Housing GSO: HRA Greensboro Affordable Housing Plan

AFFORDABLE HOUSING GLOSSARY

Tax Increment Financing: Tax increment financing is a financing mechanism wherein a government uses anticipated future increases in tax revenues from private development activity to finance present-day improvements, such as new or improved infrastructure, that will benefit that development. In North Carolina, there are two primary types of increment financing, traditional TIF and synthetic TIF, with synthetic TIF being more commonly used. With traditional TIF, the debt used to finance the infrastructure is secured by and repaid from the development’s incremental property tax revenues. With synthetic TIF, the debt is secured by either the asset itself (e.g., the improvements being financed) or the local government’s full faith and credit (general taxing power), not the incremental tax revenues; however, the tax revenues can be used to pay the debt service and principal of the improvements. Increment financing can be used to capture value from new development to create or preserve affordable housing in areas experiencing significant new growth. U.S. Department of Housing and Urban Development (HUD): HUD is the federal agency charged with overseeing affordable housing and community development programs, including programs promoting homeownership, providing low-income rental housing assistance, enforcing fair housing laws, addressing homelessness, and providing aid for distressed neighborhoods.

Value Capture: Value capture approaches seek to capture some of the benefits that private entities realize due to public investments, such as infrastructure investments that make an area more attractive for development, to fund those or other investments.

Year 15 Properties: Low-Income Housing Tax Credit projects have a 15-year required affordability period, which is followed by a second 15-year affordability period, called the “extended use period,” that keeps them affordable for a total of 30 years. However, the enforcement mechanisms for the second 15-year affordability period are much weaker than the first 15-year period, such that some properties convert to market-rate before reaching the end of their full 30- year affordability period.

Zoning: Zoning is a planning tool deployed by local governments that regulates a building’s use, size, and shape, as well as other factors, such as parking, signage, accessory structures, and landscaping.

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