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Affordable Housing, a definition

“Soon the definition won’t be determined by “who you ask,” but whether it is affordable to a certain income level.”  -Eric Englund, City of Omaha (Fox42 News Story) 

The baseline definition of affordable housing is provided by the United States Department of Housing and Urban Development (HUD): 

Affordable housing is defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities. Reference: www.hud.gov. 

Families around the United States are considered housing cost-burdened when they spend more than 30% of their incomes on rent and utilities, the reality for 45% of renters and 19% of homeowners in the Omaha and Council Bluffs area. Families are considered severely cost-burdened when they spend more than half of their incomes on housing, the reality for another approximately 15 percent of households in the Omaha and Council Bluffs area (21,500 households). Both are a strong risk factor for housing instability. An estimated 20,000 children (three times the capacity of the Baxter Arena) live in these households. 

Affordable housing, when using the definition above, means that we all need and require affordability to not pay more than 30% of our household’s income on housing (rent or mortgage) and related expenses like utilities. Households required to pay more than 30% (regardless of your level of income) are considered “cost-burdened” and therefore may have difficulty or a challenge paying for and affording other necessities such as transportation, food, clothing, and medical care. 

But where did the 30% come from? 

The 30-percent rule for measuring affordability can be traced back to The Brooke Amendment, passed in 1969 by Senator Edward Brooke, the country's first popularly elected African American senator and a vocal advocate of affordable housing. He and then-Senator Walter Mondale coauthored the 1968 Fair Housing Act, which prohibits housing discrimination based on race. 

The Brooke Amendment was a response to rent increases and complaints about services in public housing, and effectively capped public housing rent at 25 percent of a resident’s income. Representative Barney Frank recounted that “[the amendment] said originally that the poorest of the poor who get housing through various public programs shouldn’t be expected to pay more than 25 percent of their income for housing, precisely because they have so little.” Congress raised the cap to 30 percent in 1981. 

Source: https://www.huduser.gov/portal/pdredge/pdr_edge_featd_article_092214.html 

This origin is likely why when we think of affordable housing, many thoughts navigate towards low income, or the variety of housing programs that exist for households that require some support. As they should. Frank Nothaft, the late chief economist at Freddie Mac, notes, “If your income is $500,000 a year, you can pay 40 percent and still have money left. But if your income is $20,000 a year, it will be hard to make ends meet if you’re paying 30 percent of your income on rent.” 

So, how does eligibility work? Area Median Income (or “AMI”) is a term often used when defining eligibility for affordable housing programs. HUD uses income ranges in more specific terms, namely, to identify Median Family Income (MFI), which are larger geographical areas used to calculate income medians, or to identify more specific income limits for subsidies and housing programs, such as Public Housing, Section 8 vouchers (housing choice), Section 202 (for the elderly and aging), and Section 811 (for persons with disabilities). The median in MFI divides the income distribution across the geographical area into two equal parts: one-half of the cases falling below the median income and one-half above the median. For households and families, the median income is based on the distribution of the total number of households and families including those with no income. 

Income limits qualify AMI data to adjust for family size. HUD provides an updated table of those AMI percentages and family sizes (1 person up to 8 persons) based on County income data.  

Source: https://www.huduser.gov/portal/datasets/il/il2022/2022summary.odn 

To learn more about the calculations and exceptions, including adjustments for housing costs, and low-income areas vs. high-income areas, HUD provides this document (with additional attachments for even more exceptions) .  

What we believe 

The 30% rule, and the blunt tools of AMI and MFI created by the federal government should not be seen as an exhaustive way to understand affordable housing. The time has come for local communities to work together to add more dimension to this definition. We believe that affordable housing should also be high quality, available (having adequate stock across the community), and be located conveniently to work, grocery stores, public transportation, and recreation. Housing that is affordable should also have proximity to playgrounds, walking trails and shared community spaces. We also believe that affordable housing should be physically accessible to those living with disabilities and who identify as disabled, as well as housing that has high visitability features to strengthen neighborhoods and community fabric. 

We believe that affordable housing matters to the Greater Omaha Metro because having a place to call home can improve the quality of life for any person – whether they are renting or owning a home. Everyone deserves to have safe, quality housing available to them, that they can afford. 

And beyond our belief that everyone deserves a safe, affordable place to live for themselves, we believe that truly affordable housing offers additional benefits across the community and that it is important to understand its shared value. For example, cities are drivers for economic growth and development, and we know there is an extremely strong connection between housing security and economic growth.  

Beyond the impact on economic growth, housing advocates are shining a light on other societal benefits of affordable housing, such as health equity and the reduction of disparities.  

Affordable housing is an investment in our health. A difficult housing situation—frequent moves, struggling to pay rent, an eviction or foreclosure, poor conditions—can cause physical and mental health issues, or make existing conditions worse. Unstable housing can also amplify individuals’ vulnerability to domestic violence and other physical safety issues.  

