Affordable Housing Fund Update
In Tuesday’s regular Social Services and Public Safety Committee meeting, Affordable Housing Manager Rick McQuady will present an update on Lexington's Affordable Housing Fund, and the projects it has been used to support.
The Affordable Housing Fund was established in 2014 to invest in safe, quality, affordable housing. The Fund provides forgivable and low-cost loans to developers, which is typically called “gap financing” because it fills the gap between the cost to build affordable housing and the target rent or sale price.
It is almost impossible to build affordable housing without public or private gap financing. Here is a great tool to learn more about the costs of building affordable housing.
Since the Fund’s creation, the city has used $43.5 million to subsidize the construction and/or preservation of 3,180 housing units at various levels of affordability.
The city builds its income targets based on Federal formulas that are a percentage of the Area Median Income (AMI) of Lexington and the number of people in the household. Lexington’s median income, or AMI, for a 4-person household is $89,300.
The city has created the most housing units for those making a maximum of 60% AMI, or 4-person households that earn $53,580 or less. This amounts to 2,232 units, or 70% of the total funding. Here is how the rest breaks down:
161 units for households earning 30% or less of Lexington’s AMI ($33,000 for a 4-person household)
318 units for households earning 50% or less of Lexington’s AMI ($44,650 for a 4-person household)
469 units for households earning 80% or less of Lexington’s AMI ($71,450 for a 4-person household
Rents must comply with the Federal standard formula, which says that a monthly rent should not exceed 30% of the household's monthly income. Here is how rent ceilings would break down for those same 4-person households:
$750 / mo. for households making $33,000 annually (30% AMI)
$1,116 / mo. for households making $44,650 annually (50% AMI)
$1,340 / mo. for households making $53,580 annually (60% AMI)
$1,786 / mo. for households making $71,450 annually (80% AMI)
A dual income household earning minimum wage in Lexington would bring in approximately $29,000 per year before taxes, qualifying them for housing under 30% of the area median income.
This week’s presentation will also provide an overview of how developers apply for Affordable Housing Fund loans, and how those housing developments are monitored and evaluated once they begin operation. You can view the presentation here.
The regular Social Services and Public Safety Committee meeting will be held on Tuesday, November 14th at 1pm in Council Chambers. You can attend in-person or watch live on LexTV.
