Property that is no longer being maintained by its owners and is either vacant or not lawfully occupied. Some jurisdictions limit the term to properties that have gone through a legal proceeding confirming the owner’s failure to pay back property taxes.
A small, self-contained residential unit built on the same lot as an existing single-family home. ADUs are sometimes referred to as “in-law apartments” or “granny flats.” ADUs may be built within a primary residence (such as in an attic or basement), attached to the primary residence (like a small duplex unit with a separate entrance), or detached from the primary residence (such as conversion of a detached garage). An ADU is often subordinate in size, location, and function to the primary residential unit (which is why ADUs are sometimes referred to as “secondary units” or “second units”). Depending on the locality ADUs may or may not be in compliance with local zoning and planning regulations. While many municipalities allow such units to be rented, others do not.
Click here to learn how communities are using ADUs to expand the supply of affordable homes.
Funds set up to secure sites for development or preservation. The structure of these funds can vary greatly, but are generally used to cover legal, design and other pre-development costs associated with a project. They can also be used to directly purchase property or provide low-cost loans to third parties for acquisition. Acquisition funds can be a key tool for securing land near transit and other infrastructure investments, particularly when used to purchase land before a nearby investment causes property values to increase significantly.
A new use for a structure or landscape other than the historic use, normally entailing some modification of the structure or landscape. Adaptive reuse is distinct from rehabilitation in that the essential usage of the structure is changing. A good example of this is the conversion of old warehouse space into loft apartments. The space originally used as storage space is converted to residential use with the addition of interior walls and utilities.
Click here to learn how communities are applying adaptive reuse to convert surplus publicly-owned land to affordable homes.
A mortgage loan subject to changes in interest rates during the course of the loan term. When market interest rates change, ARM monthly payments increase or decrease at intervals determined by the lender. The change in monthly-payment amount, however, is usually subject to a cap. In hybrid ARMs, the interest rate is fixed for a period of time – often, 3, 5, 7, or 10 years – and then converts to an adjustable rate thereafter.
See Also: subprime
Adult foster care is a type of supportive housing for older adults and people with disabilities who need assistance with everyday activities in order to live independently. An adult foster care home is typically the primary residence of the person providing the care, and most accommodate between one and six residents. Adult foster care homes provide a homelike environment for their residents and are also commonly referred to as adult family homes, family care homes, homes plus, and supportive care homes. These homes allow older people to remain as independent as possible while still receiving the care and assistance they need.
See Also: supportive housing
It is a provision in the 1968 Fair Housing Act that requires not only prevention of discrimination but also affirmative steps to overcome patterns of segregation and increase housing choice. In July 2015, HUD published a final rule implementing the legislation by creating a planning process for HUD grantees to examine existing housing policies and pursue improvements.
An affordability covenant is a legally binding clause to a deed or other recorded restriction running with the land that specifies that the property will remain affordable by setting certain terms and conditions related to its long-term use. An affordability covenant may restrict to whom or at what price a unit may be rented; it also may carry similar restrictions about to whom or at what price a unit may be sold. These guidelines are typically put in place in order to ensure that homes financed with government subsidies remain affordable for future residents.
Click here to learn how affordability covenants can be used to preserve the affordability of for-sale homes.
Age in place is a term that refers to being able to live in one’s current residence for as long as possible. Staying within the same home and community allows many older people to maintain existing social networks and routines. The ability to age in place is greatly determined by the physical design and accessibility of a home, as well as community features like the availability of nearby services and amenities, affordable housing, and transportation options.
Funding allocations made on a regular basis by a committee or other authorizing body. The level of appropriations made available to federal, state or local agencies for housing and related programs may vary from year to year. This variation may be due to other urgent budget needs, policy changes, and/or political shifts. In contrast, dedicated funding sources generally guarantee that all revenue from a specified source will be available for use by a designated program or entity.
Click here to read about the use of dedicated funding sources to support housing trust funds.
The area median income (AMI) is the middle value, or median, household income in a region. It is used to measure whether households are low-income relative to other households in the region. AMI is calculated annually and used by the U.S. Department of Housing and Urban Development (HUD) for the purpose of determining the eligibility of applicants for certain federal housing programs. Different housing programs use different percentages of AMI – such as 30 percent of AMI or 80 percent of AMI – as maximum income limits for admission. Many state and localities have adopted HUD’s income limits for their own programs, or use a variation on the HUD limits – for example, 120 percent of AMI.
