About Affordable Housing

Affordable housing typically comes in two forms: subsidized housing or naturally occurring affordable housing, or NOAH. Subsidized housing involves financial or other contributions from state, local or federal sources. In exchange for these contributions, the owners of the housing agree to keep rents at or below a certain amount. NOAH properties are affordable simply by market conditions, making preservation of these properties very important.

The U.S Department of Housing and Urban Development defines affordable housing costs as not exceeding 30% of a household's gross income on housing costs, including utilities. Households that spend in excess of 30% are considered housing cost burdened and may experience housing instability. Those paying more than 50 percent of their income for housing costs are considered “severely housing-cost-burdened”

To determine what rents a subsidized housing development should charge to remain affordable to lower-income households, practitioners use a location's “are-median income” or AMI. A location’s AMI is simply the midpoint income amount of all household incomes in a specific area as calculated by the Department of Housing and Urban Development. This should not be confused with average. From the midpoint income, practitioners apply a percentage to determine extremely low through middle income levels.

Affordable Housing properties and homeownership programs serve a wide range of incomes. From those exiting homelessness in permanent supportive housing to first time homeowners. Some Affordable Housing practitioners serve occupants up to 120% of area median income in exceptionally expensive housing areas like Colorado’s mountain resort communities. Affordable Housing serves many of the service industry workers, first responders and teachers.

In Colorado, subsidized affordable housing has been developed in all four corners of the state. Affordable housing exists in urban areas along the front range, in rural communities and in mountain resort communities. The following link to the Colorado Housing and Finance Authority (CHFA) website shows the dozens of tax credit subsidized affordable housing developments in Colorado: https://www.chfainfo.com/rental-housing/housing-credit/awards.

Like most endeavors, an affordable housing project usually starts with a concept. Sometimes the concept comes from a seasoned developer and sometimes the concept is initiated amongst a group of mission-driven individuals with no development experience seeking housing for their neuro-devirgent loved ones The concept should address need for affordable housing and other associated services and the type of housing that could respond to that need.

No matter how the concept is devised, a process involving a strong development team is needed to reach the goal. Following are brief descriptions of each phase of affordable housing development:

PRE-DEVELOPMENT - Once a concept is in place, the developer must identify a site. Sometimes, the development team already owns land and other times it must find a site suitable for the project. It is also at this point that a building design concept is developed, financial and project cost feasibility is reviewed. At this stage, the project will begin incurring expenses.

FINANCING - Before construction begins, the development team must find the financial resources, often referred to as the ”stack”, used to pay for the construction of the project and to finance the costs over the long term or “permanent” period. Affordable Housing projects often contain multiple sources including traditional debt, untraditional debt sources, grants, and subsidies such as tax credits. The process will require comprehensive and detailed financial modeling usually called a “pro-forma” spreadsheet workbook and each financial source’s application requirements.

CONSTRUCTION - After financing sources have been assembled, the development team is ready to “break ground” and commence with the actual construction of the project buildings. This phase may take as little as 12 and as many as 24 months. The project is deemed ready for occupancy once the Certificate of Occupancy has been obtained from the appropriate municipal authority,

POST CONSTRUCTION - The project is now ready for lease-up and service provision operations…for the next 30 to 60 years! Effective PROPERTY MANAGEMENT is vital.

What is affordable housing?

What housing cost is considered affordable?

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