The most important source of financing for most EAH programs is the employer contribution, whether in the form of direct mortgage or rental assistance, construction finance, contribution to a funding pool, or other direct financial assistance. See Types of Assistance (add link).

 

Public and private funding sources can serve to incentivize and supplement employer contributions to EAH programs:

 

EAH tax credits. A number of states, including Connecticut and Illinois, offer tax credit incentives for EAH. The Illinois Affordable Housing Tax Credit Program, established in 2004, provides a $.50 tax credit on state income tax liability for every $1 in cash, land, or property donated for affordable housing creation or invested in EAH efforts. Such programs are a powerful incentive for employers to participate and can increase employer contributions to a program by a significant amount.

Bond Financing EAH   The Fannie Mae Foundation purchased $23 million in mortgage revenue bonds issued by the District of Columbia to provide initial program funding for the Howard University-LeDroit Park Initiative.

 

Existing affordable housing resources. EAH programs can be eligible for and have been funded by general affordable housing resources including HOME program funds, community development block grant funding, housing trust funds, foundation funding, and tax increment financing.

 

State and local dedicated matching funds. Municipal and state governments can dedicate funding streams to match employer contributions to EAH programs. In Illinois, for example, the Illinois Housing Development Authority matches employer contributions for EAH programs that serve employees earning less than 80 percent of AMI. Such matching funds can augment and extend EAH programs.

 

Affordable housing bonds. Mortgage revenue bonds are issued by state and local agencies or by private real estate lenders. Employers can purchase these bonds to contribute to a general affordable housing program, or state and/or local agencies may issue bonds or dedicate bond revenue specifically to fund an EAH program. Employers can also realize a modest return on the bonds, making the assistance costless or moderately profitable for the employer. Mortgage revenue bonds can be taxable or tax-exempt. Programs funded by tax-exempt bonds issued by state or local government agencies are generally required to serve low-income people and to finance homes priced below a designated state or area median purchase price, making them an appropriate funding source for EAH programs that aim to serve low-income people.

 

Local and state governments could also issue—and employers could purchase—a range of other affordable housing bonds to provide program funds.

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