Click here to leave this site and access the latest HUD income limits and AMI levels for your community.
Base flood elevation (BFE) refers to the height to which water is expected to rise during the base flood, which is a severe flood having a one percent chance of being equaled or exceeded in any given year.. The one percent flood is the national standard used by the National Flood Insurance Program and all federal agencies. Past regulatory language referred to it as the “100-year flood” based on the imperfect logic that a one percent flood should happen, on average, once every 100 years.
Below-market is a general term that refers to housing that rents or sells for less than prevailing market levels. In some cases, below-market housing is used synonymously with affordable housing. In other cases, below-market housing is targeted at moderate-income families with somewhat higher incomes than those served by federal affordable housing programs. Generally, housing can be offered at below-market levels only with a public subsidy or with a public concession such as density bonuses or reduced-cost publicly-owned land.
A bond is a type of loan or debt security that is issued by a public authority or credit authority for long-term investments. Bonds are repaid when they mature, a date specified in the bond typically 10 years or more after being issued.
Click here to read about the different types of bonds used to finance affordable homes.
Brownfield sites are abandoned, idle, or underused industrial and commercial properties where expansion or redevelopment is complicated by actual or perceived environmental contamination. The Environmental Protection Agency (EPA) runs a brownfields competitive grant funding program. Click here to leave this site and learn more about EPA’s brownfields program.
A builder’s remedy is a legal cause of action available in certain states to a developer that has been denied a building permit for development of affordable homes. The “remedy” occurs when a state enforcement agency, such as a court or other special authority, overrides local decision-making and grants permission to move forward with development.
See Also: fair share
A permit issued by a local government agency that allows the construction or renovation of a home or other structure.
The Choice Neighborhoods Initiative program was introduced in 2009. Building off of its predecessor, HOPE VI, Choice provided more funding for neighborhood-level investment projects, rather than focusing solely on replacing and rehabilitating public housing stock. Another difference is that it requires a one-for-one replacement of any demolished public housing.
See Also: HOPE VI
A clear title is a signal that a property can be purchased without concerns regarding outstanding liens or other claims of ownership. This status is also referred to as an “insurable title,” since the property owner can get title insurance to protect against losses if there was an error in checking the title history. “Marketable title” is another commonly used term, since having a clear title facilitates marketing and selling a property.
Cohousing is a type of residential development designed to encourage social interaction and active neighboring. The homes, which are typically smaller than average and clustered around a common house, can be single-family or multifamily, attached or detached, rented or owned. Cohousing developments are often planned by their eventual residents, and the communities are managed collaboratively. In addition to the common house, the open spaces and other facilities are owned in common and maintained by residents, and opportunities to socialize (e.g., group meals) are common.
Click here to learn more about cohousing and its advantages for older adults.
A community benefits agreement (CBA) is a way for local residents and developers interested in gaining resident support for a new development to codify their mutual support for the development. CBAs are negotiated between community groups and developers on a project-by-project basis, and detail specific contributions the development is expected to offer for the community. Benefits may include an agreement to hire local workers or trainees at a fair wage; provide public amenities such as a child-care facility or community room on-site; or include a percentage of affordable housing units. In exchange, developers benefit from active community support of the project.
Click here to learn more about CBAs.
A federal program created under the Housing and Community Development Act of 1974. This program (often known as CDBG) provides annual grants on a formula basis to states and larger cities and urban counties. The funds are to be used for a wide range of community development activities directed toward neighborhood revitalization, economic development, affordable housing and improved community facilities and services.
See Also: HOME
Community development financial institutions (CDFIs) are financial institutions which provide credit and financial services to under-served markets and populations. To be certified as a CDFI, a financial institution must have a primary mission of community development, serve a target market, provide development services and financing and be accountable to the community. CDFIs cannot be government entities (though they are certified by the U.S. Treasury).
Community land trusts (CLTs) are a form of land ownership designed to ensure community control over development. Very often, this ownership is used to make housing permanently affordable using public or philanthropic subsidies. Under the traditional CLT model, a nonprofit CLT is established to own the land on which homes are situated. The CLT then sells the physical structures to home purchasers for an affordable price, along with a long-term lease on the land. When the home is sold, it must be sold an affordable price to a qualifying homebuyer. CLTs also support other forms of development, such as space for community-oriented commercial services and agriculture.
