Agenda - Council - 06/28/2016 - Laserfiche WebLink

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demand iosufficient tosupport the planned rent levels. An investor or lender considering investing inthe rehabilitation or construction of affordable housing iolikely t0focus more onthe number oflower-income households who need the subsidized housing. In both of these caoeo, demand can beexpressed with relative certainty. |namixed-income proposal, however, two ormore types ofdemand must be accounted for —the demand for the market -rate units and the demand for the subsidized units. If questions lead potential investors to believe that demand for either the market -rate or subsidized units, or both, may be questionable, the perceived risk increases. When the perceived risk increases, investors expect a higher rate of return, the housing becomes more expensive to bui|d, and the project becomes less feasible. For example, public entities can often provide financing on highly favorable terms and conditions to locally significant projects. But those public entitieo, too. have their limits; they must be effective stewards of taxpayer resources and invest them in developments that are likely to succeed and in time repay the public investment. What are potential strategies to develop mixed -income housing? Despite the challenges of mixed -income development, national and local success stories show where mixed -use development has met with little resistance, has improved access to amenities and services, and has been effectively matched with other public policy goals. For example, Austin, Texas launched the S.M.A.R.T. (safe, mixed -income, accessible, reasonably priced, transit -oriented) Housing Program, which offers developers 8schedule 0f incentives based on the level of affordable housing. The schedule also incorporates local controls such as a density bonus to encourage affordable development and secure other community benefits including parking, open space, orotreetocape improvements." In our region, many cities require affordable units when tax increment financing is provided to projects. They may also deploy other fiscal, regulatory, and planning incentives and tools. Potential strategies to reduce the impediments to mixed -income development include: * Dividing the property into two distinct projects. This strategy runs counter tothe typically used criterion ofaproject aobeinQaoetofactivitieo"undercornrnonovvnerohip, management, and fin8nCing," and almost undoubtedly will result in increased soft costs. But the premise is relatively simple —find one investor that is interested in the market -rate component and another for the affordable units. HOUSING POLICY PLAN FOUR: Opportunities for Collaboration