Housing Glossary

This Housing Glossary provides basic descriptions of many concepts that are important to the the topic of housing.

Credit to David Rockwell and Jonathan Klein, who compiled and edited the source text in  May 2022.

Accessory Dwelling Unit  (ADU)

A secondary dwelling unit created within or as an extension of an existing dwelling that contains separate bath and kitchen facilities.  A form of naturally occurring, unsubsidized affordable housing that is limited by restrictive zoning in some communities.

Affordable Housing

To be truly affordable, most experts agree that the cost of housing, in the form of rent or mortgage payments, should be no more than 30% of a household’s income.  While there is some naturally occurring affordable housing in locations where market rents are widely affordable to the local population, this is increasingly rare, especially in high-cost, high-opportunity areas like greater Boston.  Therefore, in such markets, affordable housing occurs only with the placement of restrictions on the rents imposed by government funding.  

• On the rental side:  In connection with subsidized rental housing, in return for public subsidies, an affordable housing developer or owner is obligated to keep all the units, or, in a mixed-income property, a designated number of units, priced at rents deemed affordable to low- and moderate-income households, and rented to households who are low- and moderate-income.  These restricted rents must be in place for a defined period of time (30 years is a typical minimum; some affordable housing agreements require affordability in perpetuity).  The affordability requirements are contained in a legal document, known as an affordable housing agreement (sometimes called a “restrictive covenant”), which the developer or owner signs with the public entity.  Properties subject to these affordable housing requirements are often referred to as “rent-restricted”.   In some affordable housing programs, the affordable rents are dollar-specific maximums deemed affordable based on HUD (see definition below) income and rent data.  In other programs, affordability is established by the rents being no higher than some percentage of that household’s income, usually 30%; this is true in public housing and many types of affordable housing for seniors.

• On the ownership side:  In our economy, banks are charged with the responsibility of lending the right amount to a homebuyer, so that the homebuyer can afford the loan based on their income.   The mortgage crisis of 2008-09 was caused by poor, even predatory, lending practices by lenders and the real estate brokerage industry which induced low- and moderate-income first-time homebuyers to borrow loans that were more than they could afford and led to loan defaults, foreclosures and evictions.   Responsible first-time homebuyer programs, working with banks, focus closely on setting the right loan amount and payment terms for borrowers.  Though less common by far than multi-family affordable rental projects, there are multi-family ownership projects (usually condominium developments) where the sale prices for at least some of the homes are restricted to levels affordable to identified low- and moderate-income households.

Area Median Income (AMI)

The estimated median income, adjusted for family size, by metropolitan area (or in non-metropolitan areas, by county).  AMI is updated annually by the US Department of Housing and Urban Development (HUD) and used as the basis of eligibility for most housing assistance programs.  In affordable housing, the affordability requirement will often be described as “[the percentage of the total units in the project held to affordable rents] at [the target AMI]”.  For example, a project may be “20% at 50%”, meaning 20% of the units must be rented at rents affordable to households at 50% of AMI.  Here is a link to HUD median income data and related rent limits for Brookline.

Citizens’ Housing and Planning Association (CHAPA)

Established in 1967, CHAPA is a statewide non-profit umbrella organization for affordable housing and community development activities.  CHAPA’s mission is to encourage the production and preservation of housing affordable to low-income families and individuals.  They participate in public policy debates on affordable housing and provide wide-ranging educational programs.

Chapter 40B (Comprehensive Permit Law)

This state law was enacted in 1969 in recognition that local zoning ordinances stood in the way of multi-family housing production, to the detriment of both affordability and the Massachusetts economy.  It provides developers of multi-family properties with expedited local review under a “comprehensive permitting” process that can bypass zoning restrictions, which in so many communities substantially favor single-family homes on large lots and thereby hamper construction of multi-family and affordable housing.  Until a town or City shows that 10% of its housing stock is legally restricted for affordability, 40B enables developers to appeal denials or unfavorable local decisions on multi-family housing applications to a state housing court known as the Housing Appeals Committee, which can overturn the local decision in light of the widespread need for more affordable housing.  

