Staying Afloat in Affordable Housing Production: An Initial Examination and Framework of Cost Savings for Mercy Housing Southeast
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As income disparities continue to increase nationally, finding and constructing housing that is affordable and provides a stable environment to those in the lowest-income brackets has become extremely difficult across the nation. Financing residential projects that are affordable to families earning less than 60% of the area median income (AMI) involves creative layers of financing as construction costs are seen as fixed whether the units are priced at or below fair market rent. In this paper, I will focus on affordable housing in terms of residential developments with a portion of their units serving households that earn less than 60% AMI but there are many types, methods and definitions of affordable housing. Due to my familiarity with the federal and state programs of the Low-Income Housing Tax Credit (LIHTC) through my internship with a nonprofit affordable housing developer, this paper will center on LIHTC’s efforts (one moving pie ce in the puzzle) to combat affordability. As the LIHTC program is complicated, this paper aims to provide the framework for a development and construction manual to be used by affordable housing developers like Mercy Housing Southeast. For this paper, Mercy’s recent projects in Georgia will serve as case studies and provide insight into cost savings at different stages of the development and construction process. This manual can serve as institutional memory and re-evaluation for Mercy Housing Southeast in addition to providing guidelines for cost-effective projects. In this way, affordable housing developers can be better prepared and resilient when unexpected costs are incurred on a tight budget with a variety of funding sources.