What is Affordable Housing?

Image of part of a multi-family housing unit in multi-color blocks with the words Affordable Housing in white.

What is considered ‘affordable housing’ and how is it defined?

“Affordable housing” refers to a high-quality, healthy home that fits within a household’s budget; each and every Bay Area resident deserves that.  But what does “affordable” mean, and how do we create that for everyone? On this page, we share information about what the term “affordable housing” means. We explain the difference between types of community-invested affordable housing such as housing vouchers or public housing units. We also share information on different strategies used to fund affordable housing in California and how the state of California ensures cities determine land-use that includes affordable homes.

Table of Contents:

What is Affordable? * 3P’s * Area Median Income (AMI) * Housing Cost Burdened

Public Housing * Non-Profit Affordable Rental Housing * Housing Vouchers/Section 8 * Market-Owned Rental Housing * Affordable Homeownership * Community Land Trust

Policies Impacting Affordability: Article 34 * Rent Control * Costa-Hawkins * Eviction Protections * Eviction Moratorium

Affordable Housing Policy and Land-Use Terms

What is ‘Affordable’?

Housing is affordable if it costs no more than 30% of one’s income. People who pay more than this are considered “cost burdened”; those who pay more than 50% are “severely cost burdened.” Affordable housing generally means affordable to lower-income people with incomes at or below 80% of area median income (AMI). Most affordable rental housing programs target lower-income people, while affordable homeownership programs increasingly target people making up to 120% of AMI. (See the chart below for income and rent limits).

A chart of who qualifies for affordable housing based on income limits in 2021
Income levels data from California Department of Housing and Community Development, March 2021: http://www.hcd.ca.gov/grants-funding/income-limits/state-and-federal-income-limits.shtml. Income limits may be higher than exact percentage of median in high housing cost areas like the East Bay.

A Crisis Years in the Making

The Bay Area is facing an enormous housing crisis. Working and middle-income families can no longer afford to own a home, renters face rising costs that force them to move further from their jobs and communities, and growing numbers of unhoused people live on our streets. Public opinion polls show that most Bay Area residents are concerned about their own housing stability as well as that of their families, friends and neighbors. A majority report that they’ve considered moving out of the area and even out of state because of the housing situation.

This crisis did not happen overnight. It’s been building for decades and has spread from poor and low-income families to moderate-income households. The harshest impacts are felt by Black residents, communities of color, people with disabilities, formerly incarcerated people, low-wage immigrants, transgender and gender-non-conforming people, and those with the lowest incomes.

Image of a spreadsheet chart showing the difference between annual median wage of various occupations such as dishwasher, receptionist, etc. and the percentage those families would need to pay of their income to afford a market rate apartment.
Based on HUD 2020 Fair Market Rent of $1,808 for a one-bedroom apartment in Alameda or Contra Costa counties. (https://www.huduser.gov/portal/datasets/fmr.html)
Note that actual rents are often much higher, especially for newly built apartments.
Wage information from California Economic Development Department for 1st Quarter 2020 (www.labormarketinfo.edd.ca.gov)

There is no single cause of the housing crisis – many factors have made housing unavailable and unaffordable. These include a lack of construction to match rapid employment growth; local resistance to new development in some communities; high costs for land, labor and materials; time-consuming and often costly processes for review and approval of projects; insufficient renter protection laws and legal representation, and inadequate financial resources for affordable housing.

How We Fight for Affordable Housing

The fight for housing justice is inextricably linked to the fight for racial and economic justice. EBHO focuses on expanding housing opportunities for low-, very low- and extremely low-income people. 

There is no “magic bullet” that will suddenly solve these problems. The solution lies in a comprehensive approach that includes the “Three P’s”: producing new market-rate and affordable homes; preserving existing housing that’s currently affordable; and protecting tenants from unaffordable rent increases and unfair evictions. EBHO leads and supports campaigns to address all three of these.