Click here to learn more about community land trusts and other shared equity strategies.
See Also: shared equity
The Community Reinvestment Act (CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) requires certain commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. The act was passed in 1977 to reduce discriminatory credit practices against low-income neighborhoods.
A comprehensive plan is a local government document that establishes a framework for long-term policy decisions about the built and natural environment. The plan typically identifies, analyzes, and plans for the long-term needs of the community, articulating decisions about land use, transportation, public facilities, natural resources, environmental protection and other issues.
A conditional use permit (CUP) is granted by a municipality to authorize a development type or land use on a specific lot that would not otherwise have been permitted by the underlying zoning code. In many cases, the permit is granted only upon the fulfillment of certain conditions. For example, the developer of a multifamily project may receive permission to build at a higher density than ordinarily allowed in exchange for the inclusion of affordable homes in the development.
See Also: zoning code
A credit and debt profile assesses the financial history of an individual, business, jurisdiction or other entity. Lenders often require a credit and debt profile of their borrowers to assess their credit worthiness and establish loan terms and interest rates for a home mortgage.
The debt to equity ratio is a financial ratio used to determine whether a government agency, business, household, or other entity can safely borrow money over long periods of time. The ratio is calculated by dividing the entity’s outstanding debt by the amount of equity it holds. A high debt to equity ratio may indicate that an entity is financing its growth with debt. For government agencies, debt to equity ratio is important because it will determine whether it has a strong or weak bond rating. Debt to equity ratios also play a major role in the determination of interest rates and payment terms offered by lenders.
Restrictions or limitations on the use of property, as noted in a deed. Deed restrictions are one mechanism for maintaining the long-term affordability of a home built or renovated with a significant public subsidy.
Demand-side housing policies address housing affordability challenges by increasing individuals’ purchasing power. For example, the federal government provides Section 8 housing choice vouchers to individual households to enable them to afford the costs of private-market rental homes. Many local communities offer down payment assistance programs that boost low and moderate income families’ purchasing power. Supply-side policies, by contrast, seek to directly expand the supply of affordable homes – usually through subsidies to enable developers to build or rehabilitate affordable homes.
See Also: supply-side
A fee paid to a municipality by a developer or demolition contractor in order to obtain a permit to demolish a structure. Some older communities require demolition fees to stem the loss of affordable homes by (a) discouraging demolition of older homes, which tend to be more affordable than new construction; and (b) providing a revenue source that can be directed into a housing trust fund and used for affordable homes.
Permission granted by a municipality to build more or larger units than otherwise allowed by the existing zoning codes. Density bonuses are sometimes included as an “offset” to compensate developers for revenue that may be lost due to a requirement in an inclusionary zoning ordinance that a share of newly developed units be affordable to working families. In other cases, density bonuses are granted as an incentive to encourage owners to voluntarily include affordable units within new developments.
See Also: Floor Area Ratio
Click here to learn more about density bonuses.
The fee a government charges for reporting a real estate purchase or sale in the public record. Document recording fees are one source of funding for housing trust funds.
See Also: impact fees
The right of a person, government agency, or public utility company to use public or private land owned by another entity or individual for a specific purpose.
The economic principle that as the scale of production increases, the cost of producing each additional unit decreases, leading to a lower average cost per unit. This principle helps explain, for instance, some of the costs advantages of manufactured homes and larger builders.
The right of a government agency to take private property for a public purpose. Fair compensation must be paid to the owner whose property is taken.
Employer assisted housing is housing assistance provided by employers for their workers or the broader community. A growing number of employers are extending employer assisted housing benefits to their workers by providing grants or loans to assist with downpayments (for homebuyers) or security deposits (for renters), offering homeownership education and counseling, and investing in the development of affordable homes in the community.
Click here to learn more about employer-assisted housing and other strategies for leveraging employer interest in affordable homes.
Specific geographical areas selected by the Departments of Housing and Urban Development or Agriculture to receive tax and other benefits intended to improve the economic viability of the area. No new areas are currently being designated for these programs.
See Also: enterprise zone
Specific geographical areas selected by the Departments of Housing and Urban Development or Agriculture to receive tax and other benefits intended to improve the economic viability of the area. No new areas are currently being designated for these programs.
