In recent years, a number of financial entities have submitted proposals to local jurisdictions to use tax-exempt government bonds (Essential Housing Revenue Bonds) coupled with a property tax exemption to acquire market rate apartment buildings and subsequently convert them to rental housing for households earning up to 120% of the Area Median Income. These programs are generally referred to as “Middle Income Housing Programs” (MIH Program).
The MIH Programs are marketed as a workforce housing solution to municipalities that sorely lack affordable housing for overlooked “missing middle” income households. Keyser Marston Associates has extensive experience in the evaluation of the economic aspects of establishing a MIH program and offers clients an unvarnished opinion of the pros and cons of a program’s complex transaction structure, which varies jurisdiction by jurisdiction based on negotiations between the parties.
To date, Keyser Marston Associates has advised numerous jurisdictions - including Costa Mesa, Dublin, Escondido, Fullerton, Irvine, Milpitas, Placentia, Pomona, Redlands, San Marcos, Vista and West Hollywood – on the merits of participating in a MIH Program. While the provision of more affordable housing units is a desired outcome, municipalities must also weigh the on-going loss of property tax revenue and issues associated with the true affordability benefit of the project to ensure that the program meets the local jurisdiction’s affordable housing objectives. Additional potential risks and liabilities for the municipality throughout bond term must also be considered.
Contact Keyser Marston Associates for objective advisory services if your jurisdiction is interested in assessing the possibility of establishing a Middle Income Housing program.