ABSTRACT
This chapter begins with a new, multifamily rental unit and determines the level of subsidy that would be necessary to make the unit affordable to a low-income family and describes two different types of subsidies. They are: an interest or rental-assistance subsidy to the private mortgage lender which continues over the life of a project mortgage, and a one-time capital grant to the housing developer which reduces the size of the necessary mortgage but not the interest rate on it. The chapter assesses the new housing production programs contained in the housing and urban-rural recovery act of 1983 and discusses the challenges these pose to communities dedicated to the supply of low-income housing. The depth of the subsidy required to make a new housing unit affordable to a low-income family is a function of its development cost, financing terms, and maintenance and operating costs, including normal profits.
