While I may claim to be a quasi expert on what’s happening with Richfield’s many redevelopment projects, I admit that all the jargon that comes along with it often perplexes me.
And apparently, I’m not the only one.
I recently received an email from resident Barry LeBlanc regarding the Pillsbury Commons housing project. LeBlanc is part of Richfield Commoners United, a neighborhood organization. Formed largely in opposition to the project as it stands, the group also aims to educate residents on what the new development will mean for the city.
“The biggest issue we have is that people are not informed what all these acronyms [such as] Section 42, and LIHTC total capital funding [mean],” LeBlanc wrote. “We are sending out replies and answering hundreds of phone calls explaining what these mean to them.“
So, in the spirit of keeping people informed, here are general definitions for some of the key terms thrown around lately in the redevelopment sphere.
Tax Increment Financing (TIF)
TIF is a financing method that uses future gains to finance developments or improvements. Theoretically, when improvements are made, the surrounding area increases in value and, ultimately, increases tax revenues for the city.
I think of TIF as an investment the city makes in its own infrastructure, in hopes that it will receive a return on its investment.
Section 8 Housing
Section 8, or the housing choice voucher program, is the federal government’s major housing program that assists very low-income families, the elderly and the disabled. The program, run through the U.S. Department of Housing and Urban Development (HUD), aims to help those people afford safe and sanitary housing.
Vouchers are issued to an individual or a family by a local public housing agency. In our case, and to my knowledge, the issuing agency would be the Richfield Housing and Redevelopment Authority (HRA). Those who receive a voucher are responsible for finding housing on their own.
In general, to be eligible, the family's income may not exceed 50 percent of the median income for that county or metropolitan area.
More details on the program are available on HUD’s website.
Low-Income Housing Tax Credit (LIHTC)
LIHTC is a dollar-for-dollar tax credit for affordable housing investments. It was created under the Tax Reform Act of 1986, which encourages private equity in the development of affordable housing, according to the Minnesota Housing and Finance Agency website. The Pillsbury Commons Project is largely being funded through this agency.
Section 42 of the Internal Revenue Code outlines the regulations for the LIHTC program. Further, the projects that result from the LIHTC program are often referred to as Section 42 housing complexes.
Like Section 8, Section 42 allows people in the lower income brackets to obtain affordable housing. However, unlike Section 8, the rents established for a Section 42 development are already fixed.
Still, some Section 8 vouchers may be accepted at Section 42 complexes, depending on the rent.
I’m sure there are many other confusing terms being thrown around out there and, hey, maybe you can explain some of these terms better than I can. Feel free to share your knowledge, thoughts and other resources in the comments section below.