cross subsidies: overview » introduction

Where is this policy most applicable?

In its purest form, the cross-subsidy model uses income from market-rate units to provide affordable housing opportunities to low- and moderate-income families in a mixed-income context, reducing the need for public funds. As such, it works best in strong housing markets with high market rents and/or home prices.

Communities can employ cross-subsidies in a broader range of markets by combining this tool with other strategies to create innovative "hybrid" models. Donated land, low-cost financing or density bonuses can be used in weaker markets to make cross subsidies work more effectively. Whether in a strong or weak market, many jurisdictions choose to support mixed-income communities because they believe they are more sustainable and serve a broader public purpose.

Click on the links below to learn more about how cross subsidies work:

Casa del SolHow do cross-subsidies support mixed-income communities?
Under certain market conditions, the profits associated with market-rate units can be great enough to subsidize development of affordable homes.

How can jurisdictions facilitate the use of cross-subsidies to create mixed-income communities?
By combining cross-subsidies with other incentives, communities have successfully used cross-subsidies in a wide array of markets.

Residents--Mercy HousingWhat are the benefits of mixed-income communities?
The benefits of mixed-income communities extend beyond the increased availability of affordable homes.

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