Physical health impacts of housing area especially pronounced for children, who are in a critical stage of their physical, emotional, and intellectual development. Children who experience housing instability or homelessness have a 25% greater risk of poor health in adulthood. Stable housing, however, can reduce healthcare costs and improve lifelong health for children and adults. Research consistently documents the impacts of housing instability on our health. This research shows direct links between housing instability and childhood nutrition, healthy development, and asthma. For example, children living in poor-quality housing make 60 percent more visits to the emergency room due to asthma. Also, a child living with housing insecurity is almost 30 percent more likely to be underweight, and 20 percent more likely to have poor nutrition. We note many projects taking shape to address this, through partnerships between housing and health providers, and our team is encouraged to see innovative and necessary solutions rising to the forefront in other parts of the country and hope to see similar projects in the Greater Omaha Metro soon. 

When individuals and families have access to safe, quality, and affordable housing, their correlating health risks decrease. One economic benefit of a focus on safe affordable housing is when households are not required to pay more than 30% of their income on rent or mortgage, and utilities. By reducing this housing cost burden, households can instead prioritize access and financial resources for health care, foods that are healthy for their individual needs, and transportation to/from physical and mental health care.  

Affordability in housing is a complex and nuanced, but extremely important topic. The Front Porch Investments team envisions a community committed to ensuring all have a home where they can thrive, with bold decisions and effective innovation supporting housing as a human right. We are building on the exemplary housing developments, organizations, and individuals tasked with these challenges in the past, harnessing today’s momentum and incredible talent, to create a more robust, holistic, and lasting approach. 

Words Matter: a Front Porch Investments Glossary (Q-Z)

byFront Porch Communications Team
The Front Porch Investments logo is large and centered. At the bottom of the image is the word, Glossary, in all caps, and a periwinkle font.

We value fostering a collaborative environment where transformative change happens. Part of that transformative change comes about when our community operates from a shared language, and a defined set of terms and words that inform our work. We are excited to share our Glossary of terms, phrases, and words that we've done our best to define. 

We know this glossary is not exhaustive, and we welcome your input if you spot something that should be included!
 

We've already covered the words and terms that fall in the A-P category!  Read those articles

Finally, the words and terms that fall in the Q-Z category!

Note: any acronyms used throughout this Glossary will be also defined alphabetically by the phrase or word’s spelling (as opposed to alphabetically by the acronym).

 

Qualified Census Tracts (QCT) 

Designated by Housing and Urban Development (HUD), or equivalent geographic area defined by the Census Bureau, where at least 50% of households have incomes below 60%.  

 

Rapid Rehousing (RRH) 

A program that rapidly connects households experiencing homelessness to permanent housing through a tailored package of assistance that may include the use of time-limited financial assistance and targeted supportive services.  

 

Real Estate Investment Trust (REIT) 

A company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in residential housing and/or financing real estate. 

 

Regulations 

Rules that affect the use of the land, such as zoning, land development, construction, and subdivision regulations. It also contains rules that permit an owner to divide their land into smaller tracts. These activities include barriers, such as exclusionary zoning, as well as solutions, such as bonus density zoning. It also includes private restrictions on the use of property, such as deed restrictions. 

 

Rent Subsidies and Operating Subsidies 

Funds that make it possible to build affordable housing, usually from the government or a public body. 

 

Safe Haven (SH) 

A form of supportive housing that serves hard-to-reach homeless persons with severe mental illness who come primarily from the streets and have been unable or unwilling to participate in housing or supportive services.  

 

Section 8 Housing (Project Based) 

Many Section 8 contracts have expired or will expire soon, and the property owners must now decide whether to renew their contract or leave the program ("opt out"). Most of these contracts are now renewed on a one-year basis. Projects with high risk of opting out typically have rents set by the Section 8 contract below the prevailing market rents for comparable units. Owners thus have an incentive to leave the program and convert their property to private market rentals. In the Omaha & Council Bluffs area, there are 2,760 units leased as project-based section 8. Households must have incomes at or below 80% of AMI. Sometimes, an apartment or entire community may only be available for tenants of a specific demographic, such as elderly or disabled persons. In Omaha, a third of all households utilizing project-based vouchers belong to a minority group. The Housing Authority may enter a HAP contract with an owner for an initial term of up to 15 years and an extension of the initial term of up to 15 years. After one year of assistance, a family may switch to the housing authority’s tenant-based voucher program when the next voucher is available, or to another comparable program if such a program is offered. 

