Goal: Increase the Availability of Affordable Homes
Role: Capitalize on Market Activity

Tools in this section capitalize on market-rate development to expand affordable housing opportunities. Some policies work best when implemented in areas that already have an active housing market. For example, inclusionary zoning policies -- which encourage or require the inclusion of a modest share of affordable homes in new market-rate developments -- achieve the greatest results in growing
communities with a high volume of new construction. Although in many places the housing market has slowed dramatically since the early and mid-2000s, communities that have typically had a high volume of housing development can benefit from enacting these policies during the current lull to ensure that these policies are in place when activity picks up again. Others tools are useful in both strong and weak markets; for example, tax abatements can be used to encourage redevelopment in neighborhoods in need of revitalization or to provide owners of multifamily homes in need of renovation with a financially viable way to cover the cost of improvements without increasing rents.

Click on the policies below to learn more about ways to implement this strategy.

Utilize Tax Increment Financing to Fund Affordable Homes
Parsons Place
Municipalities increasingly use tax increment financing to fund community development initiatives, including production of affordable homes. Improvements are paid for by borrowing against the anticipated increase in property tax revenue.

Stimulate Construction or Rehabilitation Through Tax Abatements
Cooper Street Townhomes
Tax abatements involve freezing or lowering property taxes on a specified lot for a designated period of time. Abatements can be offered to encourage construction or rehab of rental homes, or to help homeowners stay in their homes.

Create or Expand Dedicated Housing Trust Funds

Crystal Creek
Housing trust funds are flexible sources of financing for affordable homes, and work best when supported by a stable, dedicated funding source. Trust funds can be a useful tool for supplementing other housing programs.

Establish Inclusionary Zoning Requirements or Incentives
Poinsettia Station
Inclusionary zoning policies help ensure that a modest share of homes within new developments will be affordable to working families. Whether mandatory or voluntary, these policies generally offer cost offsets and other benefits to participating developers.

Use Cross-Subsidies to Support Mixed-Income Communities
Foundry Square
In strong housing markets, non-profit or mission-driven developers can use profits from the sale or rental of market-rate homes to subsidize the development cost of affordable homes.

Photo credits (clockwise from upper left): Parsons Place, East St. Louis IL -- photo courtesy of McCormack Baron Salazar; Cooper Street Townhomes, Portland OR -- photo courtesy of City of Portland OR; Crystal Creek Townhomes, Sierra Vista AZ -- photo courtesy of Arizona Department of Housing; Foundry Square, Newburyport MA -- photo credit: Greig Cranna, courtesy of MassHousing; Poinsettia Station, Carlsbad CA -- photo courtesy of BRIDGE Housing