In return for the expedited permitting process under 40B, the developer must set aside a portion of the units as affordable – either 20% of the units must be affordable at 50% Area Median Income (AMI), or 25% of the units must be affordable at 80% of AMI.  These affordable units must be maintained as long as the property doesn’t comply with the underlying zoning, and many localities require legally binding agreements to keep them permanently affordable even if the zoning changes.  The law also imposes a profit limitation on the developer of 10% of his/her equity investment per year for rental properties, and 20% of equity on the sales of multi-family condominiums and single-family subdivisions permitted under 40B.   Developers using the 40B program must engage one of the four state agencies authorized to ensure compliance with affordability requirements, with the profit limitation, and with fair housing laws – MassHousing, Massachusetts Housing Partnership (MHP), MassDevelopment, and the state Department of Housing and Community Development (DHCD); you can find more information here. 

Chapter 40R

Also knows as the Smart Growth Zoning Overlay District Act (Chapter 149 of the Acts of 2004), Chapter 40R encourages communities through financial incentives to create dense residential or mixed-use smart growth zoning districts which include a high percentage of affordable housing units, located near transit stations and/or in areas of concentrated development such as existing city and town centers.. 

Community Based Housing Development Organization (CHDO, pronounced CHO-DOE)

A HUD term for a specific type of community-based non-profit housing development organization, which HUD recognizes for eligibility for certain funding programs targeted to production and preservation of community-based affordable housing developments.  The board of a CHDO must include low-income, local persons as one-third of its membership.  Most CDCs (see below) are CHDOs.

Community Development Corporation (CDC)

A non-profit development corporation created to support and revitalize communities through affordable housing development, community-oriented commercial development, job training, youth programming, wealth building, and other programs.  In Massachusetts, a CDC must be certified by the Department of Housing and Community Development (DHCD) under a state law passed in 2010 (Chapter 40H) that requires community-based board membership and identifies a certain geographic area for each CDC.  There are 96 certified CDCs at the present time (about 15 in the City of Boston, each focusing on certain neighborhoods), and their trade organization is Massachusetts Association of Community Development Corporations (MACDC).  Brookline has one CDC – the Brookline Improvement Coalition (BIC).

Community Economic Development Assistance Corporation (CEDAC)

A quasi-public agency created by the Legislature in 1978 to provide financial assistance to CDCs and other nonprofit housing developers, especially for the pre-development costs early in the life of a project -- activities like land acquisition, architectural and engineering studies, environmental analysis, and market studies.  CEDAC’s assistance usually comes in the form of loans to CDCs and other non-profits that are repaid when a project reaches the start of construction.  CEDAC is also a leader in child care facility financing and in the effort to preserve affordability for “expiring use” (see definition) properties nearing the end of their affordability terms.  

Community Preservation Act (CPA)

Enacted by the legislature in 2000 as Chapter 44B, this act allows communities, at their option, to establish a “community preservation fund” to support affordable housing, preserve open space and preserve historic resources, by imposing a surcharge of up to 3% on local property taxes.   The state provides matching funds from a fund generated from an increase in certain Registry of Deeds fees.   Of the 351 cities and towns in Massachusetts, 189 have voted to adopt the CPA program.  Brookline became the 187th CPA community in spring of 2021, when the voters adopted a 1% CPA surcharge, expected to lead to approximately $3 million/year in available funding The funds are administered by a CPA committee appointed, in Brookline’s case, by the Select Board.   The non-profit Community Preservation Coalition advocates for CPA and its website closely tracks the law’s progress. 

Community Reinvestment Act (CRA)

A federal law enacted in 1977 requiring the Federal Reserve and other federal bank regulators to encourage banks to help meet the credit needs of the communities in which they take deposits, especially low- and moderate-income communities, with pro-active lending to local business, bank branch locations, affordable housing financing, and other actions supporting the local economy.  The regulators issue CRA ratings for all banks, and a poor CRA rating can interfere with federal approvals on bank acquisitions and expansions.

