Affordable Housing

Affordable housing does not mean a home that’s “cheap,” implying shoddy construction, poor location and scarce access to resources. Ideally an affordable house or apartment is a quality home that provides the same goods, services, dignity and safety that we all seek. Combining the contributions of foundations, private donors, investors, federally authorized assistance subsidies (funds referred to as “Section 8” and “Section 202”), and federal tax credits, GEDCO provides homes and supportive services to hundreds of seniors and other adults in Baltimore.

Here is GEDCO’s brief guide to the math and methods of affordable housing.

Subsidized Housing
Section 8

How do subsidy funds make their way from the federal budget to individual renters? In the case of Section 8, government subsidies are distributed by locally-based Housing Authorities (like Baltimore Housing), which in turn work with:

• Private owners who accept low-income renters,
• Public housing developers, and
• Individuals seeking housing choice vouchers.

Housing Authorities also help match renters to the programs and housing that interest them. Renters then combine 30% percent of their income with government subsidies to pay the rent each month (the percentage may be different based on how far below the median income level they fall, and may be adjusted for special conditions such as age and approved medical expenses.) The Housing Authorities send the subsidy checks directly to the landlords.

GEDCO's Ednor Apartments I and II at Stadium Place accept housing choice vouchers, like private landlords do. Harford House, Micah House and Epiphany House have project-based Section 8, meaning that the subsidy is tied to the housing unit instead of traveling with the renter as it does in the case of vouchers.

Section 202

The Department of Housing and Urban Development (HUD) Section 202 is a housing fund especially for seniors.  Each year HUD provides highly competitive funds to build and operate housing for the Very Low Income (VLI) elderly (persons 62 years of age and older.) The capital funds are used to secure land, design, and build an apartment complex for the elderly. The HUD 202 Program also offers rental assistance for seniors who meet the requirements of the federal program.

Weinberg Court and Venable Apartments II at Stadium Place, as well as the Harry and Jeanette Weinberg Senior Housing at the Gallagher Mansion, operate under this provision. The amount of each tenant’s rent is calculated by an on-site leasing specialist, who ensures that the cost of rent, along with a utility allowance, does not exceed 30% of the senior’s income. Having an on-site specialist means seniors don’t have to navigate more of the city government.

A similar type of housing, HUD Section 811, is utilized for people with disabilities; GEDCO’s Ascension Homes program falls into this category. 

Tax Credit Housing

Tax credit housing is another way of reducing the cost of housing for renters. The Low-Income Housing Tax Credit (LIHTC) provides funds for building costs by allowing a private citizen taxpayer (usually affiliated with development partners) to take a federal tax credit equal to part of building and development cost. Development funds are raised by "syndicating" or selling the credits to an investor or a group of investors.

To take advantage of the tax credit housing, for example,

• GEDCO proposes a project to the Maryland State Department of Housing and Community Development,
• seeks and wins a competitive allocation of tax credits,
• completes the project,
• certifies its costs,
• and rents out the building to the specified number of low income tenants.
• At the same time, investors are found to make a "capital contribution" to the partnership in exchange for tax credit over a number of years.
• As a result, investors receive their tax benefit, the residents receive a wonderful home at an affordable rate, and GEDCO receives a fee that allows it continue its development work.

Ednor Apartments II is an example of how investors help reduce the cost of construction so that rent can be lowered. Ednor Apartments II is mixed income, meaning that some renters earn 30% of the area median income (one bracket), some 40% (another bracket) and so on. A certain number in each bracket are accepted into the housing unit. In addition, Ednor Apartments II also has some market-rate units, which emphasizes the appeal of the property.

Summary

Either through the assistance of federal subsidies or local investors, affordable housing means lower rent costs, in communities that may be very desirable, for those who already are stretched to meet their basic needs.