Development Model

Permanent Supportive Housing Rehabilitation Rental

Permanent Supportive Housing (PSH) is affordable rental housing combined with supportive services for households generally earning no more than 30 percent of Area Median Income (AMI). PSH includes innovative approaches to help homeless persons live as independently as possible (such as tiny homes).

Financial feasibility – The populations served by PSH often use rental assistance or other forms of public assistance, such as Social Security Disability Insurance, to cover their housing expenses. This may mean the intended residents will need much lower housing costs than what AMI suggests. Consider how your proposed project will be able to offer rents that align with the intended residents’ incomes. Understand if the cost of development will need to account for site improvements (public road access, access to public water or sewer facilities, or environmental issues).
Building features – It will be important to align your financing assumptions with the needs of the intended residents. Consider things like number of bedrooms relative to intended residents, building or unit features (such as accessibility, healthy housing, and/or trauma-informed design), and space for onsite services.
Special approvals – Many localities require special or conditional use permits to build most types of PSH. Research if the city or county where the proposed development will be located requires special approval to build PSH. If so, conduct outreach to local planning or development staff to understand the special approvals process (including any interactions with elected officials or the public).
Services – A defining feature of PSH is the provision of onsite or nearby offsite services. Consider what services your intended residents would need to maintain their housing stability and build self-efficacy. Identify opportunities to align site selection with residents’ needs or partners to deliver services once the project is complete. Incorporate costs for ongoing service delivery into your financing assumptions.

Permanent Supportive Housing New Construction Rental

Permanent Supportive Housing (PSH) is affordable rental housing combined with supportive services for households generally earning no more than 30 percent of Area Median Income (AMI). PSH includes innovative approaches to help homeless persons live as independently as possible (such as tiny homes).

Financial feasibility – The populations served by PSH often use rental assistance or other forms of public assistance, such as Social Security Disability Insurance, to cover their housing expenses. This may mean the intended residents will need much lower housing costs than what AMI suggests. Consider how your proposed project will be able to offer rents that align with the intended residents’ incomes. For rehabilitation, aim to understand the need for contingencies given the uncertainty associated with property rehabilitation in general.
Building features – It will be important to align your financing assumptions with the needs of the intended residents. Consider things like number of bedrooms relative to intended residents, building or unit features (such as accessibility, healthy housing features, and/or trauma-informed design), and space for services. In the case of rehabilitation, it’s also important to understand any costs associated with modernizing units and meeting federal ADA and Fair Housing laws.
Special approvals – Many localities require special or conditional use permits for substantial rehabilitation of most types of PSH. Research if the city or county where the proposed development will be located requires special approval to rehabilitate PSH. If so, conduct outreach to local planning or development staff to understand the special approvals process.
Services – A defining feature of PSH is the provision of onsite or nearby offsite services. Consider what services your intended residents would need to maintain their housing stability and build self-efficacy. Identify opportunities to align site selection with residents’ needs or partners to deliver services once the project is complete. Incorporate costs for ongoing service delivery into your financing assumptions.
Tenant relocation – Tenant relocation may be needed when rehabilitating existing occupied housing. Familiarize yourself with federal or local relocation standards to understand the requirements associated with relocation (for instance, residents using federal rental assistance will trigger federal relocation requirements). Identify opportunities to phase your development project so you can rotate residents to vacant units as you rehabilitate them (but be mindful that units may need specific features for residents to live there temporarily). If needed, incorporate financing assumptions for hiring a relocation specialist or property manager with tenant relocation experience (including service continuity).

Affordable New Construction Rental

Affordable rental housing offers affordable rents to households earning no more than 60 percent of AMI. Homes produced through this model often receive a private or public subsidy that reduces development costs. Depending on the subsidy, these units may have rent restrictions for a set period.

Kiowa Creek

Financial feasibility – It’s important to understand households’ income levels relative to your overall project costs and any associated requirements with financing programs you may use (see the Funding Sources Inventory in the online version of this guide). Research common occupations where the development will be located and determine how those align with rent levels at your proposed property, including if costs need to be adjusted down to better align with workers’ earnings. Understand if the cost of development will need to account for site improvements (public road access, access to public water or sewer facilities, or environmental issues associated with the site).
Building features – It will be important to align your financing assumptions with the needs of the intended residents. Consider things like number of bedrooms relative to intended residents, building or unit features (such as accessibility or healthy housing features), and space for onsite services or community space.
Zoning – Some rental developments are built at higher densities as multifamily properties. Research where multifamily developments can be built by-right in the city or county where the proposed development will be located. Determine if your intended site requires any special approvals, such as a rezoning or variance. If so, conduct outreach to local planning or development staff to understand these processes (including any interactions with elected officials or the public). For more information see Chapter 4: Engaging the Community.
Regulatory compliance – Affordable rental developments using public and private subsidies are subject to various compliance requirements (tenant eligibility screening, income certification and recertification, and reporting) as part of construction and ongoing property operations. Consider whether your organization or the property manager will be able to effectively manage the compliance process associated with common affordable housing subsidy programs (Housing Tax Credit, HOME Investment Partnership) and local programs.

