Unfortunately, the cost of building and maintaining affordable housing is often higher than the income generated by renting it out. This makes it difficult for developers to finance such projects.
One way to finance workforce housing is through tax credits. Tax credits can be a significant incentive for developers to build affordable housing. Low-Income Housing Tax Credits (LIHTCs) are one type of credit that can help developers finance the construction of affordable housing. The credits can offset a developer’s tax liability and are distributed by state housing finance agencies. LIHTCs are an important tool for developers, as they help lower affordable housing costs.
Another way to finance workforce housing is through government subsidies. These subsidies help cover the cost of construction and operation of the housing. Government subsidies come in different forms, including grants, low-interest loans, and tax abatements.
A third way to finance workforce housing is through public-private partnerships. Public-private partnerships involve collaboration between government agencies and private developers. This partnership allows for the sharing of resources and expertise. Public-private partnerships can help lower the cost of building and maintaining affordable housing.
Despite the various financing options available for workforce housing, there is still a lack of affordable housing in many communities. One reason for this is the high cost of construction and rising insurance policies. Another reason is the lack of available land and political will to prioritize affordable housing.