people who qualify based on their income
- Have rents based on 30% of a community member’s gross income
- Often include services
- Allow for only one person per room (no overcrowding)
There are three major types:
- 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)
- Rental Assistance – homes that accept Section 8 and other similar vouchers
- 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:
- 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
- Private Debt – loans from financial institutions
- Public Subsidies
- Federal
- 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
- 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
- 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.
- HOME Investments Partnership Program – grants for the exclusive purpose of creating affordable housing activities to benefit low-income households
- State
- 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.
- State tax credits – used to facilitate private investment into the creation of affordable rental homes.
- 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.
- Property tax exemption – owners of affordable housing properties don’t have to pay property tax on homes rented to low-income resident
- County & City
- 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.
- 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.
- Measure K – ½ cent sales tax in San Mateo County that may be used to fund the construction of affordable housing.
- Deferred fees – used to encourage the creation of affordable homes by deferring residential development fees.
- Federal