Glossary of Terms
This is a working list of terms commonly associated with the topic of housing affordability. Knowing and understanding these terms can help you join in the discussions about housing affordability in our community.
A
The Federal Department of Housing and Urban Development (HUD) defines an “affordable dwelling” as one that a household can obtain for 30 percent or less of its income.
The annual household income earned by the median or “middle” households in a region. AMI is used by HUD (Department of Housing and Urban Development) to establish income limits that determine eligibility for several assisted housing programs. HUD income limits are based on both the median family income estimated and Fair Market Rent area definitions.
Generally, a household should not spend more than 30% of its annual gross income on housing costs. When renting, housing costs include both rent and utility expenses. In home ownership, housing costs include the mortgage loan principal, interest, property taxes, and insurance payment (PITI), as well as any homeowners association (HOA) dues or mortgage insurance required.A household paying more than 30% is considered cost-burdened. Households paying more than 50% are considered severely cost-burdened.
C
Instead of building affordable homes on-site, many Inclusionary Housing Ordinances (IHOs) allow developers to pay cash to the municipality to fund the development of affordable housing elsewhere in the jurisdiction.
The CDBG Entitlement Program from HUD provides annual grants on a formula basis to entitled cities and counties to develop viable urban communities by providing decent housing and a suitable living environment by expanding economic opportunities, principally for low- and moderate-income persons. The program is authorized under Title 1 of the Housing and Community Development Act of 1974, Public Law 93-383, as amended; 42 U.S.C.-5301 et seq.
A quasi government agency that strengthens Colorado by investing in affordable housing and community development. They offer financial resources to strengthen homeownership, affordable rental housing, and businesses.
A law intended to encourage depository institutions (banks and saving associations) to help meet the credit needs of the communities in which they operate, including low-and moderate-income (LMI) neighborhoods, consistent with safe and sound banking operations.
The state agency responsible for strengthening Colorado’s local communities and building capacity by providing strategic training, research, technical assistance, and funding to localities.
E
A HUD program. The ESG is a federal grant designed to help improve the quality of existing emergency shelters for the homeless, make additional shelters available, meet the costs of operating shelters to provide essential services to homeless individuals and help prevent homelessness. ESG also provides short-term homeless prevention assistance to a person at imminent risk of losing their housing due to eviction, foreclosure, or utility shutoffs.
F
Gross rent estimates used to determine the standard amount of payments for various HUD programs. They include the shelter rent plus the cost of all tenant-paid utilities. HUD establishes FMR’s annually.
H
A HUD program, HOME provides formula grants to states and localities that communities use – often in partnership with local nonprofit groups – to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people. It is the largest Federal block grant to state and local governments designed exclusively to create affordable housing for low-income households.
The federal government program administered locally by public housing agencies(PHAs) for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. The PHAs receive federal funds from (HUD) to administer the voucher program. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses and apartments. The voucher participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects. A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family’s choice where the owner agrees to rent under the program. This unit may include the family’s present residence. Rental units must meet minimum standards of health and safety, as determined by the PHA. Income eligibility for all households is verified annually.
A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.
Homeless shelter (below 30% AMI); transitional housing (below 30% AMI); permanent supportive housing (below 30% AMI); affordable rental housing (30 to 60% AMI); market rental housing (60% to 120% AMI); first-time/long-term homeownership (50% AMI and above).
Single-family homes; Multifamily units; Manufactured Housing; Modular Homes; Mobile Homes; and Housing Cooperatives.
A HUD Program for low-income people buy public housing units by providing funds that nonprofit organizations, resident groups, and other eligible grantees can use to develop and implement homeownership programs. Homeownership is one key to self-sufficiency for low-income families, building assets for families and stability and pride for neighborhoods. Through HOPE and other programs, HUD is working to make homeownership possible for thousands of families now living in public housing. HUD awards planning and implementation grants on a competitive basis to help eligible applicants. The grants help public housing residents and other low-income families purchase public housing units, as well as to undertake a variety of activities that help them prepare for homeownership. Eligible HOPE applicants include public housing authorities, resident management corporations, resident councils, nonprofit organizations, housing cooperatives, and public entities.
I
A municipal or county ordinance requiring a given share of new construction to be affordable by people with low to moderate incomes.
A fee that is imposed by a local government on a new or proposed development project to pay for all or a portion of the costs of providing public services to the new development or to pay directly into an affordable housing fund.
L
A federal tax credit designed to encourage private sector investment in the new construction, acquisition, and rehabilitation of rental housing affordable to low-income households. Colorado Housing and Finance Authority (CHFA) manages the distribution of LIHTC funds in Colorado.
LIHTC provides funding for the development costs of low-income housing by allowing an investor to take federal tax credit equal to a percentage (up to 70% or 30% of property value depending on the credit type) of the cost incurred for development.
Two types of LIHTCs are available depending on the nature of the construction project. The so-called “9% credit” is generally reserved for new construction, while the so-called “4% credit” is typically used for rehabilitation projects and new construction that is financed with tax-exempt bonds. Each year, for 10 years, a tax credit equal to roughly 4% or 9% of a project’s qualified basis (cost of construction) is claimed. The applicable credit rates have historically not actually been 4% and 9%. Instead, the credit rates have fluctuated in response to market interest movements so that the program has delivered a subsidy equal to 30% of the present value of a project’s qualified basis, in the case of the 4% credit, and 70% in the case of the 9% credit. For both the 4% and 9% credit it is the subsidy levels (30% or 70%) that are explicitly specified in the Internal Revenue Code (IRC), not the credit rates. Since 1986, the 4% rate has ranged between 3.15% and 3.97%, and the 9% credit between 7.35% and 9.27%. Since 2008, however, there has been a floor under the 9% credit below which the new construction credit rate cannot fall.
M
The tax rate that is applied to the assessed value of a property. One mill is one dollar per $1,000 dollars of assessed value.
N
NOAH properties have lower-ranging rents generally between $550 and $1,200 per month which are affordable for low and moderate income households.
O
With uneven recovery across the country from the Great Recession, a provision in the Tax Cuts and Jobs ACT of 2017 created the Opportunity Zones initiative that utilizes tax incentives to draw long-term investment to communities that struggle with poverty, unemployment, and slow business growth.
T
Transitional housing refers to temporary accommodation to bridge the gap from homelessness to permanent housing. This is often completed through structure, supervision, support, life skills, assistance from caseworkers, and in some cases, education, and training.
The 1992 amendment to the Colorado Constitution that restricts revenues for all levels of government. Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. Revenue in excess of the TABOR limit must be refunded to taxpayers unless voters approve a revenue change as an offset in a referendum.
U
A federal agency whose mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect the consumer; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.
V
A program of HUD, VASH combines the Department of Housing and Urban Development (HUD) Housing Choice Voucher (HCV) rental assistance for homeless veterans and their families with case management and clinical services provided by the Department of Veterans Affairs (VA) at its medical centers and in the community.