Three-P’s:

Production

  • Requiring that all cities – particularly those that historically have blocked new housing – establish zoning for higher-density housing to accommodate their fair share of the region’s housing needs. For example, in 2020-2021, EBHO advocated for a Regional Housing Needs Allocation (RNHA) that promotes an equitable distribution of new housing and furthers fair housing.
  • Expanding funding for affordable housing at the local, county, regional, and state levels. In 2020, EBHO supported ballot measures that won funding for homeless services and emergency housing in Alameda County (Measure W), and funds for affordable housing and other critical needs in Contra Costa County (Measure X).
  • Using surplus public land to develop affordable housing. In 2019, EBHO helped pass amendments to the Surplus Land Act; we continue to advocate for full implementation of the amendments and to maximize the amount of affordable housing developed on BART-owned land.
  • Ensuring that public actions that increase land values are coupled with requirements for affordable housing. For example, EBHO advocates for “land value capture” strategies in local plans like the Downtown Oakland Specific Plan.

Preservation

  • Acquiring and preserving existing housing as permanently affordable. For example, EBHO was part of a coalition that passed AB 1079, which enables tenants and non-profit organizations to match top bids on foreclosed homes, enabling existing homes stay in community control, preserving affordability by decreasing speculation.
  • Preventing the loss of existing housing from condo conversion, demolition or use as short-term rental housing.

Protection

-By Jeff Levin, EBHO Policy Director

Affordable Housing Types in the U.S.

In the United States, the system of housing is centered around housing as a market commodity; the high rates of homelessness and cost-burdened households are evidence that this system of housing is not working to meet the basic needs of its residents. Over the last 100 years, different tactics have been used to ensure that people with lower incomes can have a home they can afford with the resources they have. When people talk about “affordable housing” in the U.S., they’re generally talking about a home someone can afford with what they have available to them. For many middle- and upper-income Americans, homes bought or rented in the open market are affordable to them, meaning they spend less than 30% of their income on housing.

For the rest of the estimated 48% of renter households that are Housing Cost Burdened, other techniques must be used to ensure people can stay housed and afford the basic needs of their daily life. Below is a summary and links to other resources to understand the techniques that are generally used to extend affordable housing to people with below-median and low incomes.

Public Housing

Public housing is affordable housing for low-income households that is owned and operated by a public agency, known as a Public Housing Authority (PHA), rather than a non-profit or for-profit developer. It is funded by the U.S. government through capital subsidies for construction and operating subsidies that limit rents to 30% of household income. First introduced in 1937, federal funding for public housing has come under attack since the 1970s. In 1998, Congress passed a law (known as the “Faircloth Amendment”) barring PHAs from building more units than the number they owned in 1999. Federal disinvestment in public housing has led to the deterioration of PHA properties and widespread housing insecurity among low-income people. As such, progressive policies like the Green New Deal now call for a renewed federal investment in public housing as part of a larger program of social housing.

Tassafronga Village, Public Housing, Oakland Housing Authority

Read more about EBHO leaders that live and lead in Public Housing here in the Bay Area.

How did public housing get a bad reputation as a “bad” place to live? Disinvestment, meaning the Federal Government didn’t keep its commitment to fund the upkeep of these properties, is the simplest answer, but we recommend these articles to better understand the range of disinvestment in public housing. Some public housing units have benefitted from rehabbed housing and are quality places to live, but the total number of public housing units was frozen under the Faircloth Amendment and level of affordability reduced under the federal Hope VI policy. Despite this, public housing remains home to hundreds of thousands of people in the United States.

We Call These Projects Home: Solving the Housing Crisis from the Ground Up: (Right to the City Alliance, 2010)

20 Years Later, What Hope VI Can Teach Us (Shelterforce, 2017)

What is the Faircloth Amendment (Next City, 2021)

Non-Profit Affordable Rental Housing

 In public policy, housing is considered “affordable” when the household pays no more than 30% of their overall income in housing costs. For rental units, housing costs typically include rent and utilities. The term “affordable housing” usually refers to housing that is affordable to low-income or moderate-income households in particular.

There is no set cost that makes a home affordable to all people. Rather, the exact amount that is affordable can change significantly relative to household income. For instance, a single elder living off of a fixed income will be able to afford far less than a family with two adults who work as teachers. If a household pays more than 30% of their income on housing costs, then they are considered to be cost burdened. Both renters and homeowners can experience cost burden, regardless of their income.

