Powerful inequities exist in obtaining financing for affordable housing and community development projects and investments. Unfortunately, low-income individuals suffer the most disadvantage from the disparities.
But all is not lost. The government launched an affordable housing development program — the low-income tax credit that will influence community development. The program has (and is still) the nation’s primary tool in the effort to construct affordable housing for low and middle-income households.
Constructing more affordable housing will lower housing instability and economic inequality. But how will communities develop from tax credit projects initiated by the government? Let’s find out.
The HUD public housing program
The primary goal of public housing was to develop safe and decent rental housing for eligible low-income individuals and families.
The program only serves low-income families, and the U.S. Department of Housing and Urban Development (HUD) determines eligibility based on U.S. citizenship/eligible immigration status and annual gross income.
Eligible investors can access funding to purchase or develop multifamily properties. If you are a first-time HUD developer, you must have some HUD experience per the HUD requirements. For instance, you should be a general contractor who has completed HUD transactions or a construction consultant. The HUD program is for experienced HUD designers.
Benefits of the HUD Multifamily projects
Low-income housing projects benefit many people. For instance, low-income individuals and families can access safe, decent, affordable housing. Additionally, eligible investors can access enough funds to complete affordable housing projects.
However, communities where the houses are built benefit the most. Here are some benefits of HUD multifamily projects to communities.
One of the primary benefits of HUD multifamily projects is job creation. Unfortunately, low-income communities are under-developed hence limited job opportunities.
Affordable housing programs involve building, preservation, and sustainability, creating job opportunities for construction tradespeople, leasing agents, property managers, security staff, and more.
HUD programs boost local economies and support thousands of jobs yearly — directly or indirectly.
Furthermore, local businesses benefit from the HUD multifamily housing projects. The workforce employed needs a variety of resources, from food to fuel. Local restaurants can provide food to the workforce.
Additionally, more locals can establish small businesses like shops and healthcare facilities around the affordable housing properties. This also creates a solid local relationship.
More spending power
Families with high housing costs often forego crucial aspects of their lives, such as healthcare. Instead, they are more focused on putting food on the table than going for a health checkup because they spend more on rent. What’s worse, they have no choice in their diets. They just have to feed on what their income can buy.
However, affordable housing increases spending power in low-income communities. Individuals and families can spend less on rent and more on nutritious food and healthcare. When a low-income family is certain of affording house rent every month or year, it liberates their ability to spend on essential items like healthcare.
Furthermore, some affordable housing properties offer quality resident services, which aid communities in health, nutrition, and financing decision-making.
However, multi-residential building developers should understand the local community before setting up an affordable housing property. You want to build a property in a society that will develop rapidly over time and attracts more development. You also want to read the minds of locals and understand how they’ll take up your project.
So, to get a snapshot of available opportunities for affordable housing projects, conduct some studies and meet with local officials, specifically those in construction and development. This way, you’ll establish the right opportunities for your affordable housing project.
Increased revenue for local governments
According to a report, 100 affordable housing units can generate up to $2.2 million in sales and taxes. Furthermore, local governments enjoy additional revenue from city fees and tolls, among other activities. The benefits are accrued to a local municipality, encouraging support and funding for more affordable housing.
In markets like Chicago, cities court more development once affordable housing gains traction for low-income individuals and families. Often, interested professionals seeking to take advantage of such multifamily housing projects partner with a knowledgeable non-profit developer for a smooth process.
Additionally, affordable housing has a significant impact on communities’ social benefits. Such benefits can not be undervalued, especially in this age of ESG investing.
Reduced theft and crime
There’s a strong link between income inequalities and crime. Lack of unemployment drives youths and even adults to resort to theft and crime. In addition, under-developed communities often struggle with security issues.
However, community development is crucial in increasing neighborhood security and reducing crime. Affordable housing programs create more local jobs, reducing idleness, theft, and crime. Additionally, residents enjoy an improved quality of life and new and enhanced amenities.
Technology also plays a role in reducing crime. Modern houses have enhanced technology and security features such as security cameras, alarm monitoring, fire alarm systems, smart locks, and security sensors to minimize or eliminate theft and improve home safety.
With all these home security features, residents can feel safe and secure in their houses/homes.
Why affordable housing matters
Access to safe, decent, affordable housing impacts individuals, families, communities, and local governments. Children living in better and stable homes benefit from better health and educational outcomes and enhanced access to economic opportunities.
Families that live in communities with affordable housing spend about five times as much on healthcare and a third more on food. They can settle their debts, save for school fees, or buy a home.
Additionally, decent and accessible housing combined with coordinated services improves health outcomes for seniors and people living with disabilities. Also, it prevents homelessness and offers stability for vulnerable households.
Communities with higher upward mobility rates among children have less racial and economic segregation, low rates of violent crime, and low levels of income inequality.
Low-income individuals deserve decent and affordable housing. The government, through the U.S. Department of Urban Development, offers tax credits on HUD multifamily projects to encourage affordable housing. Everyone in the equation benefits, from low-income individuals and families to communities and local governments.
Contact us if you’re looking for a HUD multifamily project architecture.