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There are several hurdles facing those who are interested in pursuing low income housing projects. The costs of labor and supplies have risen during the past couple of years, the supply of available land has dwindled and many communities are hesitant or strongly against having low income housing in their neighborhood.
But perhaps the most difficult hurdle for low income housing developers to overcome is financing. Obtaining financing is especially critical for for-profit developers, whose projects need to make financial sense at the end of the day.
First of all, "'low income' means that the maximum total combined household income in the family does not exceed 50 percent of the area median income, adjusted for the household size," Nancy Stangle, development director of Georgia-based Athens Land Trust, said.
There are many financing programs from which to choose, from local and federal government programs to tax credits, partnerships, low interest loans, grants and even donations. But low income housing is in high demand, and the resulting competition for each of these types of financing is fierce.
"It is very competitive to apply for every subsidy program [available] to do affordable housing," Ronne Thielen, managing director of Center Line Capital Group and president of the Affordable Housing Tax Credit Coalition, said. "It's also very complicated in most of the cases."
"One of the biggest hurdles is the timing of applying for all of these different sources and being able to pull it together at the right time," she said. "Everyone has a different deadline and coordinating all your applications and winning is probably the most difficult part" of the financing process, she said.
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Author: Trista Winnie
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