Non-Profit, mission-driven affordable housing organizations provide an affordable home for hundreds of thousands of families, elders, workers, and people with disabilities in the U.S. Non-profit affordable housing providers combine public investments from taxes, bonds, grants, and fees with private-market financing to build new affordable home and rehabilitate properties that are in disrepair. Then, they rent those units to low-income residents, usually charging no more than 30% of their income. That rental payment is used to upkeep the property and pay staff that help operate the communities and create more affordable homes.

Non-profit affordable homes provide a foundation for our communities. Read stories of EBHO resident-leaders that live in non-profit affordable homes or view EBHO non-profit developer members’ new and rehabilitated homes throughout the East Bay.

A California state law, Article 34, prevented affordable public- and non-profit homes from being built in majority-white, high-income communities for decades. Article 34 prohibits the building of affordable homes in a community without the majority vote of residents to allow it. While state laws to incentivize affordable housing generally take precedent over this Article now, the racist and classist law is part of a long legacy of housing discrimination against low-income people. Read more about this law and attempts to repeal it.

Housing Choice Vouchers (Section 8)

Housing Choice Vouchers (HCVs)/Section 8: HCVs, often referred to as “Section 8,” are subsidies that ensure that low-income households pay no more than 30% of their income in rent. The voucher is used to pay the landlord the difference between the full rent and the amount that is affordable to the tenant. The HCV program is funded by the U.S. Department of Housing and Urban Development (HUD) and run by Public Housing Authorities (PHAs) in local communities. HCVs may be tied to either specific tenants or specific housing units. A household with a “tenant-based voucher” can move from one apartment to another and the subsidy will move with them. A housing provider with a “project-based voucher” can subsidize a specific unit in order to make it affordable to successive low-income tenants. When a tenant leaves an apartment with a project-based voucher, the subsidy will not move with them.

Read about an EBHO leader whose life has been stabilized and supported with a tenant-based housing voucher.

Read more about the Housing Choice Voucher Program and Project-Based Voucher Program from NLIHC Advocate’s Guide.

Market-rate affordable rentals – rent regulations & NOAH

The cost of market-rate housing rises and falls with changes in the value of real estate, or what consumers are willing to pay. It is not set according to the guidelines of government agencies, which do not directly finance market-rate housing. As such, market-rate housing is more expensive than community-invested or what’s often called subsidized affordable housing, where housing costs are capped to fit the budget of low-income households. Most for-profit developers build market-rate housing, while non-profit developers build affordable and supportive housing.

The vast majority of rental listings that are available when a person searches for an apartment are market-rate rental housing, and the rules vary city-by-city how much a landlord/housing provider can charge for rent after the previous tenant has left the unit. There are also different rules about how much a landlord can increase the rent each year on existing tenants, though since January of 2020 in the state of California, many market-rate units are subject to a rent cap and just-cause eviction rules. This comes after many years of powerful tenant advocacy from housing-justice organizations, including EBHO.

Rent Control: Rent control is a policy that limits the amount that a landlord can raise the rent in a given year. It serves to stabilize housing costs for low-income households who do not live in rent-regulated affordable housing. It also discourages speculation in low-income neighborhoods, where rising rents lead to gentrification and displacement. In California, however, the Costa-Hawkins Act weakens rent control by letting a landlord raise the rent when a new tenant moves in. This encourages landlords to evict tenants who live in rent-controlled units. Just Cause eviction protections are needed alongside rent control to discourage this practice.

The Costa-Hawkins Act, passed in 1995, is a California law that limits the ability of local communities to adopt or strengthen rent control. It prohibits cities and counties from enacting laws that restrict the rent on 1) vacant units (though subsequent rent increases can be regulated), 2) single-family homes or condos, and 3) units built after 1995 (or earlier, in some cases). Housing justice advocates have long sought to close the loopholes in local rent control laws created by the Costa-Hawkins Act. But two recent ballot measures (Prop 10 in 2018 and Prop 21 in 2020) failed to receive 50% of the vote.

