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Tool: The Basics of Affordable Housing in the United States

Public housing

Public housing is low-income housing operated by a local housing authority. Public housing was first provided in the 1930s to provide decent and safe rental housing for eligible low-income families, the elderly, and people with disabilities. There are many types of public housing ranging from scattered single-family house to high -rise apartments. There are approximately 1.3 million households living in public housing units managed by more than 3,300 housing authorities. The U.S. Department of Housing and Urban Development (HUD) administers federal aid to these local housing agencies to manage the affordable housing for low-income residents. HUD furnishes technical assistance in planning, developing, and managing the developments.

Public housing is development-based assistance. This means that assistance is "attached" to a specific housing development that is owned by a public housing authority (PHA). When a vacancy occurs in that development, the PHA offers it to prospective tenants. As long as they live in the apartment the assistance "stays " with them. When the next family moves in, they receive the assistance. Public housing is available for renters who qualify and is contingent on availability.

Section 8 housing

The Section 8 housing program is also a federal program, through the U.S. Department of Housing and Urban Development. It subsidizes housing in the private housing market with certificates or vouchers issued through a PHA. Section 8 assistance is tenant-based. Tenant-based assistance goes with the tenant wherever he or she moves. With the certificate or voucher the tenant finds rental housing on the private housing market and a PHA agrees to assist them with the rent. The housing must meet certain basic quality standards and rent must be reasonable. Public housing and Section 8 programs account for 4.3 million subsidized units in the United States.

In rural communities, the U.S. Department of Agriculture provides rental assistance programs, home improvement and repair loans and grants, and self-help housing loans to low income individuals and families through the Rural Housing Service (RHS). Rental assistance ensures that elderly, disabled, and low-income residents of multi-family dwellings pay no more than 30 percent of their income for housing.

Manufactured housing

A manufactured home (formerly "mobile home") is a transportable, factory-constructed home. They are more affordable than conventional homes and offer many of the same amenities. Owners of manufactured homes rent or buy land on which to place a home. PHAs can subsidize homes for qualifying renters or buyers.

Housing initiatives focusing on home ownership

Cooperative housing

Cooperative housing, (also known as a "co-op"), is a democratic living environment where tenants cooperatively own the building(s) in which they live. Tenants usually form a not-for-profit cooperative organization to which each person or family contributes monthly to pay operating expenses. A co-op is managed by a board of co-op members. Residents buy a membership in the co-op, but the cooperative owns the building(s), land, and common areas. Residents live there as part of membership benefits and pay a fixed amount each month to cover expenses including mortgage, property taxes, maintenance, insurance, utilities, and reserves.

Housing co-ops come in forms ranging from single-family homes, duplexes, townhouses, garden apartment, mid- and high-rise apartments, fraternity and sorority houses, dormitories, rural communities, land subdivisions with sites and utilities, and manufactured homes. More than one million U.S. families of all income levels live in homes owned and operated through co-op associations. Cooperative housing is used in rural areas to provide easier to manage home ownership for seniors. This frees up single-family homes for younger families while maintaining independence for healthy seniors.

Advantages to cooperative housing are:

  • Reasonable monthly charges for taxes and operating costs
  • Tax deductions
  • Ownership equity
  • Members can jointly exert influence on tax rates and utilities prices and obtain improved services from local government
  • Savings due to shared costs of ownership and not-for-profit status
  • Community control
  • Cultural diversity
  • Shared maintenance responsibilities
  • Ownership reduces vandalism and improves shared security

Disadvantage to cooperative housing:

  • Difficulty in financing due to membership consisting of very low-income residents
  • Many low-income co-ops must define minimum income limits for potential members in order to remain financially viable

Community Land Trust (CLT)

A Community Land Trust is a democratically controlled, non-profit corporation with an open membership and an elected board of trustees that makes it feasible for low-income families to be homeowners. A CLT typically acquires or holds land, but sells off commercial or residential buildings on the land. Without property, land cost is minimized or eliminated, making housing more affordable. Community land trusts develop affordable housing, commercial space, and parks while promoting home ownership, historic preservation, local control, and neighborhood revitalization.

CLTs operate in 31 states and the District of Columbia. The modern CLT model was developed in the 1960s by community activists wanting democratically controlled institutions that would hold land for the common good and make it available to individuals through long-term land leases. Many rural CLTs ensure access to land and housing for low -income people and preserve family farms. Urban CLTs often deal with combating the negative effects of speculation and gentrification.

Land speculation and gentrification often result in displacement of low-income residents. Speculation involves a developer buying up property to sell at a high profit for business or new residential development. Gentrification involves many individuals coming into a deteriorating neighborhood, buying property at a low price, rehabilitating it, and residing in the neighborhood. As the rate of gentrification increases, the face of a neighborhood changes radically and property values increase. This sometimes inspires residents to sell the properties at a large profit.

Typically, a CLT project has five or more sources of funding that may include commercial mortgages and construction loans, HUD loans and grants, a state housing finance agency, private foundation loans and grants, tax credits, and pension fund investments. CLT projects must meet strict requirements for housing quality; energy efficiency; historic preservation; handicapped accessibility; lead, asbestos, and other environmental requirements; and levels of affordability. Entire communities benefit from this thorough approach to development.

Community Development Corporation (CDC)

A Community Development Corporation is a nongovernmental development organization run by professional staff and citizen boards. Often the board members live in the community they serve, have a personal interest in improving it, and have intimate knowledge about how to do it. CDCs are funded from private, corporate, and government resources. They create opportunities in their communities through commercial, industrial, and residential initiatives. More than 2,000 nonprofit CDCs exist in the U.S.

Nonprofits are the groups usually most willing to invest the time and work in saving and building affordable housing, and have provided effective solutions to the housing problem. The main problem with relying completely on private developers to supply and restore publicly subsidized housing is that often there is conflict between public goals to provide housing and private interests to profit at taxpayers' expense.

Community Development Block Grants

The Housing and Community Development Act of 1974 authorized the U.S. Department of Housing and Urban Development (HUD) to make Community Development Block Grants (CDBGs). The goal of the program was to rehabilitate the nation's deteriorating urban areas, build community leadership, and empower low-income people to take charge of their neighborhoods and their futures.

A CDBG offers funds to a locality on a competitive basis. They were designed to unite neighborhoods, business leaders, and government in building affordable housing, spurring economic development, creating jobs, and providing essential social services in disadvantaged communities. Twenty years and $60 billion later, the program has been judged as a partial success. Projects revitalized many neighborhoods, but low -income advocates had to wage continual battles to get funding and keep it targeted on needy neighborhoods. After some local governments used CDBG money for projects of questionable benefit to the poor, the program was amended to require that 70 percent of CDBG programs must benefit low- and moderate-income citizens.