What is Affordable Housing Finance?
Affordable housing finance addresses the gap between the costs of developing and operating housing and the rent low- and moderate-income tenants can afford.
Because rental income alone often does not cover total costs, developers typically rely on financial support to make projects viable. This support often comes in the form of government subsidies at the local, state, or federal level, though private and nonprofit funding sources may also play a role.
These programs can help offset construction expenses, reduce operating costs, or provide rental assistance so tenants can afford stable housing.
If you’re involved in an Low Income Housing Tax Credit project, our affordable housing attorneys serving Philadelphia, Bucks, Delaware, Chester, and Montgomery Counties can help you navigate financing structures, regulatory requirements, and compliance considerations.
Types of Affordable Housing Finance
Developers rely on numerous subsidy sources to fill the affordable housing finance gap. Those subsidies most often come from the Low Income Housing Tax Credit, a federal program. However, other options include:
- Mortgages with low-interest rates
- Taxable or tax-exempt bonds
- Local loan funds
- LIHTC
- Federal Historic Tax Credit
- State Tax Credits and Historic Tax Credits
- State Historic Tax Credits
- Land donations
- HOME Investment Partnerships Program
- Community Development Block Grant (CDBG) Program
- Deferred developer fees
- General Partner (GP) capital
- Federal Home Loan Banks (FHLBs)
- Affordable Housing Program (AHP)
Despite the number of subsidy resources available, most developers try to use as few as possible. Not surprisingly, each additional help complicates funding. For example, each subsidy includes its own set of legal restrictions. But with projects requiring 100% funding for gaps, developers may resort to multiple sources to make projects financially feasible.
How Our Philadelphia Affordable Housing Attorneys Can Help
The real estate attorneys in our Philadelphia area law offices have managed affordable housing projects, both large and small. They've handled low-income housing tax credit (LIHTC) developments involving the new construction of 40 or fewer apartment units. Plus, they've addressed large rehabilitation/preservation transactions involving layered refinancing, the decoupling of interest-reduction payments from the original loan, and the application of such payments to new HUD-insured first-lien financing.
Several affordable housing finance projects have involved historic tax credits and low-income housing tax credits (LIHTC). The physical layouts of the affordable housing projects have included scattered site developments, garden-type apartments, and mid-rise apartment buildings. In addition, several of the projects have involved mixed-use facilities. As a result, those projects required submitting the building or buildings to a condominium regime or regimes. They included commercial space on the first floor and residential units on the upper or adjacent floors.
A number of our projects have involved ground leases from local housing authorities. For example, our real estate attorneys have submitted several new affordable housing developments for approval under "land condominium" regimes.
Our Philadelphia Affordable Housing Attorneys Secure Subsidies to Get Your Project Complete
Our real estate lawyers enlist multiple sources of financing for development transactions:
- LIHTC syndications
- HUD-insured loans from conventional lenders
- PennHOMES loans from the Pennsylvania Housing Finance Agency
- Housing assistance loans from the Pennsylvania Department of Community and Economic Development
On the more local level, we have represented our developer clients concerning HOME loans and CBDG loans from local finance agencies, including:
- Philadelphia Redevelopment Authority
- Chester County Department of Community Development
- Scranton Office of Economic and Community Development
Financing for particular projects can involve four or more sources, all layered into one transaction. So give the real estate attorneys here a call to assist in your affordable housing finance project today, especially if your project is in the Philadelphia area including Montgomery County, Bucks County, Chester County, or Delaware County.
