The work of creating affordable apartment housing isn't cheap, and various sources of funding are used to help with construction and upstart costs for buildings in development. Here, we cover just a few of the options provided:
1. (National) Housing Opportunities Made Equal (HOME) Funds: The largest federal block grant program to create affordable housing for low income families, this program provides financial support to states and local governments (a minimum of $3 million/state, $500,000/local government). These funds must be used for home purchase or rehabilitation assistance, building or rehabilitating homes for rent, site acquisition or improvement, or funding designated Community Housing Development Organizations. In every project, the state or local government must pledge $0.25 for every $1 of federal funds; this money can come as cash or materials donations (construction materials, land, labor, and others). This matching requirement can be waived by HUD in certain circumstances, such as a Presidentially-declared natural disaster.
2. (National) National Housing Trust Fund: Created in 2008 as part of the economic recovery, the NHTF uses surplus revenues from Fannie Mae and Freddie Mac operations to fund affordable housing solutions. 90% of all funds are to go to building, preserving, repairing, and operating rental units for low income and very low income household, while 10% can support home ownership assistance for first time home buyers. (Currently, with Fannie Mae and Freddie Mac under conservatorship, advocates for the NHTF are seeking a different source of dedicated funding.)
3. (State) Virginia Housing Trust Fund: Created in 2012 using funds received from the National Mortgage settlement, the fund supports short, medium, and long term loans that reduce the cost of homeownership and rental housing (80% of funds) and targeted efforts to reduce homelessness (20% of funds). As an example, VHTF recently awarded our Bloom partners, Carpenter’s Shelter, with a grant for $84,500 to support rapid rehousing.
4. (Local) City of Alexandria Set Aside Program (PDF): When developers are constructing market-rate or luxury units, they must abide by certain density and height limits. For some extra room, developers can pledge to commit a certain number of their units as affordable units, or provide an equivalent amount to the city’s Housing Trust Fund. As of 2016, the program had added over 360 units and 220 pledged units of affordable housing to Alexandria's housing stock.
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