Housing affordability is measured in relation to area median income (AMI), a number determined by the Department of Housing and Urban Development (HUD) to represent a typical annual household income for a local area. In 2015, the Charlottesville AMI was $77,800.
Affordable Housing: Section 8
Who it’s for: Households with incomes at or below 30% of AMI. Up to $28,000 in income; rents up to $650 for a family of four. Typical jobs include food servers, waiter/waitress, home health aide, and bus driver.
How it works: Each family pays 30% of its income for rent. Rent payments are tied to income and can shift up or down each month. Friendship Court has a designated fair market rent (FMR) of approximately $800 per unit per month that the federal government determines is enough to cover operating expenses. A federal subsidy covers the difference between the FMR and the portion paid by the tenant.
Affordable Housing: Low-Income Housing Tax Credit (LIHTC)
Who it’s for: Households with incomes at 60% of AMI and below. Up to $40,000 in income; rents up to $1,000 for a family of four. Typical jobs include mechanic, school teacher, police officer, and administrative assistant.
How it works: Families pay a fixed affordable rent. LIHTC units must be rented to low income families at affordable rents, but unlike Section 8 rents don’t change with a family income.
Affordable Housing: Subsidized Workforce
Who it’s for: Households with incomes at or below 80% of AMI. Up to $60,000 in income; rents up to $1,600 for a family of four. Typical jobs include post-secondary instructor, landscape architect, physician’s assistant, dental hygienist, and bank teller.
How it works: Families whose incomes are above LIHTC income limits but not sufficient to afford market rents are eligible for workforce housing. This type of housing has no federal subsidies and targets families between 60% and 100% AMI.
Who it’s for: Families with incomes at 100% of AMI and more is where market-rate developers are targeting rents. Above $75,000 in income; rents up to $2,400 for a family of four. Typical jobs include lawyer, software engineer, accountant, and upper management.
How it works: Demand in the market sets rents. The proposed redevelopment would have amenities and unit sizes to make it competitive with other market-rate developments. The amenities need to attract market-rate renters, but are open and available to all residents at all rent levels. This type of housing has no federal subsidies.
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In our next Master Plan blog post, we’ll see how previous local planning reports contributed to the Friendship Court Master Plan.
Source: Friendship Court Redevelopment Master Plan, December 2016 – What We Heard and What That Tells Us (Ladder of Affordable Opportunity)