Q: Which strategy(s) are typically most advantageous to rural areas with very low market rents?
A: Ginger: We have used cross subsidies in low rent markets with deep capital subsidies. For example, we did a project with 20% of the units at 30% AMI and 80% of the units at 50% AMI in Spokane, which has low AMIs and low rents. This worked fine because almost all of the capital costs were covered by HOME funds, which were structured as a loan with cash flow contingent repayment (we only repay to the extent cash flow is available). The NHTF’s ability to cover operating costs should help quite a bit in rural areas where you might need only modest operating subsidies for it to work. In other words, if you could serve the target population with a $100 – $200 per unit per month operating subsidy, then the NHTF could fill that gap.
Nancy: Developing 100% affordable developments with rents set at 30% AMI and below on 20% of units, 40% AMI on 30% of units and 50% AMI on 40% of units.
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