Read More about the campaigns to repeal the Costa-Hawkins Act:

https://www.tenantstogether.org/campaigns/repeal-costa-hawkins-rental-housing-act

https://la.curbed.com/2018/1/12/16883276/rent-control-california-costa-hawkins-explained

Naturally Occurring Affordable Housing (NOAH): NOAH is a term for lower-cost rental homes that do not receive a direct government subsidy. The landlords are not required to limit rents to make them affordable, but they charge lower rents regardless. These homes are relatively affordable to low-income households due to landlord choice, rather than regulatory requirement. While NOAH provides homes to many who need it, the lack of rent regulation means that the landlord can increase the rent at any moment (unless there is rent control and strong tenant protections). As a result, many advocates call for NOAH to be “preserved” through programs that allow tenants or non-profit organizations to purchase these homes using a subsidy and, in exchange, restrict the rents to make them permanently affordable to lower-income residents.

Condo-Conversion Ordinances: EBHO was part of a coalition of organizations that successfully updated the City of Oakland’s Condo Conversion ordinance to prevent tenant displacement and slow the total number of rental homes, including rent-controlled homes, that were being converted to Condominiums and sold. The overall reduction of the number of rental properties in the city, especially those eligible for rent caps and rent control, drives up the cost of rental housing over time.

Eviction Protections

Eviction is the process of removing a residential or commercial tenant from where they live or do business. There are five stages of the formal residential eviction process. It starts when a landlord issues a notice warning the tenant that they are no longer allowed to stay in their home. It moves through a legal trial known as an “unlawful detainer” (UD) case. And it ends with law enforcement physically removing the tenant and their belongings. (The reasons that a landlord can legally evict a tenant are limited in most cases in California by state and local protections known as Just Cause for Eviction.) Evictions often increase with gentrification, leading to the displacement of low-income residents and communities of color. However, they are also common among cost-burdened renters who struggle to afford the high cost of market-rate housing. The individual and communal costs of evictions are high. In the Bay Area, eviction can lead to homelessness. Rent control, Section 8 vouchers, subsidized affordable housing, and eviction moratoria are all tools to reduce the likelihood and harms of eviction.

In 2020, EBHO and coalitions across the state advocated for an won eviction moratoriums at the county, city, and state levels during the COVID-19 pandemic.

An eviction moratorium is a temporary prohibition on evicting, or removing, a residential or commercial tenant from the space that they rent. While such laws are rare, they have become more common during the pandemic because, without them, millions of renters who lost work would be displaced from their apartments, thus making it harder to control the spread of COVID-19. To be truly effective, an eviction moratorium should outlaw all five stages of the eviction process. But AB 3088/SB 91, the statewide eviction moratorium passed in response to the pandemic, only restricts a landlord’s ability to take a tenant to court in what is called an “unlawful detainer” (UD) case. Some local governments, including Alameda County, have passed moratoria that are stronger than the statewide law, offering local residents more protections. You can learn more about the emergency eviction protections in your East Bay community here.

Read More:

The Coming Wave of COVID-19 Evictions: A Growing Crisis for Families in Contra Costa County. by By Jamila Henderson, Sarah Treuhaft, Justin Scoggins, and Alex Werth (East Bay Housing Organizations). July 2020

Navigating the Eviction Process and its Lasting Impact (by By Dana Bartolomei, Shelterforce, 2020)

Affordable Homownership Programs

In public policy, housing is considered “affordable” when the household pays no more than 30% of their overall income in housing costs. The unit can be either a rental or ownership unit, such as a condo or a single-family residence. For rental units, housing costs typically include rent and utilities. For ownership units, housing costs can include mortgage payments, property taxes, insurance, utilities, and condo fees. The term “affordable housing” usually refers to housing that is affordable to low-income or moderate-income households in particular.

There are programs in most counties and cities to encourage low-income homeownership, including

More information on Affordable Homeownership Programs in California and the East Bay:

https://www.habitatebsv.org/

https://www.hud.gov/states/california/homeownership/buyingprgms

View Resources on Mortgage Lending from the Center for Responsible Lending.