 

Section 8 Housing (Tenant Based) 

Housing authorities receive funding from the federal government to give vouchers to individual families. Families use these vouchers—which cover a portion of their rent—with property owners (landlords) in the private rental market. In exchange, property owners receive rent payments from the housing authority. In the Omaha & Council Bluffs area, 10,960 households use tenant-based vouchers. In every community, there is a year-long waitlist of people who are eligible for section 8 but for whom there are not enough vouchers.  

 

State and Local Tax Policies 

Barriers and solutions which impact housing affordability, and include laws related to property taxes, tax assessments, transfer taxes, and sales taxes on building materials. It also refers to tax abatements or concessions and homestead exemptions. 

 

Subsidized Housing 

A generic term covering all programs that reduce the cost of housing for low- and moderate-income residents. Subsidies are common from the government to individuals or groups for activities that the government wants to encourage (the government gives money to farmers who grow corn, for instance, and so more farmers grow more corn than otherwise would). Subsidized Housing does not mean affordable housing. Any time the government shares the costs of housing with developers, property owners (landlords), tenants, or homeowners, it is subsidized housing. If we take the term at its most basic meaning – housing that receives some form of subsidy – it is hard to find housing that is not subsidized. Housing can be subsidized in numerous ways—giving tenants a rent voucher, helping homebuyers with down payment assistance, reducing the interest on a mortgage, providing deferred loans to help developers acquire and develop property, giving tax credits to encourage investment in low- and moderate-income housing, authorizing tax-exempt bond authority to finance the housing, providing ongoing assistance to reduce the operating costs of housing and others.  

 

Subdivision 

In the literal sense, a subdivision is a plot of land, divided into lots. A plat is already a divided piece of land, and lots are created by dividing that land accordingly; hence, the name subdivision. Many people know subdivisions at their most developed points when they have infrastructure, roads, and homes. 

 

Supplemental Security Income (SSI) 

A federal income supplement program funded by general tax revenues (not Social Security taxes). It is designed to help aging and disabled people who have little or no income by providing cash to meet basic needs for food, clothing, and shelter. It is a $763 per month benefit.  

 

System Performance Measure (SPM) 

A report that focuses on viewing the local homeless response as a coordinated system of homeless assistance options as opposed to homeless assistance programs and funding sources that operate independently in a community. Performance is measured as a coordinated system, in addition to analyzing performance by specific projects or project types. 

 

Tax Increment Financing (TIF)  

A form of public financing that leverages future tax benefits for real estate subsidies or improvements to pay for current improvements/subsides. This method is used to spur development, stability and address blighted areas. Funding for TIF is often drawn from property taxes or sales tax.  

  

Transitional Housing (TH) 

A program that provides temporary housing with supportive services to households experiencing homelessness with the goal of interim stability and support to successfully move to and maintain permanent housing.  

 

Transit-Oriented Development (TOD) 

A type of mixed-use housing development close to public transit such as frequent bus lines, etc. TOD is usually within 1/4 to 1/2 mile of a transit station or major bus line.  

 

Underserved Populations 

Examples include: 

Persons living below the poverty line 

Excluded and/or marginalized populations and/or communities 

Persons with disabilities 

Migrants and/or displaced persons 

Undereducated 

Underserved, owing to a lack of quality access to essential goods and services 

Women and/or sexual and gender minorities 

Aging populations and/or vulnerable youth 

Other vulnerable groups, including refugees because of natural disasters 

 

Universal Design 

The design of buildings, products or environments to ensure they are, or to make them, accessible to all people, regardless of age, disability or other factors. Proponents of universal design advocate that it is not a special requirement, for the benefit of only a minority of the population, but that it is a fundamental condition and good design. 

 

U.S. Department of Housing and Urban Development (HUD) 

A U.S. government agency created in 1965 as part of then-President Lyndon Johnson’s Great Society agenda to expand America’s welfare state. Its primary mission is improving affordable homeownership opportunities to support the housing market and homeownership. HUD’s programs are geared toward increasing safe and affordable rental options, reducing chronic homelessness, fighting housing discrimination by ensuring equal opportunity in the rental and purchase markets, and supporting vulnerable populations. 

 

Workforce Housing (see HUD Income Categories) 

 

Workforce Innovation and Opportunity Act  

The primary federal workforce development legislation intended to increase coordination among federal workforce development and related programs. WIOA provides comprehensive change to several employment and education-related programs, including services for people with physical, intellectual, and developmental disabilities. 

 

Yes, In My Backyard (YIMBY) 

A neighborhood group, or person, who supports equal access to housing, including low-income housing built near their homes. 

  

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Note: We value learning at Front Porch Investments and prioritize opportunities to continue our learning path. We will update this Glossary as we expand our awareness and seek to be as inclusive as possible! On that note, what did we miss? Email us at FrontPorch@OmahaFoundation.org to let us know what terms, words, or concepts we need to add to our Glossary! 

 

To read the other segments of our Glossary, visit the Words Matter series.

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