Affordable Rehabilitation Rental

Affordable rental housing offers affordable rents to households earning no more than 60 percent of AMI. Homes produced through this model often receive a private or public subsidy that reduces development costs. Depending on the subsidy, these units may have rent restrictions for a set period.

Tabor Grant Hotel Apartments

Financial feasibility – It’s important to understand households’ income levels relative to your overall project costs and any associated requirements with financing programs you may use (see the Funding Sources Inventory in the online version of this guide). Research common occupations where the development will be located and determine how those align with rent levels at the proposed property, including if costs need to be adjusted down to better align with workers’ earnings. Understand the differences between financing rehabilitation for subsidized affordable rental properties (compliance costs, cash flow) and using financing to keep unsubsidized rental properties affordable and in good repair (cash flow, low tenant turnover, cost controls).
Building features – It will be important to align your financing assumptions with the needs of the intended residents. Consider things like unit size relative to intended residents, building or unit features (such as accessibility or healthy housing features), and space for onsite services. In the case of rehabilitation, it’s also important to understand any costs associated with modernizing units, returning the property to good physical condition, abating any health hazards (such as lead-based paint and asbestos) in older properties, making energy-efficiency improvements, sufficiently funding your replacement reserve, and meeting federal ADA and Fair Housing laws.
Zoning – Rental developments being rehabilitated may require special approvals, such as rezoning or variances. Older properties may no longer conform to current zoning standards or rehabilitation may result in higher density within the building’s existing footprint. Conduct outreach to local planning or development staff to understand the need for special approvals and the process for them (including any interactions with elected officials or the public).
Tenant relocation – Tenant relocation may be needed when rehabilitating existing occupied housing. Familiarize yourself with federal or local relocation standards to understand the requirements associated with relocation (for instance, residents using federal rental assistance will trigger federal relocation requirements). Identify opportunities to phase your development project to enable you to rotate residents to vacant units as you rehabilitate them (but be mindful that units may need specific features for residents to live there temporarily). If needed, incorporate financing assumptions for hiring a relocation specialist or property manager with tenant relocation experience.
Regulatory compliance – Affordable rental development using public and private financing is subject to various compliance requirements (screening for tenant eligibility, income certification and recertification, and reporting) as part of ongoing property operations. Consider whether your organization or the property manager will be able to effectively manage the compliance process associated with common affordable housing subsidy programs (Housing Tax Credit, HOME Investment Partnership) and local programs.

Market-rate Rehabilitation Rental

Market-rate rental housing provides homes to rent at current prices in the private market. Depending on the location, market-rate rental housing can serve households earning 60 percent of AMI to households earning higher incomes (above the AMI, for instance).

Financial feasibility – Market-rate rental housing meets demand for homes, based on housing market conditions. Research what market segment you will serve with the development, based on characteristics such as household type, occupation, age, and income levels to better align rents with your intended residents. Use the development’s market analysis to identify your competitors and ways to be competitive in the rental market (such as location or offering specific types of onsite amenities or different housing types). Understand if the cost of development will need to account for site improvements (public road access, access to public water or sewer facilities, or environmental issues associated with the site).
Building features – It will be important to align your financing assumptions with the needs of the development’s intended residents. Consider things like unit size with the intended residents, building or unit features (such as accessibility or healthy housing features), and space for onsite services. In the case of rehabilitation, it’s also important to understand any costs associated with modernizing units, abating any health hazards (such as lead-based paint and asbestos) in older properties, making energy-efficiency improvements, and meeting federal ADA and Fair Housing laws.
Zoning – Rental developments being rehabilitated may require special approvals, such as a rezoning or variance. Older properties may no longer conform to current zoning standards or rehabilitation may result in higher density within the building’s existing footprint. Conduct outreach to local planning or development staff to understand the need for special approvals and the process for them (including any interactions with elected officials or the public).

Affordable Homeownership New Construction

Affordable homeownership provides for-sale opportunities for households interested in becoming homeowners, often for the first time. These opportunities include using public or private subsidies to lower the sales prices for intended buyers or shared-equity models to promote long-term affordability. Depending on the location, affordable homeownership can serve households earning 50 percent of AMI to households earning higher incomes (above the AMI, for instance).

