Exhibit 4: Housing Assistance and Affordable Housing Programs

1. Public housing. These units are owned by local public agencies. From 1937 to the mid-1980s, public housing was used extensively to produce additional assisted housing units. Today, there are 1.1 million occupied units of public housing.

2. Project-based assisted housing. These programs supported the construction and rehabilitation of 1.4 million rental units now occupied by low-income households. Deep rent subsidies are attached to projects owned by for-profit and nonprofit sponsors that must rent units to eligible households. These programs added large numbers of assisted units from 1974 to the early 1980s. Since then, HUD has continued to build deeply subsidized units for the elderly and disabled under Sections 202 and 811.

3. Tenant-based assisted housing. These programs provide direct rental assistance to 1.6 million renter households to enable them to find their own housing on the open market. The maximum subsidy is the difference between the tenant contribution and the local fair market rent (FMR), an average rent for standard quality housing in the area. Begun in 1974, this type of assistance has accounted for most of the incremental units, or additions to assisted housing, since the mid-1980s. Another 110,000 vouchers were appropriated in fiscal years 1999 and 2000.

In all three programs, assisted households pay rents that are a percentage of their adjusted income—usually 30 percent. These "deep" subsidies allow even the poorest households to live in assisted housing.

Other Federal programs produce affordable housing. There are a number of other Federal housing programs in which renters are charged fixed or flat rents, with the maximum determined by program rules. Households pay the established rent rather than a percentage of their income. Without an additional subsidy, the poorest households often cannot afford this housing. These programs include:

• The Low-Income Housing Tax Credit (LIHTC) program. This tax credit program subsidizes the capital costs of units that must bear rents affordable to households with incomes at or below 60 percent of area median income. Through 1999, HUD estimates that this program has produced more than 700,000 units since its enactment in 1986. Of these units, about 675,000 are "affordable" (that is, the units have rents at or below 30 percent of 60 percent of area median income). ⁴

• The HOME Investment Partnership (HOME) program. This is a formula grant to States and local governments that can be used to assist existing homeowners, first-time homebuyers, or renters. Between 1992 and August 1999, HOME produced 203,000 affordable rental units. Qualifying rents must be affordable to households with incomes at or below 65 percent of area median income, or below local FMRs if the local FMRs are lower than rents affordable at 65 percent of area median income.
• Older rental subsidy programs. The Section 221(d)(3) below market interest rate (BMIR) program and the Section 236 program were active from the early 1960s through the early 1970s. They were designed to produce housing affordable by families with incomes above the public housing income limits. Over time many projects or portions of projects in these programs became "project-based assisted housing" rather than "rental subsidy" as deep rental subsidies were attached to the units. There remain 300,000 units subsidized by these older programs that do not have deep rental subsidies.