Community Land Trust Housing

A Community Land Trust (CLT) is a non-profit organization dedicated to buying properties in order to maintain them for communal uses, including farming, gardening, and affordable housing. In a residential land trust, the CLT owns the land while residents rent or own the buildings on that land. This makes it so that residents continue to live in their homes, often at an affordable cost, while the land remains a long-term asset under community control. Community control ensures that, once the current residents move, the housing will remain permanently affordable to other residents of the neighborhood. CLTs are thus a tool to fight gentrification and displacement. In addition, they can help residents build financial wealth through ownership of their homes or apartments, also known as the “improvements,” but not the land itself.

See more information on community land trusts on our Study Room page, Building Power, Enacting Solutions.

Housing Cost Burdened

As the cost of housing has skyrocketed, even more people are unable to afford a home to live in without being cost-burdened. See the National Low-Income Housing Coalition’s Out of Reach 2020 Calculator:

How Much do you Need to Earn to Afford a Modest Apartment in Your State?

Households are considered “cost burdened” when they pay more than 30% of their overall income in housing costs. See Affordable Housing. In areas with high housing costs and not enough affordable housing, such as the Bay Area, many households end up spending more than 50% of their income on housing costs; these households are considered “severely” cost burdened. Both renters and homeowners can experience cost burden, regardless of their income.

There are Different Perspectives on How Affordable Housing Should and Can Be Expanded

At EBHO, we believe that using a 3-P’s strategy to protect, preserve, and produce affordable housing is the best path to create affordable homes for all low-income people in the East Bay in our current conditions. We organize residents of affordable housing, non-profit and public housing providers, and local residents across class and race to take action together to expand affordable homes for all who need it. Our advocacy is rooted in values prioritizing racial and economic justice. Different organizations committed to housing justice take different strategies to reach their aims, however, and hold different perspectives on the best way to do their part of the work for housing justice. In the video below, you’ll see a conversation between four women leaders (including our Executive Director, Gloria Bruce) in the fight for housing justice in the East Bay with differing perspectives and approaches.

Affordable Housing Land Use & State Policy Glossary

Zoning

The zoning code is a set of laws that divides all of the land within a community into zones for different activities, or “land uses,” such as housing, manufacturing, retail, recreation, and more. In addition to use, zoning regulates the design and development standards for each property. These standards include the height, density, materials, and other aspects of a potential development. In order to get permission to build a project on a particular site, a developer must show the local government that their plan follows, or “conforms” to, the property’s zoning. Under certain circumstances, the government can give the developer an exemption, also known as a “variance.” In communities where those advocating for “Not In My Back Yard” (NIMBY) policies, the zoning code is often used as a tool to exclude multi-family and affordable housing.

Read more on Exclusionary Zoning:

The History and Future of Single-Family Zoning, United Way Bay Area.

The Racial Origin of Zoning in American Cities by Christopher Silver.

Where should Berkeley allow 9,000 new homes to be built? City will start trying to figure that out by Sarah Ravani, SF Chronicle, March 2021

Read more on Inclusionary Zoning:

Inclusionary Housing, Incentives, and Land Value Recapture by Alan Mallach and EBHO member Nico Calavita, 2009. 

The Regional Housing Needs Allocation (RHNA)

RHNA is the process for allocating a region’s future housing need to each city and county in the area. That housing need, which is initially determined by the State, is divided into very-low, low, moderate, and above-moderate income groups. Each city and county is then assigned a “fair share” of the regional need, meaning that each community must plan to accommodate housing for all economic groups. Once the RHNA is complete, cities and counties must update the Housing Elements of their General Plans to show that they have zoned their land in a way that will allow them to meet their RHNA targets, including identifying specific sites where that housing can be built. The RHNA process is repeated every 8 years. In the Bay Area, it is overseen by the Association of Bay Area Governments/Metropolitan Transportation Commission (ABAG-MTC), which develops a methodology to allocate the needed housing units for all income levels to local cities and counties. EBHO sees RHNA as a tool to promote affordable housing, racial equity, and economic opportunity by requiring exclusionary suburbs to build their fair share of multi-family and affordable homes.

