real estate development

glossary.

Real Estate Development Glossary for Affordable Housing

Acquisition-Rehab Program
A program, usually run by a nonprofit or local government, that purchases abandoned or substandard properties, renovates them, and sells or rents them to lower-income households.

Adaptive Reuse
The process of repurposing old or underutilized buildings (such as factories or schools) for new uses, often including affordable housing.

Affordable Housing
Housing where the occupant pays no more than 30% of gross income on housing costs, including rent or mortgage and utilities.

Affordable Housing Fund
A subsidy funding program (often of the Federal Home Loan Bank Board or local government) dedicated to financing the development or preservation of affordable housing.

Affordable Housing Overlay Zones (HOZs)
Zoning districts that provide incentives—such as increased density or relaxed regulations to developers who include affordable units in their projects.

Affordable Housing Program (AHP)
A competitive grant program of the Federal Home Loan Bank system, providing funds for investment in low- or moderate-income housing initiatives.

Affordability Gap
The difference between what a household can afford to pay for housing and the actual market price of available homes.

Amortization
The gradual repayment of a loan (such as a mortgage) through regular payments of principal and interest.

Amortizing Loan
A loan that is paid off in equal installments over its term, with each payment covering both principal and interest.

Annual Contribution Contract (ACC)
Annual contracts with Public Housing Authorities (PHAs) for payments toward rent, financing debt service, and financing for modernization.

Area Median Income (AMI)
The midpoint income in a specific area. Eligibility for affordable housing programs is often based on earning a percentage (e.g., 60%, 80%) of the AMI.

Asset Management
The ongoing oversight and administration of a real estate portfolio to maximize its value, performance, and compliance with funding requirements.

Bond Financing
The use of tax-exempt or taxable bonds to raise capital for affordable housing projects.

Brownfield Redevelopment
The process of cleaning up and redeveloping contaminated or underused land for new uses, including affordable housing.

Capital Stack
The combination of different sources of funding such as debt, equity, grants, and tax credits used to finance a housing project.

CDFI (Community Development Financial Institution)
A specialized financial institution that provides loans and financial services to underserved communities, often supporting affordable housing.

Community Development Block Grant (CDBG)
A federal grant program that provides communities with resources to address a wide range of unique community development needs, including affordable housing.

Community Development Corporation (CDC)
A nonprofit organization focused on revitalizing neighborhoods through real estate development, including affordable housing.

Community Land Trust (CLT)
Nonprofit organizations that own land and lease it to homeowners to maintain long-term affordability.

Compliance Period
The length of time during which a property must meet specific affordable housing requirements, often tied to funding sources like tax credits. For LIHTC, this is typically 15 years, followed by an “extended use period” of another 15 years5.

Consolidated Plan (ConPlan)
A planning document required by HUD that outlines a jurisdiction’s strategy for housing and community development, including affordable housing goals.

Cost-Burdened
Households spending more than 30% of their income on housing, indicating a need for affordable options.

Debt Service Coverage Ratio (DSCR)
A measure used by lenders to assess a project’s ability to cover its debt payments, calculated as net operating income divided by total debt service.

Difficult Development Area (DDA)
An area designated by HUD as having high construction, land, and utility costs relative to the area median income, making affordable housing development more challenging. DDAs receive enhanced LIHTC benefits under IRS Code Section 42(d)(5)(C).

Development Partner
Any individual or organization (such as a nonprofit, government agency, or private developer) involved in planning, financing, or constructing affordable housing.

Displacement
The forced movement of residents due to redevelopment, rising rents, or other factors; a key concern in affordable housing planning.

Entitlement Community
A city or urban county eligible to receive annual CDBG funds directly from HUD.

Environmental Review
A process required for most publicly funded projects to assess the potential environmental impacts of proposed development.

Equity
The value of an ownership interest in a property, often used as a source of funding in the capital stack.

Fair Housing Act
Federal law prohibiting discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability.

Feasibility Study
An analysis conducted to determine if a proposed affordable housing project is viable, considering market demand, costs, funding, and regulatory requirements.

Form 8609
The IRS form (Low-Income Housing Credit Allocation and Certification) required for each building in a LIHTC project to claim credits over the 10-year credit period.

Gap Financing
Supplemental funding used to fill the difference between what a project costs and what can be raised through primary loans and equity.

General Obligation Bonds
Municipal bonds backed by the credit and taxing power of the issuing jurisdiction, sometimes used to fund affordable housing.

Green Building
Design and construction practices that reduce environmental impact and increase energy efficiency in affordable housing.

Homeless
A person or family lacking a fixed, regular, and adequate nighttime residence, including those in shelters or transitional housing.

Housing Choice Vouchers (Section 8)
Federal rental assistance program allowing very low-income households to lease privately-owned rental units. Recipients pay 30% of their income toward rent and utilities, with the remainder covered by the voucher.

Housing Payment Ratio
The percentage of a borrower’s income spent on the housing payment after a home purchase, refinancing, or renovation. Includes principal, interest, taxes, and insurance (PITI).

Housing Stabilization Fund
A state or local program supporting neighborhood redevelopment and helping developers acquire, preserve, and rehabilitate affordable housing.

Housing Trust Fund
A distinct fund established by city, county, or state governments with dedicated public funding to support affordable housing preservation and production.

HUD (Department of Housing and Urban Development)
The federal agency overseeing national housing policy, including affordable housing programs.

