November 21, 2016

Field Notes: A Lesson in Community Development Alphabet Soup

By Ai-Lien Vuong, Enterprise Rose Architectural Fellow

The current Enterprise Rose Architectural Fellows share their ideas, inspirations, and photos from the field on our blog. Learn more about the Fellowship.

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When I was in graduate school, I audited a course on housing markets & policy in which the majority of other students in the class were, aside from being whip smart, not only in their final year but had backgrounds or related-work experience in real estate, business, or economics. I recalled feeling a bit uneasy during the first few days, because although classes had just begun, it felt like I had dropped into another world. There were so many acronyms related to housing, particularly affordable housing, and although I recognized a few (yeah, HUD!), it took a while before phrases like “RAD” or “LIHTC” (pronounced “LIE-TEK”) were familiar tools in my vocabulary.

Upon starting my Rose Fellowship at the Denver Housing Authority, that same feeling of unfamiliarity with the vernacular in my workplace resurfaced. No one ever tells you that getting into the affordable housing world means learning a new language. Even words I did know now had many different nicknames—LIHTC (Low-Income Housing Tax Credit) became “Tax Cred,” “State Cred,” “4%,” “9%,” “competitive,” or “non-competitive.” Phrases like “penciling out” or “cap stack” or “bond financing” made my eyes glaze over, and I found myself constantly jotting down terms or phrases during meetings that I would need to look up later. Is “Perm Debt” a new fad in hairstyle (kidding)? Nearly a year into the fellowship, I’ve managed to not only survive the “alphabet soup” of the affordable housing world but have begun to dish it out for others’ consumption. I had unknowingly transitioned into one of the development jargon-slingers that had caused me so much confusion less than a year ago. It took several friends and fellowship colleagues to outright tell me, “I have no idea what you’re saying” to make me rethink the way I was using my newfound language and talking about affordable housing in a way that was accessible to all.

So now what can I—and you too, if you’re likewise guilty—pledge to do in order to prevent others from drowning in the depths of acronym dystopia? Well, it helps to never assume that your audience has the same background knowledge that you do. If you’ve ever used the word “charrette” in a room of non-designers or at a community meeting, the blank faces should be more than enough to make you back up and explain. You can also use the Grandma Rule. Is what you just explained something that your grandmother might understand? If not, try to get it to the point of simplicity and clarity to where it is. If you’re someone who has been on the receiving end of the acronym onslaught, first and foremost, I’m sorry. Second, I’ve compiled a brief dictionary—one that will be an ongoing collection so feel free to add to it—of acronyms, abbreviations, phrases, and terms that are often used in affordable housing development that may help you or someone you know navigate the alphabet soup in which so many of us find ourselves treading.


Housing Policies or Related Political Entities

  • CDC = Community Development Corporation:

A nonprofit, community-based organization focused on revitalizing the area where located—typically low-income, underserved neighborhoods that have experienced significant disinvestment

  • CLT = Community Land Trust:

A nonprofit corporation that develops and stewards affordable housing, community gardens, civic buildings, commercial spaces and other community assets on behalf of a community

  • CRA = Community Reinvestment Act:

Federal law intended to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining

  • Fair Housing = refers to the Fair Housing Act:

Federal law that banned discrimination in housing based on a set of defined protected classes

  • FHA = Federal Housing Administration:

Office under HUD that provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories; insures mortgages on single family and multifamily homes

  • HUD = Housing and Urban Development:

U.S. department and government agency that oversees home mortgage lending practices

  • NOAH = Naturally-Occurring Affordable Housing (Market-Rate Affordable):

Housing that is affordable without being supported by public subsidies such as LIHTC (see next section)

  • PHA = Public Housing Authority:
  • Provides decent, safe, and affordable quality rental housing for eligible low-income families, the elderly, and persons with disabilities (example: Denver Housing Authority)
  • TIF = Tax-Increment Financing:

