The Glossary

Affordable housing is simple. It’s housing that real people can afford. But building it, preserving it, and expanding it currently require a bunch of programs that are complicated. Keeping up with the termonology can feel like a full time job. Here’s some of the most common terms you’ll hear thrown around when talking about policy solutions.

Gentrification

Gentrification has many different definitions. For some, it is a process through which higher-income households move into an area, increasing housing prices, and leading to additional investments and changes in the built environment. This can also be accompanied by displacement, which happens when lower-earning long-time residents are pushed out. Gentrification can also include a cultural or demographic change in a neighborhood.

Housing Counseling

Housing counseling lets residents talk with expert financial advisors and get advice on housing goals, like buying a home, finding an apartment, reducing debt, or avoiding foreclosure.  Most housing counseling is free from HUD-approved organizations, though sometimes there can be a small fee for homebuyer education classes.

LIHTC

The Low Income Housing Tax Credit program, or LIHTC (pronounced lie-tech) for short, is the largest funding program for building and preserving affordable housing in the country. It is designed to create mid-priced housing, usually around 60% Area Median Income.

Market Rate Rent

Generally speaking, the “market rate” is whatever a landlord can get someone to pay in the private market without a subsidy. In Ohio, property owners are not limited in how much they can charge, how often they raise rents, or how much the rent increases (unless they agree otherwise in a lease or contract). For some housing programs, HUD uses a formula to try to calculate “fair” market rents.

Section 8

Now referred to as Housing Choice Vouchers, the “Section 8” program helps people afford housing in the private market. With it, the tenant usually pays 30% of their income towards rent, while the voucher covers the difference owed to the landlord.

Restrictive Covenant

Most builders or developers who get funding to build affordable housing are required to accept a “restrictive covenant”, which contractually limits how much they are allowed to charge. These covenants expire after a certain time, often between 7 and 30 years after they were first signed.

Severely Cost Burdened

When someone is paying more than half their income towards housing costs, they are severely cost burdened. This is also called the “toxic tradeoff” range because they are typically required to sacrifice necessities (like food or medication) to be able to make their housing payment.  

Affordable HOusing

Affordable housing is a home that costs no more than one-third of your gross income. To go deeper, check out our dedicated page that helps define and measure affordability in Central Ohio.

Area Median Income

If you lined every family in the city up in a row based on how much money they earned, the family standing in the exact middle of the line would have the “area median income”. They are the precise middle of our income distribution. Housing costs are often calculated by how close (or far away) they are from being affordable to that middle family. See more on what this looks like in Central Ohio on our What is Affordable Housing page.

Circuit Breaker

A circuit breaker is a policy that prevents property taxes from rising faster than local incomes. If taxes rise too fast and “overload” a family’s budget, they “trip the circuit” and are frozen until incomes catch up. When that happens, the State “backfills” lost revenue to the local government so that schools, police, and fire are not harmed.

Deep Affordability

Housing that is priced in a range where “extremely low income” earners can afford it is often called deeply affordable. This means that rents do not exceed a rate that someone earning 30% of the area median income can afford.

Fair Housing

Federal law prohibits housing discrimination based on someone’s race, color, religion, sex, national origin, family status (having minors in the home), or disability. Ohio also has fair housing protections for ancestry and military status. And lots of local cities prevent discrimination because of LBGT status, gender identity, marital status, or source of income.  

Gap Funding

A gap is a budget hole. For example, a developer who wants to build affordably might be able to raise enough money to pay for 80% of construction costs, the missing 20% is called the gap. If they try to “close the gap” with a mortgage, they’ll have to raise rents or sale prices. But if they find a grant to close the gap, they can keep prices lower.

Shared Appreciation Mortgage

A shared appreciation mortgage or “SAM” is a type of loan that lets people buy a home with a lower monthly payment. Instead of paying interest each month, the borrower agrees to share a portion of the appreciation they earn when they sell it with the nonprofit administrator

Source of Income

Source of Income discrimination occurs when a landlord refuses to rent to someone because of how they earn lawful income or creates procedural barriers for people with disfavored income types. See our page on SOI discrimination.  

Subsidy

A subsidy is any public or private program that reduces the cost of housing below what the market would otherwise charge. The largest housing subsidies in the United States are usually for homeownership programs like the FHA Mortgage or the Mortgage Interest Deduction.

Tax Abatement

Builders that qualify for the Ohio “Community Reinvestment Areas”, often called tax abatements, can avoid property tax increases when building on their land. In some communities, this reduction in operating costs is only offered in exchange for promises to keep rents at lower prices.

Workforce Housing or Attainable Housing

These are marketing words with no universally agreed upon meaning. When used colloquially, they often mean housing this is priced between 60% and 120% of area median income (which is a *huge* price range)

Zoning

Zoning codes are laws that say what kinds of buildings are allowed to go in our neighborhoods. They often work in tandem with building codes or design codes to say how those buildings must look. Zone codes that aren’t updated regularly and based on modern needs can add costs. See our page on the value of modern zoning laws.