Last month, Community Housing Innovations’ president, Alexander Roberts, was invited to participate as the moderator of the panel discussion “ABC’s of Affordable Housing: Getting it Done Right”, organized by the Westchester/Fairfield branch of the Urban Land Institute (ULI).

From financing to marketing affordable housing development, the discussion gathered developers, investors, architects, lawyer, local government representatives and other professionals interested in getting a better understanding of the process involved in developing this kind of facilities.

The programs provided by the Federal government to help finance affordable housing were among the main topics of discussion. These programs offer great incentives for developers to enrich their communities by creating residences that not only fulfill the dreams of homeownership for families that couldn’t otherwise afford to purchase a home, but also encourages cultural and racial integration.

The panel started by answering the question of what is “affordable housing.”  HUD defines it as a rental apartment affordable to a household with income at or below 60% of the Area Median Income adjusted by family size.  That household may pay no more than 30% of their adjusted gross income for rent.  Affordable for-sale housing is affordable to a household with income up to 80% of the Area Median Income, representing no more than about 35% of their adjusted gross income.

This chart, prepared by Westchester County, displays the maximum rent considered affordable for various income levels:

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Much of the discussion centered around the nation’s largest affordable housing program, the Low Income Housing Tax Credit (LIHTC).  The LIHTC program awards developers of qualified projects with Federal housing tax credits. Developers then sell these credits to investors to raise capital (or equity) for their projects. This reduces the debt that the developer would otherwise have to borrow. Properties receiving this benefit must offer a proportion of lower rents to income-qualified residents, but because of the lower financing costs, the property will remain profitable.