Sometimes referred to as AMI, this is the typical income in the regional housing market based on household size and county or city. AMI figures are published by HUD and various housing agencies. AMI figures vary by location.

A set of documents and descriptions that provide the plans and specifications of the development and construction scope of work needed by a contractor to estimate the costs, timelines, labor requirements, and other details associated with construction (Also referred to as a “Request for Bid” or “RFB”).

A set of documents and descriptions that provide the plans and specifications of the development and construction scope of work needed by a contractor to estimate the costs, timelines, labor requirements, and other details associated with construction (Also referred to as a “Request for Bid” or “RFB”).

An allowance in a zoning ordinance for specific types of development or land uses to be conducted without seeking special public variances or approvals..

A measure of an organization’s ability to deliver a service or product. This could include having the right staff, skills, financial capacity, personnel resources, knowledge, policies and procedures, and many other factors.

The amount of income remaining after paying operating expenses and debt service. This is the developer’s source of profit and capital for new investments.

A census tract meeting the income requirements to qualify as a Community Development Block Grant for a Low to Moderate Income (LMI) Census Tract. This means that the median family income of households in the tract is below 50 percent (for a low-income tract).

A Community Land Trust (CLT) is an attainable housing ownership model that enables affordability by removing the cost of the land from the purchase price of a home. The home is owned by the household who lives there. The land, however, is owned and managed by a community-based nonprofit organization called a community land trust and is leased to the homeowner (typically with a 99-year renewable lease). Typically, the homeowner must meet certain requirements to be eligible to live in the home. These may include ties to a local employer that owns the land and controls the trust such as a college, university or health center. Often when the homeowner is no longer employed by the employer, the homeowner must vacate the home. While the terms of such actions vary by CLT, often the homeowner is required to sell the home back to the CLT and receive a predetermined return on their investment. The CLT then resells the home to another eligible member of its community..

Households paying more than 30 percent of their income for housing costs are considered “housing-cost-burdened.” Households paying more than 50 percent of their income for housing costs are considered “severely cost-burdened” or “extremely cost-burdened.

Funds (generally calculated as percentages of estimated project costs) that are reserved to account for the unexpected costs involved in development or construction. This is a way of accounting for the uncertainty or project unknowns associated with project development estimates.

The amount that will need to be paid to a lender as part of the loan repayment schedule (for example, a monthly loan payment amount). Depending on the type of loan, this would include some combination of principal and interest.

Sometimes abbreviated as DSCR, DCR, or DSC, this is the ratio of a project’s net operating income to its debt payments (typically interest and principal). This reflects the amount of cushion a lender looks for.

Professional fees that developers and sometimes other project team members with ownership interest, such as property managers, do not collect, or defer payment of, until there is sufficient cash flow.

A fee collected by the developer, calculated as a percentage of the total cost of the development.

A budget that captures all costs required to build your project and place it in service or have your project generally ready for occupancy.

Typically abbreviated as DDA, these are HUD-designated areas with high land, construction, and utility costs relative to the median income.

Amounts of your construction loan that you are able to access at different phases of the project in order to pay contractors. You will set your draw schedule with your lender.

Moving soil, building retaining structures, incorporating onsite stormwater management infrastructure and other horizontal infrastructure work including utilities to prepare the site for housing development.

The public approvals (zoning, easements, permitting, etc.) needed for a development to begin construction.

The general contractor (GC) is the organization responsible for providing the equipment, materials, labor, and other goods and services necessary to construct a development.

A typical financial structure where the land and underlying commercial real property is leased on a long-term basis (typically 50-99 years) by the project sponsor to the operators of the real estate building. In exchange, the operators of the real estate are entitled to collect revenue generated by the building.

Financing to close the development’s financial gap. Subordinate loans, grants, or in-kind donations that might include lower cost labor and discounted or free land are common approaches to close a financing gap.

A broad category of legally binding commitments a developer must make to a lender or other party. For example, these could include guaranteeing a development will be completed by a certain date or that a loan will be fully repaid by a certain date. In some cases, a third-party organization can provide the guarantee.

A traditional loan, usually from a private-sector lender, with required repayment schedules and standard interest rates. This debt is usually secured by a first-position lien on the property.

A process of documenting the demographic, housing, economic, and other conditions related to the housing needs in a community, housing market, or neighborhood. Sometimes referred to as Housing Demand or Market Demand studies.

The Housing Tax Credit (HTC or LIHTC) is the primary source of financing for the construction and preservation of affordable rental housing in the United States. Housing Tax Credits provide an incentive for investors to invest in affordable housing construction and preservation via a tax credit. Developers can apply for their development to be awarded tax credits and then investors will invest in the property in exchange for those tax credits, providing equity for the development. The HTC may also be referred to as the Low-Income Housing Tax Credit. At present, there is no housing tax credit program available in the U.S. for attainable housing developments or acquisitions. The LIHTC program targets housing for which the income of the residents does not exceed 60% of AMI.

A project delivery method in which a project sponsor selects a Developer to develop and construct a new building. The sponsor procures the property and then executes a lease of the property to the Developer , who then develops the property and constructs the facility, which typically includes a Guaranteed Maximum Price. The sponsor then leases back the property and facility from the developer. At the end of the lease, the sponsor owns the project. The sponsor selects and approves the site and project plans.

An arrangement providing an option for the tenant to purchase the unit they are living in at the end of a specified period. The inclusion of certain Lease-to-Own provisions may trigger on-balance sheet treatment of the lease payments to the Lessee.

The period when your property is habitable (i.e., in possession of its Certificate of Occupancy) but is not occupied, or not yet at full occupancy.