See Also: empowerment zone
As used in the housing context, an escrow account is a separate account into which the lender puts a portion of each monthly mortgage payment. An escrow account provides the funds needed for such recurring expenses as property taxes, homeowners insurance, mortgage insurance, etc. Requiring families to make monthly payments into an escrow account to cover these expenses is generally viewed as a desirable practice that helps families manage their housing costs by spreading the payments for these expenses throughout the year. Escrow has the beneficial effect of reducing the risk of a family incurring a large bill and lacking funds with which to pay it.
Discretionary fees, dedications, or off-site improvements imposed as a condition of approval of a particular development project by the municipality or county. Like impact fees, exactions are meant to mitigate off-site impacts of a development.
See Also: impact fee
A non-rural residential community located outside a city, beyond the suburbs.
“Fair housing” refers to the concept that every American should have access to decent, safe, and affordable housing, and that any barriers to that access should be overcome or removed. The legal source of much fair housing policy is the 1968 Fair Housing Act.
See Also: Affirmatively furthering fair housing
To promote an equitable distribution of affordable homes within a state or region, fair share requirements assign each municipality a target number of affordable units to produce. Progress towards this target may be enforced through imposition of a builder’s remedy or other expedited appeals process that facilitates development of affordable homes in communities that haven’t met their goal. New Jersey’s fair share obligations, a product of the Mount Laurel decisions, is one of the best known examples.
See Also: builder’s remedy
The ratio of the internal square footage of a building to the area of the lot on which the building is located. For example, a one-story building which covers the entire lot and a four-story building which covers a quarter of the lot both have a floor area ratio (FAR) of 1.0 (or 1:1). This is a common way to compare density of development from one location to another.
A loan that is not required to be repaid if program requirements are met for a specified period of time. The loan may be forgiven incrementally over time – for example, 20 percent per year for five years – or all at once at the end of the specified time period.
A type of bond issued by a state or locality that is backed by the issuer’s taxing power. Because general obligation, or GO, bonds are repaid through the general revenue – or through a specific tax levied for that purpose – they are an ideal resource for subsidizing public works projects such as affordable homes that are not expected to generate sufficient revenue to fully repay the debt. A vote of the electorate is often necessary to authorize general obligation bond issues.
Click here for more information on using general obligation bonds for housing.
See Also: bond
A process in which a low-cost – and possibly deteriorating – neighborhood undergoes revitalization through reinvestment in its physical assets. Gentrification is often associated with an influx of higher-income residents, an increase in property values, and the displacement of at least some of the original lower-income residents, which can make it controversial.
Green building refers to a set of building design and construction practices that seek to reduce environmental impacts by improving energy efficiency and indoor air quality, reducing water use and consumption, choosing sustainable building materials, and situating the home in a manner that takes advantage of sunlight and other natural amenities.
Click here to go read more about energy efficiency and affordable housing.
Established by Congress in 1990, this federal program is designed to expand the supply of decent affordable housing for low- and very low-income families and individuals. HOME funds are provided each year by HUD to states and localities, which determine how the funds are spent. HOME funds may be used for: tenant-based rental assistance; assistance to homebuyers; property acquisition; new construction; rehabilitation; site improvements; demolition; relocation; and administrative costs.
See Also: community development block grant
Home modifications are retrofits or adjustments to existing homes that are undertaken to improve physical accessibility for older adults and people with disabilities. They can take a variety of forms depending on the level of investment and the scope of the improvement and address any number of obstacles to independent living.
HOPE VI is a federal program designed to revitalize distressed public housing through demolition and reconstruction. HOPE VI grants are made to public housing authorities based on a competition administered by HUD. Many HOPE VI developments include households with a mix of incomes and provide supportive services. The program ended in 2010. Its successor program is the Choice Neighborhoods Initiative.
An organization whose work focuses in whole or in part on providing homeownership education and counseling.
A dedicated fund established by a state or locality to provide a stable source of revenue reserved solely for affordable homes. Because housing trust fund revenue is locally-generated, it is not encumbered by the restrictions associated with federal resources and thus may be used more flexibly to fulfill locally-determined housing goals.
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A fee most commonly levied on developers of new homes to cover the initial costs of servicing those homes with water, sewer and other public infrastructure. When the cost of the fee is passed on to homebuyers through higher home costs, impact fees can make new housing less affordable.
Click here to learn how some communities have revised their impact fee policies to have less of an impact on housing affordability.