Read more about how RHNA is determined and view RHNA allocations by municipality on the State of California’s Housing & Community Development site: https://www.hcd.ca.gov/community-development/housing-element/index.shtml

Housing Element

The Housing Element is a section of a city or county’s General Plan that evaluates local housing conditions and identifies strategies to preserve, improve, and develop more housing. Every city or county is required to update their Housing Element every 8 years. The Housing Element must show that the government has zoned its land in a way that will allow it to meet its Regional Housing Needs Allocation (RHNA) targets for all income levels. For the low-income segments of the RHNA, this requires zoning land for multi-family development. The Housing Element must also identify barriers to housing development, such as exclusionary zoning, and specific policies to remove them. Finally, it must include strategies to affirmatively further fair housing (AFFH).

Inclusionary Zoning

Inclusionary zoning is a policy that requires or encourages market-rate housing developers to include a specific percentage of units that are affordable to low-income or moderate-income households in new developments. It is a response to patterns of exclusionary zoning. Rather than build affordable homes at the development site, many inclusionary zoning policies allow developers to pay in-lieu fees that can be used by non-profit developers to build affordable homes at other sites.

Exclusionary zoning is when zoning laws prevent people from living in certain areas in a manner that discriminates by race, ethnicity, religion, income, disability, or another group characteristic. In the early 1900s, real-estate practices such as racial redlining and restrictive covenants were used to explicitly exclude marginalized people from upper-income, White, Christian neighborhoods. Since then, such practices have been ruled illegal. But in their place, many communities have turned to practices such as single-family zoning and other restrictions on multi-family housing that make it harder for low-income people and people of color to live in areas that have the most economic and environmental resources. Inclusionary zoning and AFFH policies are meant to reverse the harmful impacts of exclusionary zoning.

View this interactive map from the Othering & Belonging Institute that shows how single-family zoning correlates with segregation and economic inequality:

pink blogs over a map of the bay area show single-family zooning
View an interactive map showing the relationship between single-family zoning and inequity: https://belonging.berkeley.edu/single-family-zoning-san-francisco-bay-area

Land Value Recapture

Land value recapture is the idea that, as cities invest public money in infrastructure or change their zoning codes to encourage development, land becomes more valuable and profitable. This increase in value is created by the public sector, but it primarily benefits private developers and land owners. Thus, some of that value should be “recaptured” by the community in the form of affordable housing and other community priorities. A CBA can be a tool for land value recapture.

By Right Development

By right development is when a developer can build a specific project without seeking a zoning change, conducting a CEQA analysis, or undergoing other reviews or public hearings, which can slow down and increase the costs of development. In other words, rather than requiring special permission, a project that meets certain guidelines can be built “by right.” This is also called receiving “ministerial approval.” Recently, California has passed or considered several “streamlining” laws that let developers build multi-family or affordable housing by right in order to overcome local NIMBY opposition, which tends to slow down or stop new housing construction.

Community Benefits Agreement (CBA)

A CBA is a formal document in which a developer agrees to provide specific benefits to local residents, organizations, and government agencies in exchange for support or approval for their project. CBAs are based on the idea that new development 1) benefits from resources provided by the government, such as zoning approvals and transportation systems, and 2) may impact surrounding communities, for example by contributing to the displacement of long-time residents and businesses. In recognition of these facts, the developer agrees to fund improvements, amenities, or services that will benefit those who might be negatively impacted by the project. For instance, a CBA might include a commitment to build affordable housing or provide reduced rent for local non-profit organizations or small businesses. A CBA can serve as a form of land value recapture.

Read more about EBHO’s work in advocating for CBA’s that create affordable housing:

Oakland Organizers Ask How Hard Are the A’s working to Keep Us in Oakland? Oakland Post.

Local Organizers Demand Community Benefits Agreement for A’s Ballpark KQED News.

Disposition and Development Agreement (DDA)

Disposition and Development Agreement (DDA): A DDA is a contract between a government agency and a developer that governs how public land will be transferred to and developed by the developer. It lays out the rules, regulations, and commitments that will guide the project. As such, it may specify the community benefits included in a CBA.

