All communities need clean, safe, and affordable quality housing. But America faces a deficit of 7 million units. Developing housing options depends on a well-resourced community development finance system to protect against the market forces of displacement and gentrification.
Developers make money from rent minus expenses. That’s why they charge market rates—both to cover construction costs and to generate financial return investors require. If rent is restricted, alternative forms of capital beyond bank debt are needed – things like Low-Income Housing Tax Credits, New Markets Tax Credits, tax exempt bonds or other subsidies. Developers also often work with philanthropies or nonprofits to offset costs.
Bottom Line: In community development finance, policymakers, impact investors and philanthropy can help align the tools and agencies needed to create those housing options. When they do, we see an uptick in the number of families who can find a safe and affordable place to live.