A cash payment some municipalities allow developers to pay instead of including affordable units within a particular development, as required under an inclusionary housing policy. In-lieu fees are often deposited into a housing trust fund, where they are used to fund other affordable housing initiatives.
See Also: housing trust fund
Inclusionary zoning (sometimes called inclusionary housing) is a special form of zoning code that creates a requirement or incentive to reserve a specific percentage of units in new residential developments for low- or moderate-income households.
See Also: zoning
Click here for more information.
The highest income level at which a household qualifies for participation in a subsidy program. In most housing programs, income limits are expressed as a percentage of the area median income, as determined by HUD.
See Also: area median income
A policy designed to prioritize families with incomes below a specified level for a certain percentage of newly available assistance. Under federal law, for example, 40 percent of newly available public housing units must be provided to families with incomes below 30 percent of the area median income (AMI). The balance of units may be rented to families with incomes as high as 80 percent of AMI – the income eligibility limit. Local communities may target assistance more deeply than required by federal law.
Development that occurs on vacant or abandoned lots, in spaces between buildings, or through the redevelopment of existing lots in an urban area, rather than on previously undeveloped land outside of developed area boundaries.
The cost of providing the various systems and facilities needed to support the operation of a community (e.g., sewer and water systems, electric systems, communication lines, roads). Some municipalities charge impact fees to developers or purchasers of new homes to help pay for the costs associated with the initial servicing of these homes.
See Also: impact fee
When associated with transit-oriented development, joint development refers to partnerships between private developers and transit agencies. These partnerships can take a variety of forms, most commonly revenue-or cost-sharing or co-development. In the former, the public and private entities split either costs or revenues from development around transit lines. Co-development is a non-financial agreement wherein the partners coordinate their projects.
Land banks are governmental or quasi-governmental entities dedicated to assembling properties – particularly vacant, abandoned, and tax-delinquent properties – and putting them to productive use. Land bank authorities acquire or facilitate the acquisition of properties, hold and manage properties as needed, and dispose of properties in coordination with city planners and in accordance with local priorities for land use.
Click here for information on how land banks help convert vacant and abandoned property to productive use.
See Also: community land trust
In a limited equity cooperative, households buy a “share” in the cooperative and in return receive the right to occupy one unit and share in decision-making for the development. Share prices are set by a formula specifically designed to keep membership affordable for future purchasers.
See Also: shared equity
Linkage fees are adopted by local governments to ensure that the additional housing needs generated through economic development and new job creation are met. In communities with linkage fee requirements, developers of non-residential buildings pay a fee, often based on project type (manufacturing, commercial, retail, etc.) and square footage, which is generally deposited in a housing trust fund and used to support affordable housing initiatives.
The federal Low-Income Housing Tax Credit is the principal source of federal funding for the construction and rehabilitation of affordable rental homes. The tax credits are a dollar-for-dollar credit against federal tax liability. States allocate the tax credits to developers according to the criteria set out in the states’ qualified allocation plans. Developers then work with syndicators to sell the credits to investors – generally for-profit corporations and investment funds – generating the equity necessary to complete their projects. Some states also have similar tax credit programs.
A housing type that is wholly or substantially built in a factory and then delivered to the building site for final assembly and installation.
See Also: modular homes
Mark to Market is a HUD program that was implemented to recapitalize and adjust rent levels to market for properties with FHA-insured mortgages and rental assistance contracts in HUD’s Section 8 multifamily housing program (also known as Project-based Section 8).The process created by Mark-to-Market is still used to renew project-based Section 8 contracts to preserve the affordable rental housing they assist.
A type of development that includes households at various income levels in the same building or in the same neighborhood. Mixed-income developments are intended to promote the deconcentration of poverty and give lower-income households access to improved amenities.
A type of development that combines various uses, such as office, commercial, institutional, and residential, in a single building or on a single site in an integrated development project with significant functional interrelationships and a coherent physical design.
Model codes are building codes developed by building and code enforcement industry associations. Many local governments choose to adopt a model code to avoid the time and expense associated with creating and maintaining their own building codes, while retaining the flexibility to add any amendments needed to ensure the code suits local conditions
See Also: building code
Modular homes are houses that are built in sections that have been manufactured in a factory setting. These sections, or modules, are delivered and assembled at the intended site of use. Unlike manufactured homes, modular homes are subject to the same building codes as stick-built homes, and may be financed using the same mortgage products. Modular homes are often indistinguishable from neighboring homes that have been built entirely on-site; however producers are able to reduce their costs through use of a standardized production technique and other economies of scale in the production process.
