The El Dorado of Permanent Sustainable Affordability
Exhibit 2: Taxonomy of American affordable housing, 1937-2002:
Four generations, nine original cohorts
| Generation1 | Heyday | Cohort | Description and challenges |
| 1. Public housing | 1937-54 | a. Family | Direct local ownership. Slum clearance device not specifically aimed at poverty alleviation. Confusion between goals: affordability, sustainability, urban revitalization. |
| 1962-66 | b. Elderly | Targeted population with specific goal of long-term affordability. | |
| 2. Appropriated (public-private) | 1968-74 | c. Rent buydowns | Provide financial incentives to enable cheap rents yet motivate developers (for-profit or non-profit). Chiefly mortgage insurance or subsidy programs: §202,2 221d3, 236, and 515. |
| 1977-85 | d. Section 8 AAF | Build market-quality properties even where markets do not support them. Provide resident income subsidy (§8) attached to the property to enable viability. §221d4, HFA3 programs, and §8 mod rehab. | |
| 3. Tax credit (LIHTC) | 1986-90 | e. Basic | Offer tax incentives to raise soft equity that enables rent buydown without appropriated funds. Conventional and §515.4 |
| 1988-now | f. Deep targeted | Using LIHTC as a base, add supplementary soft debt to deliver even deeper affordability to target populations (disabled, extremely low income, HOPWA). | |
| 4. Moving to market | 1996-now | g. Mark Up to Market (MUM) | Allow older properties to raise their rents back to market (so they can once again be sustainable) and inject resident income subsidy (to assure ongoing affordability). ELIHPA/ LIHPRHA preservation, Mark Up to Market, and §202 refinancing. |
| 1996-now | h. HOPE VI | Transfer properties from public housing (Generation 1, Cohort a) to tax credit (Cohorts e-f-g). Usually combined with additional resources. |
1 In fact, some American affordable housing dates from Pilgrims' era: by 1660, Boston had built an almshouse. Such activities were generally private charities or local civic initiatives rather than national programs, so for this purpose we ignore them.
2 Since §202's are direct non-profit ownership, and §515's were originated by the Farmers Home Administration (FmHA, now the Rural Housing Service), some might see them as separate cohorts. Perhaps they are better considerate separate species within the same cohort.
3 While there are important differences between HUD and HFA flavors, we regard them as separate species within the same cohort.
4 §515 used an appropriated resource (the 1% FmHA mortgage) on top of the soft equity to create an even deeper rent buydown so theoretically one could classify LIHTC/§515 as a hybrid that straddles cohorts.
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