A public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects

  • TOD = Transit-Oriented Development:

An approach to development that focuses land uses around a transit station or within a transit corridor; typically characterized by a mix of uses, density, and walkability

Public Affordable Housing Programs

  • Choice Neighborhoods program:

HUD program that supports locally driven strategies to address struggling neighborhoods with distressed public or HUD-assisted housing through a comprehensive approach to neighborhood transformation

  • HOPE VI:

HUD program intended to redevelop the worst U.S. public housing sites into mixed-income communities

  • Housing Choice Voucher Program (also known as Section 8):

HUD program that allows very low-income families to choose and lease or purchase safe, decent, and affordable privately-owned rental housing

  • LIHTC = Low-Income Housing Tax Credits:

The country's most extensive affordable housing program; provides private owners with an incentive to create and maintain affordable housing; funds are allocated to states on a per capita basis and are managed by a housing finance or other agency that then allocates tax credits to developers

  • Tax credits: provide a dollar-for dollar reduction of your income tax liability (example: $1,000 tax credit saves you $1,000 in taxes)
  • 4% tax credits: 4% of depreciable basis, comes with state bond financing, may or may not be competitively allocated
  • 9% tax credits: 9% of depreciable basis, competitively allocated
  • QAP = Qualified Allocation Plan: criteria outlined in the selection process for applications to the state’s housing finance authority (HFA) for tax credits
  • NMTC = New Market Tax Credits:

Program that stimulates local economies in low-income, distressed communities by supporting job creation and encouraging expansion of small businesses

  • RAD = Rental Assistance Demonstration:

HUD program that seeks to preserve public housing by providing Public Housing Agencies (PHAs) with access to more stable funding to make needed improvements to properties

Housing / Development / Financing Terms or Phrases

  • AMI = Area Median Income:

When thinking about affordable rental housing, AMI is often used to calculate affordability (ex: <60% AMI)

  • Cap Stack = short for Capital Stack:

The different capital (money) sources to be used for a project

  • CDFI = Community Development Financing Institution:

A financial institution that provides credit and financial services to underserved markets and populations (example: Enterprise Community)

  • “Doesn’t pencil out”:

The current financing or pro forma says this project is financially unfeasible

  • Layered Financing:

When you are using a variety of capital (money) sources, public and private, to finance a project

  • Perm Loan / Perm Financing:

Long-term mortgage loan or bond issue; permanent financing or permanent mortgage is obtained after completion of construction, usually to repay the short-term (non-permanent) construction loan

  • PPP or 3P or P3 = Public-Private-Partnership:

When one or more public (government) and private sector entities are working together under a cooperative agreement to provide a public asset or service

  • Public Housing:

Providing decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities

  • NOFA = Notice of Funding Availability:

Released to inform when HUD funding grants are available

  • Gap Financing:

An interim loan given to finance the difference between the floor loan and the maximum permanent loan as committed

  • Underwriting / Underwriter:

When an individual or business entity seeks funding for a real estate project or purchase, the loan request is scrutinized by an underwriter to determine how much risk the lender is willing to accept

  • WBE / MBE = Women Business Enterprise / Minority Business Enterprise:

Type of business certification; government contracts often encourage or require the inclusion of WBE/MBE certified businesses on teams that are hired in order to ensure they are diversified

AiLien Vuong headshot.jpgAbout the author: Ai-Lien Vuong joins the Denver Housing Authority (DHA) as the agency begins implementation after years of planning for the redevelopment of the Sun Valley neighborhood. DHA is the master developer, which seeks to integrate district sustainability, transportation infrastructure and community design processes into one of the largest public housing redevelopments in the country. In addition to her involvement on several key DHA projects, Ai-Lien serves on the West Denver Renaissance Collaborative—a collective impact initiative where she focuses on housing and anti-displacement strategies for West Denver. Ai-Lien actively helps DHA and its many partner organizations plan for future growth and equitable development.

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