See Also: manufactured home
The mortgage interest deduction is a federal tax deduction for households paying interest on a mortgage loan. Homeowners with deductions that are large enough to warrant itemizing can deduct the amount of interest on their mortgage when they file their taxes. The mortgage interest deduction is the largest subsidy for housing in the United States.
A type of property that is designed for more than one family, such as a condominium or apartment building.
NIMBY is an acronym for Not in My Back Yard, which refers to opposition by nearby residents to development that they perceive to be undesirable. NIMBY sentiment sometimes leads to the derailment of plans to build affordable homes.
A law adopted by a local government pertaining to an issue within its legal power.
See Also: zoning code
An overlay district is a specific geographic area upon which additional land use requirements are applied, on top of the underlying zoning code, in order to promote a specified goal. Overlay districts may be used to allow greater flexibility in development types without undergoing a large-scale rezoning.
See Also: zoning code
Plan review is the process of looking over development plans prior to submitting an application for a building permit to ensure new development meets safety, environmental, and other standards. Early plan review can help to expedite the issuance of building and other development permits by identifying any problems with an application early in the development process.
Click here for information on other strategies for expediting the permitting process to reduce the costs of housing.
A land development project involving a mixture of land uses and densities that is approved as a unit, rather than on a lot-by-lot basis. Among other things, the planned unit development process can be a vehicle for adopting cluster zoning that preserves open space without reducing the supply of housing through increased density on the portion of the development reserved for housing.
The term preservation has several meanings in the housing context. It can refer to historic preservation, in which efforts are made to preserve and retain historic structures in a community, or to the preservation of rental housing, in which efforts are made to stem the loss of affordable rental homes. Rental housing preservation can focus on physical maintenance and repairs, the maintenance of a development’s affordability, or both.
The federal public housing program has its origins in the the Housing Act of 1937 (also known as the Wagner-Steagall Act). It was created to provide decent and safe housing for eligible low-income families, the elderly, and persons with disabilities. The specific programs that make up public housing have undergone many changes with a number of different strategies implemented over time. However, the core structure of federal funding being used by local public housing authorities and their partner organizations remains the same.
A document issued by a state housing finance agency explaining the standards and priorities by which applicants will receive federal low-income housing tax credits.
See Also: low-income housing tax credit
State and/or local taxes that are assessed on real property when ownership of the property is transferred between parties. Real estate transfer tax revenue is sometimes used to fund state or local housing trust funds.
To inject new financial resources into an older property to ensure its long-term viability. Many multifamily developments need to be recapitalized after a certain number of years to cover the costs of deferred maintenance and upgrades to bring them into conformity with current living standards. Affordable multifamily homes also need to be recapitalized periodically, but because of legal or practical limitations on permissible rents, it is difficult to support new debt for this purpose.
A discriminatory and illegal practice in which financial institutions deny mortgages and other types of financing to residents of predominantly poor or minority neighborhoods, without regard to individual creditworthiness. The term has its origins in the use of the color red in early Home Owners Loan Corporation maps to denote areas where lending was considered unadvisable due to the racial and income characteristics of their population.
A regressive tax consumes a greater proportion of the income of lower-income individuals than of higher-income individuals. An example is the sales tax, which taxes all covered spending at the same rate, regardless of income, and therefore takes up a larger share of a lower-income consumer’s overall income.
Special building codes designed to make it easier to renovate older homes, while ensuring that modern safety concerns are addressed.
The process of renovating and restoring older or deteriorating properties. Often shortened to “rehab”.
See Also: rehab code
The reserves of state or local housing finance agencies (HFAs) are funds saved through income generated in the course of their operations. Among other sources, reserves are built through fees that HFAs charge on outstanding bonds and the spreads between the cost of funds to the HFA and the rates charged to borrowers.
In the context of housing policy, a covenant is an agreement that restricts the ways in which a home may be rented and/or sold. In the past, so-called “restrictive covenants” were used to limit the potential buyers of homes to members of specified racial or religious groups. These restrictive covenants were eventually ruled illegal by the Supreme Court decision in Shelley v. Kraemer. Today, however, affordability covenants are used to ensure that homes made affordable through public subsidies remain affordable to future renters or homebuyers and thus fulfill the intent of the original subsidy.
