- A subsidy is a financial benefit provided to an individual or organization to reduce cost for a person or organization. Typically the benefit is provided by a government organization. Examples of housing subsidies include LIHTC (see below), tax-exempt bonds, government-sponsored infrastructure grants, local housing funds dedicated to the production of affordable housing, etc.
LIHTC (Low-Income Housing Tax Credit):
- The Low Income Housing Tax Credit program was created in 1986 and is the largest source of new affordable housing in the United States. The program is administered by the Internal Revenue Service (IRS). The program provides tax incentives, written into the Internal Revenue Code, to encourage developers to create affordable housing. These tax credits are provided to each state based on population and are distributed to the state’s designated tax credit allocating agency. In turn, these agencies distribute the tax credits based on the state’s affordable housing needs with broad outlines of program (Source: National Housing Law Project).
AMI (Area Median Income):
- Area Median Income refers to the median income of a specific county. The AMI table established by HUD is used to establish what is affordable for various income levels.