Inclusionary Zoning
A local zoning ordinance requiring or encouraging developers to include affordable housing in new developments or to contribute to a fund for such housing. May offer incentives like increased density in exchange.

Incentive Zoning (IZ)
Policies that encourage or require affordable units in new developments by offering benefits like increased building height or expedited approvals.

Internal Revenue Code Section 42 (IRC §42)
The section of the U.S. tax code that establishes the Low-Income Housing Tax Credit (LIHTC) program. It details eligibility, compliance, and calculation of credits for affordable housing projects.

Land Banking
The acquisition and holding of land for future development, often used by governments or nonprofits to ensure sites for affordable housing.

Land Trust
A nonprofit that retains ownership of land while selling or leasing the homes on it, ensuring long-term affordability.

Layered Financing
Combining multiple funding sources such as tax credits, grants, and loans to finance affordable housing.

Leverage
Using one source of funds in a project to attract additional investment from other sources.

LIHTC (Low-Income Housing Tax Credit)
A federal tax incentive under IRC §42 for private developers to build or rehabilitate affordable rental housing. Projects must meet strict income and rent limits, and credits are claimed over a 10-year period. Compliance is monitored for at least 15 years, with an additional 15-year extended use period.

Lien
A legal claim against a property for unpaid debts, such as a mortgage or unpaid taxes.

Limited-Equity Ownership
A homeownership model where resale prices are restricted to keep units affordable for future buyers.

Loan-to-Value Ratio (LTV)
A measure used by lenders to assess risk, calculated as the loan amount divided by the appraised value of the property.

Market Rental/Home Ownership
Housing that is rented or owned at prevailing market rates, without subsidies.

Minimum Set-Aside (LIHTC)
A requirement under IRC §42(g) that a project must reserve at least 20% of units for households at or below 50% AMI, or 40% of units at or below 60% AMI, or meet the average income test for eligibility.

Mixed-Income Housing
Developments that include both affordable and market-rate units to promote economic diversity.

Mixed-Use Development
A real estate project that combines residential, commercial, and/or community spaces, often including affordable housing units.

Naturally Occurring Affordable Housing (NOAH)
Rental housing that is affordable without government subsidies, often due to age, location, or building type.

NOFA (Notice of Funding Availability)
An official announcement that funds are available for affordable housing projects, typically issued by government agencies.

Opportunity Zones (OZ)
A federal tax incentive program under IRC §1400Z-1 and §1400Z-2 that allows investors to defer or reduce capital gains tax by investing in designated low-income communities, often used for affordable housing projects.

Permanent Supportive Housing (PSH)
Affordable housing combined with support services for populations with special needs, such as the chronically homeless or disabled.

Placed in Service
The date when a building is ready for occupancy and eligible for LIHTC credits to begin, as defined by IRS regulations.

Preservation
The act of maintaining and improving existing affordable housing stock to prevent loss due to disrepair or conversion to market-rate units.

Project-Based Vouchers
Rental assistance tied to a specific housing development, rather than to individual tenants.

Public Housing
Federally funded and locally managed rental housing for low-income residents.

Qualified Allocation Plan (QAP)
A state-specific plan, required by IRC §42(m), outlining how Low-Income Housing Tax Credits (LIHTC) are allocated to projects based on state priorities6.

Qualified Census Tract (QCT)
A census tract designated by HUD where at least 50% of households have incomes below 60% of AMI, qualifying LIHTC projects for enhanced credits under IRC §42(d)(5)(C).

Recapture
The process by which the IRS reclaims LIHTC credits if a project fails to comply with program requirements during the compliance period.

Request for Proposals (RFP)
A document soliciting development proposals from organizations or developers for affordable housing projects.

Resyndication
The process of recapitalizing an existing affordable housing property, often through new tax credits or financing.

Secondary Financing
Any financing used in addition to a primary mortgage, such as subordinate loans, to help fund affordable housing projects.

Section 202 Program
A HUD program providing funding for affordable housing for elderly residents.

Section 811 Program
A HUD program supporting affordable housing for people with disabilities.

Service-Enriched Housing
Affordable housing developments that include on-site support services such as healthcare or job training.

Shelter
Temporary housing designed to provide a safe place for homeless individuals or families.

Site Control
The legal right to purchase or develop a property, often established through an option agreement or purchase contract.

Soft Costs
Indirect expenses in a development project, such as design fees, permits, and legal services.

Subsidized Housing
A generic term for all government programs that reduce the cost of housing for low- and moderate-income residents, including vouchers, downpayment assistance, interest rate reductions, deferred loans, tax credits, and more.

Supportive Housing
Affordable housing that includes wraparound support services for residents with special needs.

Sustainable Design
Design and construction practices that make affordable housing energy-efficient and environmentally friendly.

Tax Credit Equity
Funds raised through the sale of Low-Income Housing Tax Credits (LIHTC) to investors for affordable housing projects.

Transitional Housing
Temporary, supportive housing that helps residents move toward permanent housing stability.

USDA Rural Development Program
Federal funding for affordable housing in rural areas.

Vacancy Rate
The percentage of unoccupied units in a housing project or community.

Workforce Housing
Affordable housing targeted at moderate-income workers, such as teachers, healthcare staff, and first responders.

This glossary now includes critical IRS codes and tax-related terms (such as IRC §42, Qualified Allocation Plan, Qualified Census Tract, Opportunity Zones, and Form 8609) that are fundamental to understanding the regulatory and financial framework for affordable housing development in the United States.