by Gleb Lerman, The Affordable Oracle
Affordable housing is all over the news, especially in NYC. In a series of blog posts I will cover some of the stuff I learned over the last five years of appraising and consulting on affordable housing in NYC.  Most of my posts will focus on the development and operations of affordable housing.
One of the main reasons for building affordable housing is the subsidies that are available.  In return for these subsidies (to be covered in later posts) a developer encumbers the property with restrictions.  The restrictions consist of income restrictions and rent restrictions.
An income restriction sets the upper limit of how much money a tenant or household can earn and still be eligible for the housing.  The programs as well as the regulatory agreements encumbering the properties specify that the income limits be based Area Median Income (AMI) published annually by HUD.  HUD publishes AMI numbers for multiple geographic regions (however all of NYC falls into one AMI area).  Most affordable housing programs target certain populations (extremely low income, very-low income, low income, median income) which are defined as percentages of the published AMI numbers.  Here are the 2009 AMI limits for NYC taken from huduser.org.
Illustration: Lets say the Smiths want to live in 125 Main Street developed under an affordable housing program which is targeted to the Very Low Income Population (50% AMI). The Smith household consists of a five people and their gross annual income is $39,250. To see if the Smiths are eligible for housing in 125 Main Street we look to see what the Very Low Income limit for a 5 person household is. It’s $41,450.  The Smiths are in fact eligible and can thus apply for housing at 125 Main Street.
Many programs, especially in NYC don’t fall into the 30%, 50% or 80% AMI categories illustrated above. Some programs have 60% income limits, some have 120% income limits and some have 175% income limits.  However some basic arithmetic can go a long way.  If 50% AMI for a household of 2 persons is $30,700 then 100% AMI for a household of 2 persons must be $61,400.  You can test your understanding by looking at various affordable housing applications on HPD’s website (and seeing if you can figure out what income limits are set for each unit. Hint, in some cases not all the units in a building have the same AMI restrictions.)  Fascinating stuff, eh?
Coming soon! Rent restrictions, Subsidies, some recently completed affordable housing projects, Low Income Housing Tax Credits, the development budget, 4% vs 9% tax credits, and eligible basis…
