With rents on the rise and more people facing economic stress and even homelessness, affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More options are needed now as much as ever. Housing is considered “affordable” when it is 30 percent or less of the household’s monthly income. Yet, according to a 2019 report from Habitat for Humanity, 47.5 percent of renters pay more than 30 percent of their income on rent, and 1 in 6 households pay at least half of their income on housing! To make matters worse, not only are the number of at-risk renters increasing, the number of available low-cost rental properties is decreasing over time, and there is an increasing scarcity of new construction affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments.
Most affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More conversations focus on the prospective renters themselves — low-income households who qualify for various affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More programs like public housing, housing choice vouchersA program that the federal government has for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assis... More, and other types of subsidies and rental assistance programs. But not a lot of consideration is given to how affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More is created in the first place. How is affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More funded, and what can be done to create more affordable rental housing?
The Dilemma with Affordable Housing Development
Have you ever wondered why there seems to be a glut of high-rent developments being built — especially when fewer people can afford to live in them? The answer might surprise you. While economists and philosophers can debate over the overarching problem of greed, it’s not just individual greed that drives these decisions. The fact is that it’s easier for developers to get funding for high-rent projects than for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More units. Lenders approve loans for these multifamily developments based on their projected revenues, not on what it actually costs to build them. When rents are set lower, it’s more difficult for the lenders to get their money back, and they don’t want to assume the risk. Add to that the fact that it simply costs more to build these days, and you can understand why investors head toward the higher rent housing projects. It’s the path of least resistance.
That said, it is highly possible to create more affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More opportunities for moderate-income and low-income families — it just takes a bit more creativity to get these projects funded. In fact, affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developers typically rely on 3-5 funding sources, and in some cases as many as 20 or more, to get these communities built. Let’s take a look at some of the most common ways affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More gets funded.
Low-Income Housing Tax Credit (LIHTC)
By far, the most common funding source for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More is the Low-Income Housing Tax Credit (LIHTC)A tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More, a reduced tax liability incentives offered through the federal government but administrated by the states. The LIHTCA tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More incentivizes developers to allocate tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More if they set aside a portion of their total units for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More. To qualify for these credits, the development must set aside at least 20 percent of its units for people who earn less than 50 percent of the area median income, or 40 percent for people who earn less than 60 percent of area median income. The majority of new affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More utilizes the LIHTCA tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More for at least one of their funding sources.
Federal Block Grant Programs
Additional funding sources for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments frequently come in the form of one or more federal block grants — fixed federal grants given to state and local governments for various purposes to benefit those communities, including economic development. Most block grants allocated for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More are administered through the Department of Housing and Urban DevelopmentEstablished in 1965, HUD's mission is to increase homeownership, support community development, and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will em... More (HUDEstablished in 1965, HUD's mission is to increase homeownership, support community development, and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will em... More). Some of the more common grant programs include the HOME Investment Partnerships Program, the Community Development Block Grant (CDBG), and the National Housing Trust FundA trust is a fund which may contain cash or a variety of assets and is generally created to provide financial security to an individual. Types of Trust Accounts:
• Revocable Trusts
• Irre... More, to name a few.
Choice Neighborhoods Initiative
Widely considered the next generation of the HOPE IV program, Choice Neighborhoods is a special competitive grant designed to transform distressed public housing neighborhoods into revitalized mixed-income neighborhoods, either through rehabilitation or demolition and rebuilding. Many affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More projects are designed to revitalize such areas and, therefore, may qualify for Choice Neighborhood grants.
USDA Rural Housing Service
Administered by the US Department of Agriculture, the Rural Housing Service provides several funding options for services in rural areas, including affordable single and multifamily housing. Since many affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments are built in larger urban areas and don’t qualify for this funding, these loans and grants provide developers with an incentive to build in less populated areas that are in no less need of affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More.
State and Local Funding Initiatives
While the federal government sponsors all the above funding options, many state and local governments also offer various appropriations for funding affordable home programs in their respective communities. These may include loans, grants, tax credit programs, and other supportive services designed to improve housing affordability for low-income families. These initiatives may be administered by state and local housing authorities or other departments.
Private Market Funding
In many cases, not even a combination of available mortgage loans, grants, and tax creditsA reduction in tax liability. Benefits an owner of a property claims under the low-income housing tax credit program. More are enough to bridge the gap between the cost of affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More and available funds. In many cases, this gap is filled by private market institutions known as community development financial institutions (CDFIs). These institutions exist solely to provide low-cost loans to help create economic development opportunities for underserved communities — including funding for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More. These institutions are sometimes nonprofit agencies, and sometimes they are modestly for-profit. Either way, their goal is to subsidize the gaps in funding that prevent or hinder economic development in areas that need it most.
Since 1989, Olympia ManagementOlympia Management, Inc. exists to meet the needs of the affordable housing community by providing top-quality living conditions, excellent management, compassionate interaction with tenants, and cons... More has been serving the needs of low- and moderate-income households by providing clean and safe affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More options throughout the southeastern United States. To learn more about our properties, determine eligibility and income limits, and any other questions you may have, give us a call at 256-894-2382.