Basalt Vista Affordable Housing Community

Financial feasibility – Affordable homeownership units are intended to help households enter the homeownership market, striking a balance between demand and affordability. Research what market segment you will serve with these homes, based on characteristics such as household type, occupation, age, and income levels to better align for-sale prices with your target homebuyers. Identify public or private subsidies to help lower the sales prices for intended buyers (such as use of public land) and any requirements associated with homebuyer eligibility or resale restrictions. Understand if the cost of development will need to account for site improvements (public road access, access to public water or sewer facilities, or environmental issues associated with the site).
Access to mortgage financing and homebuyer assistance – One element of achieving homeownership is being able to finance the purchase of home through a private home mortgage; this access is determined by a mix of household characteristics, including credit score, debt-to-income, and household income. Seek out partnerships with organizations that provide homebuyer education and post-purchase counseling through certified government agencies, such as the U.S. Department of Urban Development, and local or state agencies administering homebuyer assistance programs (such as funding for down payments and closing costs) to create a pipeline of potential homebuyers.
Home features – It will be important to align your financing assumptions with potential homebuyers’ preferences. Consider things like number of bedrooms and bathrooms, total square feet, layout, in-home features (such as appliances and finishes), and outdoor space.
Location – Many homebuyers are looking for specific neighborhood features (such as proximity to schools, shopping, or employment centers) in addition to home features. Consider how your proposed site aligns with the preferences of your intended homebuyers. Use your market study to better understand this question or engage real estate professionals or representatives of the potential homebuyers you aim to serve.

Affordable Homeownership Rehabilitation

Affordable homeownership provides for-sale opportunities for households interested in becoming homeowners, often for the first time. These opportunities include using public or private subsidies to lower the sales prices for intended buyers or shared-equity models to promote long-term affordability. Depending on the location, affordable homeownership can serve households earning 50 percent of AMI to households earning higher incomes (above the AMI, for instance).

Financial feasibility – Affordable homeownership units are intended to help households enter the homeownership market, striking a balance between demand and affordability. Research what market segment you will serve with these homes, based on characteristics such as household type, occupation, age, and income levels to better align for-sale prices with your target homebuyers. Identify public or private subsidies to help offset rehabilitation costs (see the Funding Sources Inventory in the online version of this guide) or lower the sales prices for intended buyers (such as use of public land). Conduct due diligence on clear title, any property liens, and recent sale transactions to gain an understanding of comparable for-sale prices to help align rehabilitation costs with for-sale prices. This is especially important in areas with high numbers of vacant homes or few transactions, as it may be difficult to get an accurate appraisal for a home, which could affect homebuyers’ ability to access a private home mortgage.
Access to mortgage financing – One element of achieving homeownership is being able to finance the purchase of a home through a private home mortgage; this access is determined by a mix of household characteristics, including credit score and debt-to-income ratio. Seek out partnerships with organizations that provide homebuyer education and post-purchase counseling through certified government agencies, such as the U.S. Department of Urban Development, to create a pipeline of potential homebuyers.
Home features – It will be important to align your financing assumptions with potential homebuyers’ preferences. Consider things like number of bedrooms and bathrooms, total square feet, layout, in-home features (such as appliances and finishes), and outdoor space. For rehabilitation, it will also be important to account for the costs of any major improvements (such as roof replacement, HVAC replacement), significant repairs, or health hazard abatement (such as lead-based paint and asbestos) associated with older homes.
Location – Many homebuyers are looking for specific neighborhood features (such as proximity to schools, shopping, or employment centers) in addition to home features. Consider how your proposed site aligns with the preferences of your intended homebuyers. Use your market study to better understand this question or engage real estate professionals or representatives of the potential homebuyers you aim to serve.

Market-rate Homeownership Rehabilitation

Market-rate homeownership provides for-sale at current prices in the private market. Depending on the location, market-rate homeownership can serve households earning 50 percent of AMI to households earning higher incomes (above the AMI, for instance).

Financial feasibility – Market-rate homeownership meets demand for homes, based on housing market conditions. Research what market segment you will serve with these homes, based on characteristics such as household type, occupation, age, and income levels, to better align rents with your intended residents. Understand if the cost of development will need to account for site improvements (public road access, access to public water or sewer facilities, or environmental issues associated with the site). Research recent sale transactions to understand comparable for-sale prices to help align rehabilitation costs with for-sale prices. This is especially important in areas with high numbers of vacant homes or few transactions, as it may be difficult to accurately appraise a home, which could affect homebuyers’ ability to access a private home mortgage.
Home features – It will be important to align your financing assumptions with potential homebuyers’ preferences. Consider things like number of bedrooms and bathrooms, total square feet, layout, in-home features (such as appliances and finishes), and outdoor space. For rehabilitation, it will also be important to account for the costs of any major improvements (such as roof replacement, HVAC replacement), significant repairs, or health hazard abatement (such as lead-based paint and asbestos) associated with older homes.
Location – Many homebuyers are looking for specific neighborhood features (such as proximity to schools, shopping, or employment centers) in addition to home features. Consider how your proposed site aligns with the preferences of your intended homebuyers. Use your market study to better understand this question or engage real-estate professionals or representatives of the potential homebuyers you aim to serve.

Self-assessment: Development Model