Public Land

Public land is land owned by government entities like cities, counties, transit agencies, and school districts. Under a state law called the Surplus Land Act, such entities must offer to sell or lease public land that they no longer need to affordable housing providers before offering it to other parties.

Read “Public Land for Public Good” by Gloria Bruce in our 2019-2020 Affordable Housing Guidebook.

The Surplus Land Act (SLA): The SLA is a California law that requires that when cities, counties, and other governmental agencies sell or lease land that they no longer need, they prioritize it for affordable housing development. Under the SLA, local government entities must declare public land “surplus,” or no longer needed for its original purpose, in order to sell or lease it to another party. At that point, the agency must offer the land to priority groups, including housing developers who will make at least 25% of the units affordable to low-income households. If no affordable housing proposals are received or agreed to, and the land is later developed for market-rate housing, then at least 15% of the units must still be affordable to low-income groups.

EBHO co-authored amendments to the Surplus Land Act that passed in the 2019 Legislative Session (AB 1486) that strengthened this land-use policy to ensure much more public land will be used to create the affordable homes needed in California.

Affordable Housing Funding

Impact Fees

Impact fees are paid by developers to local governments to offset the cost of meeting the increased need for public services generated by those developments, including transportation, fire protection, and affordable housing. Housing impact fees can be used to ensure that residential development for higher-income households creates the resources needed to build homes that are affordable to the lower-income workers who provide the basic goods and services to the community. Housing impact fees can also be charged on office and commercial developments. The amount of an impact fee must be based upon an analysis of the “nexus,” or link, between the new development and the increase in demand for public resources. This analysis is called a “nexus study.” The resulting fee is thus also called a “linkage fee.”

Read our OPED on Impact Fees by EBHO Executive Director, Gloria Bruce. Opinion: Oakland Should Turn Cranes Into Affordable Housing.

Low-Income Housing Tax Credits (LIHTC)

The LIHTC program (pronounced lie-tek) is used to raise money to build affordable homes. First, the federal government issues income tax credits to a developer, which correspond to the costs of building affordable units. Then, the developer sells those credits to private investors, who can use them to lower their federal income taxes. This helps the developer raise capital for their project and reduces the amount of debt that they need to borrow from a bank. Less debt means the developer can charge lower, more affordable rents to low-income households. The LIHTC program was introduced in 1986 to get private investors, rather than government agencies, to help pay for affordable housing. It is now the primary source of funding for affordable housing–especially projects that serve households at or below 60% of AMI, which are the main recipients of LIHTC.

Housing Bonds

Federal housing bonds are used to finance lower interest mortgages for low- and moderate-income homebuyers, as well as for the acquisition, construction, and rehabilitation of multifamily housing for low-income renters. Investors are willing to purchase tax-exempt housing bonds and receive a lower interest rate than they would for other investments because the income from these bonds is tax free. Read more about what federal housing bonds are and how they’re financed from the National Low Income Housing Coalition’s 2021 Advocate Guide.

A general obligation bond is a government-issued bond that is repaid from state or local general funds or a dedicated tax. The issuing entity (e.g., the city, county, or state) places its full faith and credit in paying back the purchasers of the bond. Money from general obligation bonds can be used by counties or states to provide subsidies for affordable housing projects or fund other affordable housing programs. Learn more about general obligation bonds.

In November, 2016 EBHO was part of a campaign to pass Measure A1 Affordable Housing Bond in Alameda County. Read more about how A1 was designed to create affordable homes for low-income residents. Homes funded with Measure A1 Bond measures have started welcoming residents home. You can view A1-funded properties that had or have rental listings at https://housing.acgov.org/listings.

The National Housing Trust Fund (HTF)

“The primary purpose of the HTF is to close the gap between the number of extremely low-income renter households and the number of homes renting at prices they can afford. NLIHC interprets the statute as requiring at least 90% of the funds to be used to build rehabilitate, preserve, or operate rental housing (HUD guidance sets the minimum at 80%). In addition, at least 75% of the funds used for rental housing must benefit extremely lowincome households. One hundred percent of all HTF dollars must be used for households with very low income or less.” Read more about this program in the National Low Income Housing Coalition’s 2021 Advocates Guide

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