So What Is Affordable Housing? A Glossary

HERE is a pdf of the Glossary of Affordable Housing Terms.

  • AMI/MHI — Two different income figures are often used to measure affordability:

    1. The “Area Median Income” (AMI is determined by the census for the Nashville-DavidsonMurfreesboro-Franklin-Metropolitan Statistical Area. This means that Davidson County is combined with other counties, including wealthy Williamson County. Therefore, the income figure for the AREA is higher than just for Davidson County.
    2. The “Median Household Income” (MHI) of Davidson County alone more accurately describes our county, and focuses housing programs on those in most need. AMI for Davidson County is $68,500 for family of four, while MHI is $48,368 (2015).
  • Affordable Housing — Federal definition is housing that is affordable to people whose income is 30% to 80% of the “Area Median Income (AMI)” — $20,500 to $54,800 for a family of four (2015). Local definition is housing affordable to people whose income is 30% to 60% of Davidson County Median Household Income (MHI) ($14,510 to $29,021). Affordable housing is needed by low-wage workers, service workers, and those on a fixed income.

  • Workforce Housing — Federal definition is housing that is affordable to people whose income is 80% to 120% of the “Area Median Income (AMI)” — between $54,800 and $82,200. Local definition is 60% to 120% of the “Median Household Income (MHI)” — $29,021 to $58,042. Workforce housing is often used by teachers, police, etc.

  • Percentage of Income on Housing — Housing is considered affordable when the homeowner or tenant spends no more than 30% of his/her income on housing. Spending more than 30% makes someone “cost-burdened.” 52% of renters in Nashville are “rent-burdened.”

  • Public Housing — Housing owned by the government — by MDHA (Metropolitan Development and Housing Agency), where tenants pay only 30% of their income for rent and utilities.
  • Section 8 Housing — Rent assistance vouchers issued to low-income households by MDHA to assist them in paying rent to private landlords. Many landlords in Nashville will not rent under Section 8, since they can get higher rents at market rate.  

  • Displacement — Lower-income families being “displaced” either by government action (such as Urban Renewal) or by market forces. Homeowners and renters can both be displaced. 
  • Gentrification — “The process by which higher income households displace lower income residents of a neighborhood, changing the essential character and flavor of that neighborhood” (Brookings Institution). Gentrification is not the same as revitalization, which does not lead to displacement.

  • NIMBY (Not In My Back Yard) — The attitude by some residents and neighborhood groups that affordable housing is fine somewhere else, but “not in my back yard.” Neighborhood feelings are often aggravated by previous government action or private developers who did not engage the neighborhood in decision-making. Some neighborhoods feel that they are regularly being “dumped on” or ignored by the city.

  • TIF — Tax Increment Financing — A way that the city helps developers. While vacant or underused land generates little property tax, it would bring much more if developed. TIF financing allows the city to divert these future property tax increases in specific areas to help the developer pay off all or part of a loan taken out for construction. TIF can also be used for sidewalks, sewer lines, etc., needed in those redevelopment areas. TIF can be used for affordable housing, but this has not been done much in Nashville.

  • PILOT — Payment In Lieu Of Taxes — A property tax freeze or reduction for businesses promising numbers of jobs or other benefits to the city.

  • Inclusionary Zoning — A local law requiring that developers include a portion of affordable housing in their developments. One local version of this requires this only of developers who want a zoning change and who receive a subsidy from Metro government.

  • Developer Subsidy — A Metro program that subsidizes developers who agree to build workforce housing.

  • State Preemption — The state legislature has “pre-empted” many things done by our city government, essentially overruling our Metro Council. These include inclusionary zoning, local hire, protections against discrimination.

  • Short Term Rental Properties (STRPs) — Residential dwelling units, with no more than four sleeping rooms, advertised through online marketplaces for rent for less than 30 days. “Type 1” STRPs are owner-occupied. “Type 2” are investor-owned in single-family and two-family residential zoning districts. “Type 3” are investor-owned multi-family or condos. Metro Council wants to phase out Type 2 and 3, but the state legislature has threatened to preempt any legislation. STRPs may decrease available affordable housing.

  • Community Development Block Grant (CDBG) — Federal dollars that come to MDHA for the benefit of low-income neighborhoods, for use in improving housing, physical improvements, etc.

  • Low Income Housing Tax Credits (LIHTC) — A way for non-profits to generate money to use in affordable housing by “selling” tax credits to businesses or investors, reducing their tax liability. Administered by THDA (Tennessee Housing and Development Agency).

  • General Obligation Bonds — Bonds sold by the city to raise money for special building projects. Backed by the credit and taxes raised by the city. Essentially like taking out a mortgage that must be repaid. Bonds are tax-exempt, so investors avoid income taxes.

  • VITA — Volunteer Income Tax Assistance Program — a nation-wide IRS program designed to help low and moderate-income taxpayers complete their annual tax returns at no cost. Coordinated in Middle Tennessee by United Way.

  • Promise Zone — A federally designated area in the core of Nashville that has 38% poverty and 14% unemployment. Promise Zones receive higher priority in applying for various federal grants. MDHA is the lead organization, and six non-profits are partners in different areas of the zone.

  • Metro Assessor of Property — Metro elected official in charge of reassessment of property values county-wide. Reassessment is done every four years by state law.

  • Metro Trustee — The tax collection agency for Davidson County, which administers property tax assistance programs.

  • Property Tax Assistance Programs — Tax relief is available for senior and disabled homeowners. Those under $29,180 income can receive a rebate on their property taxes. Tax freeze allows senior and disabled homeowners under $41,660 income to freeze their taxes at the previous year’s level, which is helpful in years of higher re-assessments. Managed by Metro Trustee’s Office.

  • HUD (US Department of Housing and Urban Development) — Federal agency in charge of public housing, Community Development Block Grants (CDBG), Section 8, and other federal funds for housing. Funding has been declining for HUD since 1981. MDHA (see below) is the local agency that receives federal housing funds from HUD.

  • RAD (Rental Assistance Demonstration Program) — Converts public housing from joint ownership by HUD and MDHA to ownership by MDHA alone, allowing loans to be taken out on the property for the redevelopment of that property. Stated goal is to keep units permanently affordable at 30% of residents’ income. NOAH has concerns about permanent affordability, residents’ ability to return to redeveloped units, and residents’ engagement in planning the redevelopment. Cayce Apartments is to be the first RAD conversion, followed by Napier Homes and Edgehill Apartments.

  • Community Development Corporation (CDC) — Not-for-profit organizations created to provide services to a specific area, usually focusing on affordable housing, but can include economic development, education, community organizing, and real estate development.