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What can government agencies do? provides a menu of opportunities for state and local governments to become involved – along with their private and non-profit partners – in creating more decent, affordable homes. The "government" role in housing refers to the variety of activities – taxation, zoning, subsidizing, regulating, lending and others – that take place at several levels of governance – federal, state and local.

At the federal level, the government serves primarily as a funder, providing financial resources through federal tax policy such as the home mortgage interest deduction, direct subsidies such as assistance to low-income renters and indirect subsidies such as tax credits to builders of affordable homes. Through its other funding mainstays – the Community Development Block Grant Program (CDBG) and HOME – the federal government provides funds to states and localities as well as the flexibility to address their area housing needs.

In early 2009, the federal government provided substantial additional funding for affordable housing through the American Recovery and Reinvestment Act (ARRA) of 2009. ARRA provides support for affordable housing in several areas, including preservation of affordable housing units and rental assistance to low-income residents. In addition, ARRA expands funding for neighborhood stabilization and community development efforts that create and/or preserve affordable housing, and revitalize neighborhoods hit hard by the foreclosure and economic crisis.

CityHomes on Park, Minneapolis MN --photo courtesy of LHB Inc.
State governments play an important role in housing, too. They help lower the cost of homeownership through mortgage revenue bond programs and also can allocate their portions of CDBG and HOME funding, along with state matching funds, to areas throughout the state. Low Income Housing Tax Credits (LIHTCs), a major source of funding for new and rehabbed rental homes, also are allocated at the state level. Some states promote housing and community development through state-run housing trust funds or other funding mechanisms. In addition, states are responsible for allocating a large portion of Neighborhood Stabilization Program funds to their localities and guiding these localities in developing plans for using these funds to create and preserve affordable housing and stabilize communities wracked by foreclosures.

It is important to recognize that the state role goes beyond providing funding. Among other key roles, states can provide incentives or requirements to encourage localities to adopt policies that will help expand the supply of affordable homes. States also can serve as conveners and educators, as well as facilitators, through strengthened enabling legislation. To leave this section and learn more about the state role, click here.

Local governments are often where the rubber meets the road as far as housing is concerned. From implementing zoning regulations and processing requests for waivers to issuing building permits, and conducting housing code inspections, localities play a direct role in shaping the housing that gets built in their communities. Some localities also donate publicly-owned land or property that has gone into tax foreclosure and contribute local funds to build or rehabilitate homes.

Many larger local governments are also responsible for creating and implementing plans to use funds provided through the Neighborhood Stabilization Program. These local governments allocate these funds to eligible organizations that develop and/or preserve affordable housing. Local governments may also administer foreclosure prevention programs that aid homeowners in danger of losing their homes.

When considering what local governments can do to expand their impact, it's worth noting that not all government initiatives require spending money. By reducing barriers to development, expanding allowable densities, and creating incentives or requirements for the inclusion of affordable homes within new development, local governments can expand the supply of affordable homes with minimal public expense. Visit the Toolbox section of this site to learn more.
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What are the roles & responsibilities of the private sector?

When the lack of affordable homes – both rental and homeownership – threatens the vitality of the community, homebuilders, bankers and realtors certainly are affected, but so too is the local business community at-large. Individual employers as well as Chambers of Commerce, economic development groups and other industry associations can work alongside Mayors, local officials and affordable housing developers to help expand housing opportunities for low- and moderate-income working families and to ensure they are able to stay in their homes.

What can they do? The private sector can participate in and underwrite media campaigns to raise awareness of the need for workforce housing. As the drivers of jobs, tax, revenue and economic development, area employers and business associations hold considerable sway with city council members and legislators when it comes to reforming zoning regulations or other practices that limit the supply of affordable homes. By advocating for more effective local housing policies and actively supporting efforts to expand the supply of housing, private employers can help both themselves and their communities. They also can advocate for state grants for communities that meet their fair share of the need for affordable homes and tax credits for employers that help employees obtain housing. Finally, they can participate directly in employer-assisted housing programs that help employees find affordable housing and, in turn, attract and retain a stable workforce. Click here to go to the section on employer-assisted housing.

It is also important to recognize the critical role that private-sector developers play in expanding the overall supply of housing.  The public sector has been out of the business of constructing housing for decades, instead focusing on creating funding and incentives for nonprofit and for-profit developers to add to the stock. With the right set of market incentives in place, private-sector developers will respond by increasing the supply where needed, leading to more balanced communities that provide housing for people of all income groups.  And with creative policies to keep that housing affordable over time, communities can go a long way towards meeting both their economic development and affordable housing goals.

Private financial institutions -- namely lenders and servicers -- are critical partners who can help to ensure long-term affordability for homeowners and can also help families stay in their homes. With the dramatic shifts in the housing market currently taking place, many lenders and servicers hold mortgages worth more than the value of the underlying asset, the home.  There are creative options for refinancing that would allow the homeowners to stay in their homes and the lenders to limit their losses. Lenders can explore the different refinancing products here.  Some options include low-interest loans or shared appreciation second mortgages, which split one mortgage into two - a fixed-rate mortgage and a silent second mortgage in which no payments are due until the home is resold.

Lenders and services can work with housing counselors on behalf of the borrower or through voluntary agreements with the federal government to assist households that qualify for the federal program, Making Homes Affordable. Through the Making Homes Affordable program, lenders and servicers receive a financial incentive for helping eligible troubled borrowers to modify their loans or refinance to more affordable monthly payments over the long term. Click here to learn more about how the private sector can help families stay in their homes.
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What are the roles & responsibilities of the nonprofit sector?

Nonprofit organizations have been the sponsors, developers and operators of housing – particularly for low- and moderate-income people – for many years. Some nonprofit community development groups focus on the overall improvement of targeted neighborhoods. Others have as their mission serving vulnerable populations such as the homeless or physically and mentally disabled. Still others are sophisticated housing developers who specialize in putting together multiple funding sources to expand the supply of affordable homes. Housing often is utilized by nonprofits as a platform to provide supportive services such as job training, health care, child care, or transportation. Generally, most nonprofits are committed to making the housing they provide permanently affordable. This means they will be unlikely to opt out of affordable housing programs when market prices rise.

Nonprofits also have the flexibility to participate in unique partnerships. For example, some nonprofits provide housing counseling to the employees of private sector firms that offer employer-assisted housing benefits to their workers. Other nonprofits build close connections with residents of particular neighborhoods, gaining the trust of local residents that may be essential for the success of revitalization efforts. Nonprofits also can work with state and local governments to pool financing for specific housing developments. Or, they can advocate for broader policy changes, such as zoning changes that create more affordable housing opportunities in the communities they serve.

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