A provision in a land sale agreement mandating that the land will revert back to public ownership if not used in accordance with the terms of the agreement.
The process and action of reclassifying a parcel, parcels or geographic area from one zone classification to a new zone classification. Some localities have expanded the supply of housing by rezoning land from industrial use to residential use.
See Also: zoning
A HUD program that financed supportive housing for the elderly through interest-free capital advances to private, nonprofit organizations. The advance does not have to be repaid as long as the housing continues to serve very low-income elderly residents for 40 years. An earlier version of the program provided capital through long-term loans secured by a first mortgage. More recently, the program has shifted to focus on providing rental assistance that can leverage Low Income Housing Tax Credits and other capital sources.
A two-pronged federal program that helps low-income households afford privately-owned rental units. Subsidies granted through the Section 8 Housing Choice Voucher program are tenant-based, meaning that they may be used to rent any unit that meets program requirements. Subsidies granted through Section 8 project-based assistance are project-based, meaning the same units remain affordable, even as tenants change. In both cases, families pay about 30 percent of their income for housing, including utilities, and the government covers the balance of costs through a subsidy.
A HUD program offering access to affordable, supportive housing to enable low-income individuals with severe disabilities to live in the community. The program funds the development and operation of supportive housing units for persons with disabilities as well as provide rental assistance and funding for services for units set-aside within affordable developments funded by other affordable housing programs such as the Low-Income Housing Tax Credit program or HOME program.
The minimum distance which a wall or window is required to be from a property boundary or another window to a habitable room. It is measured as the horizontal distance between the proposed wall or window and boundary or other window.
A form of financial assistance for homeownership, in which the homebuyer must repay the original loan amount plus some percentage of the home price appreciation in lieu of interest. This approach helps to reduce the need for new subsidy monies to help future homebuyers as housing costs increase. Shared appreciation loans are often structured as a silent second mortgage that does not need to be repaid until the home is sold.
Click here for more information on shared appreciation loans.
An approach to homeownership that balances ongoing housing affordability and individual asset accumulation. Under shared equity, a public or philanthropic entity provides funding to help a family purchase a home. In return, the entity shares in any home price appreciation that occurs while the family lives there, preserving the buying power of the subsidy in the face of rising home prices, and allowing an initial investment in homeownership to help one generation of homeowners after another.
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An important technique for making homeownership affordable while recycling public dollars, a silent second mortgage is a secondary home loan issued by a home-buying program to supplement a family’s primary mortgage that does not need to be repaid until the home is resold (or in some cases, refinanced). Because no payments are due on the loan until the home is resold or refinanced, it has the same effect as a grant on housing affordability for a purchaser. But because the loan is repaid upon resale, the funds can be recycled to help the next homebuyer. When used as part of a shared equity strategy, silent second mortgages are known as shared appreciation loans.
See Also: shared appreciation loan
Broadly speaking, smart growth refers to a set of development principles that link environmental, social, and economic objectives together to create vibrant, safe, and healthy places to live. Smart growth development generally seeks to takes advantage of existing infrastructure to preserve farmland and open space; encourages multi-modal transportation options by concentrating development around public transit corridors; integrates housing and other land uses together; and provides a range of choices in the development of the built environment to promote affordability.
Click here to read about smart growth and housing affordability.
See Also: transit-oriented development
A cost to the developer of a property that is indirect (i.e. not related to land or materials). Examples include architect and legal fees, holding costs during project delays, insurance payments, and property taxes. Lengthy review and permitting processes can significantly increase development time, leading to substantial increases in a project’s soft costs that reduce housing affordability.
The process in which the spread of development across the landscape far outpaces population growth. The landscape sprawl creates has four dimensions: 1) a population that is widely dispersed in low-density development; 2) rigidly separated homes, shops, and workplaces; 3) a network of roads marked by huge blocks and poor access; and 4) a lack of well-defined, thriving activity centers, such as downtowns and town centers. Most of the other features usually associated with sprawl — the lack of transportation choices, relative uniformity of housing options, or the difficulty of walking — are a result of these conditions. Families’ search for affordable housing is one factor contributing to sprawl.
Subprime mortgages are made to borrowers with poor credit histories who do not qualify for prime interest rates. To compensate for the increased credit risk, subprime lenders charge a higher rate of interest. After the Great Recession, the term subprime became associated with predatory loan that were often inherently unsustainable for borrowers.