Leadership in Energy and Environmental Design (LEED) is a set of green building and development certification programs maintained by the U.S. Green Building Council.

A low and moderate-income census tract of land. This land may meet the income requirements to qualify as a Community Development Block Grant. This means that the median family income of households in the tract is below 50% of AMI.

The Loan-to-Value Ratio (LTV or LVR) is the maximum debt a lender can offer to a project, reflected as a percentage of the property value. It can also refer to the actual loan value as a percentage of the property’s value.

Generally, businesses owned by women, racial or ethnic minorities, or people from other groups that have historically been disadvantaged or underrepresented as business owners. Specific definitions and eligibility vary across jurisdictions.

The median family income (MFI) is the median annual income for all families in a given geography (generally a metropolitan area or a non-metropolitan county). The U.S. Department of Housing and Urban Development (HUD) uses MFI to calculate income limits for many of its programs. MFI is generally synonymous with the general use of the term Area Median Income (AMI), but it is common to see AMI used as a reference point that adjust for families of different sizes (e.g., 50% of AMI), whereas MFI specifically refers to the median for all families.

Actions taken to reduce or eliminate the severity or effect of something that has a negative impact.

A federal fund targeted to encourage the construction, rehabilitation, preservation, and operation of rental housing for residents with extremely low income.

The costs incurred as a result of operating a property. This could include costs of insurance, staffing, repairs and maintenance, utilities, property taxes, and resident services.

Net operating income (NOI) is the amount of income available after expenses.

A HUD program established for the purpose of providing emergency assistance to stabilize communities with high rates of abandoned and foreclosed homes.

A Neighborhood Revitalization Strategy Area (NRSA) is an area designated by a Community Development Block Grant (CDBG) grantee for targeted revitalization. This designation affords greater flexibility in undertaking economic development, housing, and public services using CDBG funds.

Cash that is held in reserve to cover operating expenses for a given period in the event that costs cannot be covered through regular property income sources. Lenders and other financiers will often require a reserve equal to six to 12 months’ worth of operating reserves.

State-designated census tracts that are eligible for investments through private Opportunity Funds.

A Private Activity Bond (PAB) is a tax-exempt bond issued by state and local governments or agencies to provide financing for qualified projects.

A formal (legal) agreement between organizations that outline the terms and conditions of their partnership.

Development costs that are incurred prior to construction, such as those described in the predevelopment section of this toolkit. These consist mainly of soft costs and include engineering, design, permitting, public outreach, legal and financing.

The base hourly rate paid to a majority of workers in a given area for a specific type of construction activity.

A detailed financial forecast for understanding the long-term viability of a development or acquisition.

Amounts of a construction loan that the borrower is able to access at different times in its project in order to pay contractors. The borrower will set its draw schedule with its lender.

Cash that is held in reserve to cover a range of costs that may occur over time. These include reserves to cover operations if income should fall short and reserves to cover replacement of major building systems and components.

The sum of all income anticipated from a development or acquisition.

A Qualified Allocation Plan (QAP) is a document produced by a state housing finance agency (i.e., CHFA) that defines the priorities and processes related to the allocation of Housing Tax Credits. A QAP applies to LIHTC supported projects. Currently, there is not QAP equivalent for attainable housing developments or acquisitions.

A federally designated census tract in which at least 50%of households have incomes below 60%of AMI or have a minimum poverty rate of 25%.

A measure of financial profit or loss that factors in the time required to create the return. There are multiple measures used to calculate the rate of return, but the most common is the internal rate of return (IRR), which can be thought of as the annual rate of return on capital that is invested.

Real-estate-owned property (REO) is property owned by a bank (often as a result of foreclosure).

Cash held in reserve to cover larger replacement items such as roofs, pavement, appliances or HVAC systems. Similar to Project Reserves.

A change in the zoning code for a given area or zoning classification. For example, a parcel may be rezoned to allow for a greater variety of uses or greater development density.

Return on investment (ROI) is the financial returns or losses on a development relative to the amount invested, usually expressed as a percentage.

A part of the construction process that focuses on preparing the site for vertical development and addressing any land-related issues as part of the development. Examples include grading, excavation, adding utility connections, roadway improvements, and major landscaping tasks.

Costs that are not directly related to construction labor and building materials. This includes costs such as architecture, engineering, permitting, and legal fees. Some soft costs, such as insurance, may continue after construction is completed.

More flexible loans, “soft loans,” where repayment may be deferred, forgiven, or only required upon certain conditions, such as if there is excess cash flow. These generally come from the public or philanthropic sector.

A sources and uses of funds statement (also referred to as a ‘sources and uses statement’) summarizes a project’s sources and amounts of capital (e.g., equity, grants, financing, etc.) compared to the uses of those funds across all development costs.

Debt that is paid back after higher ranking debt (i.e., more senior debt) is repaid. Subordinate debt typically has higher LTV and lower DCR requirements and usually commands a higher interest rate.

Housing that is affordable at a given income level in part because it is supported by some form of public financial resource that reduces the housing cost. In return for the public sector providing a subsidy, the developer or owner may be required to offer all or a portion of the units to particular populations, for example people with low incomes or disabilities, and/or older adults.

Focuses on creating environments that can be accessed, understood, and used to the greatest extent possible by all people regardless of their age, size, or ability.

Housing that is affordable at a given income level but does not involve public financial support; it is affordable because the market price for this type of housing is affordable. The cost, and therefore affordability, of this type of housing will be subject to changes in the market that may drive up costs over time.

An explicit exception made to the zoning requirements (e.g., to allow a land use the zoning code prohibits) that is approved through a process defined by the jurisdiction. Variances allow jurisdictions to make exceptions when they make sense for a given development without having to modify the zoning code itself.