When the economy collapsed in 2008, government funds for low-income housing took a nosedive nationwide, causing plenty of projects to stall in their tracks — and leaving far too many people without a proper place to call home. Consider, for instance, that only $4.5 billion in tax credit equity was raised in 2009, compared to $9 billion in 2006, according to an article from The New York Times. In just a three-year timespan, the funds available dropped 50 percent.
Today, however, the market is bouncing back, and tax credits for low-income housing (which depend, in part, on the capital markets) are more readily available.
Even still, navigating government funding for low-income housing isn’t easy. The processes are complicated and time-consuming, but the time and effort you put into it are well worth it. Given the costs of construction and real estate, these projects can’t happen without tax credits. And so many people of all ages — senior citizens, young children, teenagers, and parents — depend on them and desperately need better places to live.
We may not all see it firsthand every day in Baltimore, where 23.8 percent of the population lives below the poverty level, compared to 9.8 percent across Maryland, according to the latest data from the U.S. Census Bureau. But the recent protests and riots in our city, following the tragic death of Freddie Gray, bring the need for better housing to the forefront, with photographs of block after block of boarded up, deteriorating, vacant row houses seen on the nightly news.
The additional effort involved in earning tax credits — and in creating high-quality, low-income housing designs and developments — is needed not just in Baltimore but in many urban centers and small towns across the United States. If you’re a developer or architect, I urge you to get involved in this incredibly rewarding work.
How can you get started? Understanding what’s involved in earning tax credits is key. Here are just some of the processes to make these projects possible.
Know the requirements
First, understand that the tax credits are financed by the federal government but administered by state housing authorities, and unfortunately, not all states have LIHTC (low income housing tax credits) — but most do. When available, these credits can subsidize the acquisition, construction, and/or rehabilitation of rental property by private developers. To increase your chances of qualifying, there are several requirements you need to be aware of before you embark on a project:
- Most states require quality apartment spaces, minimum room sizes, and public amenities like dining and fitness areas.
- Architectural designs are often monitored by local review panels if the project has been granted state funds.
- Typically, government funded projects have minority participation requirements. Involving a small business entity like Marks, Thomas Architects, a certified Women’s Business Enterprise (WBE), in the design process can help you meet the project goals.
- S. Housing and Urban Development (HUD) funds require more stringent accessibility codes to accommodate wheel chair and walker access, along with design elements for the hearing and visually impaired.
- Construction budgets on federal and state-funded projects are extremely tight. Your own project competes for a limited pool of funding, and the best designs with the best budgets win. If you end up exceeding the construction budget, you’ll have to find money from non-government sources to cover the costs.
Understand the review and approval process
Earning tax credits to subsidize a low-income housing development involves multiple rounds of review and approval that can take a long time. The process varies by city and state, but in our town, Baltimore, Maryland, it looks like this:
- The Baltimore City Planning Department reviews the design and determines how appropriate it is to the city’s context and needs. These approvals are required before building permits can be issued. Since this limits your permit application timeline, it’s helpful to meet with the City’s building permit plans review group, or at least the local fire marshal, during the design process to discuss any code compliance issues particular to your project.
- Maryland’s Community Development Administration (CDA) reviews drawings and specs at three different times during the design process, and these timeframes do not correlate with the periods in which the contractor prices documents.
While these reviews are underway, the design part of the project carries on — and can’t wait for the review comments, given the extensive time it takes reviewers to respond. (These reviews aren’t the only work these agencies are doing.) Simultaneously, the contractor prices the design as it’s being developed.
Streamline the process
The more you know up front, the faster and more smoothly the process will go. For instance, you don’t want to design a housing development without complying with the Uniform Federal Accessibility Standards (UFAS) if you’re going after HUD funding. Finding out too late in the game will cause major headaches for everyone involved, and a project that never gets off the ground.
Keep in mind, too, that the rules and regulations change. Even if you had a strong command of the process years ago, don’t expect to get by without re-learning the ropes. Experience is key to navigating the process, so work with an expert who can tell you what you need to know — and position your project for success.
Involve the community
It’s hard to create an appropriate housing development for a community you don’t know. Take the time to talk to residents, visit area shops and restaurants, walk the streets, and really get a sense of what kind of housing development would both fit in and add to the community. Are there any religious communities close by? Where’s the nearest grocery store? What about health clinics, banks, and schools?
After you do your preliminary investigation, form groups of community members to talk through ideas and give you feedback on your design. The more the community feels a part of what you’re doing, the more your housing development will feel like a neighborhood asset, not an imposition.
During my years at Marks, Thomas Architects, we’ve designed a number of low-income, affordable, and mixed-income housing developments. Browse some of our projects, and get in touch to start a conversation about how we can help you.