Leveraging Government Funding for Affordable Housing

Leveraging Government Funding for Affordable Housing

Across the country, there are thousands of developers and development corporations working to increase the availability of affordable housing. Housing projects cost money of course, and developers often turn to government programs for funding. When used effectively, government funding often encourages investment from the private sector. When that strategy is successful, the ratio of private to government investment can be as high as 5- or 6-to-1. One organization, the Local Initiatives Support Corporation (LISC), is exploring creative ways to improve that ratio.

The Local Initiatives Support Corporation (LISC) was founded in 1980 with the intent of helping Community Development Corporations (CDCs) raise money for affordable housing and related projects. In its first 18 months of operation, LISC helped over 130 communities in 28 states make improvements to housing, infrastructure, and economic development. Over the years LISC has used $11 billion in government funding to leverage a total of $33 billion in investment dollars - all aimed at building sustainable communities where people of all incomes can afford housing, access education and find work.

Recently, LISC received a $5 million grant from the U.S. Treasury Department's Capital Magnet Fund and has used it to launch the Neighborhood Revitalization Loan Fund. The grant money will be combined with funding from Morgan Stanley to help initiate and support projects that receive Low Income Housing Tax Credits (LIHTC). Funding can be used for land acquisition, construction costs and predevelopment planning, in addition to Section 8 guarantees.

Currently, LISC plans to distribute the funding among 30 programs throughout the United States that support both urban and rural development. The Capital Magnet Fund was created through the Housing and Economic Recovery Act of 2008 as part of the Community Development Financial Institutions Fund (CDFI Fund), and is managed by the Treasury Department.

A total of $80 million was awarded last fall to LISC and similar organizations. Proponents believe the Capital Magnet Fund is an excellent example of the ways in which a small amount of federal funding can be used to leverage generous amounts of private financing for affordable housing projects.

As Congress continues looking for ways to cut spending and reduce the national deficit, organizations like LISC will need to continue exploring and promoting methods for allocating private investment dollars for low-income housing developments. Though federal funding may be reduced for these types of projects, affordable housing is needed now more than ever as families face financial crises that put market-rate homes out of reach. Leveraging Government Funding for Affordable Housing - Spasat General Business Directory - SEO Directory Business -  Business Directory