See Also: adjustable rate mortgage
Supply-side housing policies seek to increase the supply of affordable homes. Government agencies may either add to the housing stock directly, such as by building public housing, or may provide incentives for private developers to produce more homes – for example, through the low-income housing tax credit. Efforts to reduce regulatory barriers to the development or rehabilitation of housing also operate on the supply-side of the equation; such efforts promote housing affordability by freeing the market to better respond to increases in housing demand.
See Also: demand-side
Supportive housing is an overarching term that refers to an array of housing types that offer supportive services to residents. The kinds of services vary by the type of housing and the needs of the residents.
The reduction or elimination of property taxes, granted to owners of specific properties for a designated period of time in order to stimulate a specified public benefit. Click here to learn how tax abatements can be used to increase the availability of affordable homes.
After a developer has received an award of low-income housing tax credits, the developer will work with a syndicator to find investors to buy the credits. Those funds are then used to subsidize the costs of affordable rental homes. By matching buyers and sellers of low-income housing tax credits, syndicators play an essential role in generating equity for affordable rental homes.
A financing source for housing and other public improvements in designated underdeveloped areas. Communities can borrow against the incremental tax revenue expected to be received after completion of the improvements to provide initial funding of the investments.
Click here to learn how TIFs can be used to fund affordable homes.
A property for which property taxes and/or municipal bills are severely past due.
Click here to learn how tax-delinquent properties can be used as potential sites for the development of affordable homes.
Private activity bonds are bonds issued by state or local governments to fund private activities that have a public benefit. The federal government provides each state with a certain amount of authority – known as bond cap – to issue tax-exempt private activity bonds for specified purposes, including homeownership, rental housing, health care, education, and manufacturing. States decide how much of their bond cap to allocate to each qualifying use. Private activity bonds are important sources of financing for affordable homes.
Transit-oriented development is the creation of mixed-use development centered around a public transit hub to maximize the number of people who can utilize public transportation services to meet their daily travel needs.
The tests or standards used by a lender when deciding whether to approve a loan. These may include a minimum credit score, maximum debt-to-income ratio, and other measures of a borrower’s creditworthiness and the risk involved in extending a loan.
Universal design is an approach to improve accessibility in the built environment through products and environments designed to be usable by all people without the need for adaptation. Within a residential setting, examples of universal design features include lower countertops and wide doorways for people in wheelchairs, lever faucets and door handles, and roll-in showers with handheld adjustable shower heads.
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A property that has no occupants. Often these properties are also in severe disrepair. Vacant properties can be an important source of land for the creation of affordable housing.
Exceptions to zoning laws granted by municipalities in accordance with the provisions of state zoning enabling laws.
See Also: zoning code
The number of miles that residential vehicles are driven each day. When housing is located far from employment centers and public transit, vehicle miles traveled generally increase, along with environmental pollutants.
Visitability is a concept formalized in 1987 by the advocacy group Concrete Change and is based on the principle that all new homes should include basic features that make them accessible to people regardless of their physical abilities. A visitable home has a main level that is easy for both residents and guests to enter and exit with ease. The three key accessibility features include: at least one zero-step entrance; wide interior doors; and a half-bathroom on the main level of a home.
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In general, a weak market is one in which the number of sellers is greater than the number of buyers. In the housing context, weak-market cities may have falling or depressed home values and, in some cases, property abandonment.
See Also: abandoned property
Weatherization refers to a set of modifications that improve the energy-efficiency of existing single-family and multifamily homes. Typical weatherization measures include installation of insulation, new windows and doors, and weather-stripping or caulk. Weatherization is a simple and important way to increase energy efficiency and reduce utility costs.
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Workforce housing has been used to describe housing for the occupations needed in every community, including teachers, nurses, police officers, fire fighters and many other critical workers. It is sometimes shorthand for housing aimed at people earning more than 60% of AMI. When used to contrast with low-income housing, the term workforce housing can obscure the reality that many residents of low-income housing work full time.
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Zoning is the use of local ordinances to regulate the use and development of land and buildings. Zoning codes specify the allowable uses within each of those zones. For example, most jurisdictions divide land into industrial, commercial, and residential zones, with certain subcategories of zones within those. Some zones also may permit a mix of uses.