Using Local Resources for Affordable Housing
The nature of affordable housing developments these days is that the developer usually has to cobble together multiple funding sources in order to create affordable rents and purchase prices while still making ends meet. A funding source that may equal only five percent of the total development costs may seem minimal but can make the difference between the deal getting done or not. Many cities have found that their own funding sources are necessary to closing that gap.
Among the local resources commonly provided by cities are Tax Increment Financing (TIF), local property tax abatements, HOME funding, CDBG funding, the issuance of tax exempt debt through housing revenue bonds or government obligation bonds, and a city-wide property tax levy devoted for this purpose. If a city pleads poverty with respect to local financial contributions, it may be instructive to review whether the city is providing money to other development priorities that may be politically more popular.
Land cost is a major driving factor in the high cost of residential development these days, and cities can assist here too. In some cases cities will already own land suitable for housing, and cities can provide the land free or at reduced cost. In other cases there may be an advantage to city acquisition of the land and subsequent transfer to a developer. Cities should look for opportunities to assist in this way.
Housing Preservation Project, 2007