Multifamily

By Taylor Williams In an era in which land and construction costs are perpetually on the rise, developers of affordable housing must be able to navigate a complex web of federal, state and local programs in order to secure gap financing — the capital that covers the delta between total development costs and those covered by tax credit equity, municipal bonds or other types of subsidies. Understanding and effectively utilizing the various initiatives and incentives — density bonuses, private activity bonds, tax increment reinvestment zones, energy efficiency compliance — is no easy task. Time and manpower aside, this process is further complicated by the fact that state and municipalities have their own laws and regulations when it comes to these programs. But successfully navigating them is key to eliminating development costs not covered by tax credits — the critical piece of financing that lies at the heart of virtually every affordable housing project in Texas. For without these subsidies, the economics of paying market-rate land prices and record-high construction costs to develop housing in which rent levels are capped simply doesn’t work. “As developers that want to build high-quality affordable housing that’s basically indistinguishable from market-rate product, what we need …