Cooperative Housing (“Co-op”)

A form of shared ownership multi-family housing where all residents own stock in a corporation that owns the property.  The residents do not own their units, but own shares in the corporation which entitles them to a long-term lease on their unit and voting rights on the governance of the property.   Limited equity cooperatives are a form of affordable, resident-controlled homeownership in which the individual share prices are very low so that the resident can buy in without needing a mortgage.

Debt and Subsidy Financing

Most real estate properties have a bank loan, or some other type of financing, which supported the property’s initial acquisition or subsequent repairs and renovations.  In affordable housing, the cost of building a project is higher than the amount that can be financed by conventional bank loans and owner cash equity, so governmental agencies at the federal, state and local levels offer subsidy financing (sometimes called “soft debt”), in the form of additional loans which are junior, or “subordinate”, to the bank loan.  These subordinate loans often do not require any, or only minimal, interest or principal payments as long as the owner keeps the property affordable and rented to income-eligible households.  In Massachusetts there are many such subsidy loan programs, including the Community Development Block Grant program (CDBG – funds funneled to local governments from HUD for affordable housing and community development); HOME (also federal funds transferred to state and local government for the same purpose); Housing Stabilization Fund (HSF) and Affordable Housing Trust Fund (AHTF), both state-budgeted funds for affordable rental housing, and Facilities Consolidation Fund (FCF) and Community-Based Housing (CBH) – state-budgeted programs for housing for persons with disabilities.  More information about the state’s affordable housing funding programs can be found here. 

Executive Office of Housing and Livable Communities (EOHLC)

Massachusetts EOHLC, formerly the Department of Housing and Community Development (DHCD), is the state’s lead agency for housing and community development programs and policy. It consists of two bureaus – one for state-funding public housing, one for private affordable housing.  EOHLC administers the public housing programs in the areas of family housing, senior housing, and special needs housing with funds authorized by the state legislature.  On the private affordable side, EOHLC administers a range of funding programs to support affordable housing development, including the Low-Income Housing Tax Credit program, a range of other subsidy programs, and the state-level Section 8 and MRVP voucher programs.   EOHLC also regulates the 40B program to ensure 40B developments undergo the permitting process in accordance with state law, and that 40B owners observe the fair housing (non-discrimination) and affordability requirements of that program. 

Department of Housing and Urban Development (HUD)

The U.S. Department of Housing and Urban Development was created in 1965 with a mission of creating strong, sustainable community and quality affordable homes nationwide.  It administers hundreds of programs targeting both rental and ownership forms of affordable housing, including federally funded public housing; Section 8 rental assistance; capital subsidy programs like HOME and CDBG (Community Development Block Grants) for privately developed affordable housing, and various housing and urban development initiatives.

Expiring Use Restrictions

“Expiring use” housing refers to privately owned but publicly subsidized housing developments that can be converted to market rents when the mortgage is paid off or the subsidy contract expires.  These developments were built with federal and/or state subsidies, such as low-interest mortgages, low-income housing tax-credit restrictions, rent subsidies, and loan guarantees which have expiration dates that usually give the property owners the right, when these expiration dates arrive, to convert their properties to market rental rates, threatening the housing of the low- and moderate-income residents.  One response in Massachusetts to this problem is an act by the state legislature, known as Chapter 40T, that requires owners of expiring use properties to give affordable housing development organizations the opportunity to bid on the property before it is sold to a market-oriented buyer. 

Fair Housing

Federal legislation, first enacted in 1968 and expanded by later amendments, requires HUD to enforce rules against discrimination in affordable housing programs with federal funding.  In Massachusetts a similar fair housing act is in place.  These laws prohibit discrimination on the basis of race, sexual orientation, physical disabilities, marital or family status, ancestry, veteran status, source of income, and age.  They require developers of subsidized housing to prepare marketing plans that reach out to communities of color (which plans must be approved by DHCD) and to maintain waiting lists at properties in way that is not discriminatory.

Fair Market Rents (FMRs)

This is a term used by HUD to describe the maximum rent it allows landlords who participate in the Section 8 rental assistance program to charge.   HUD sets FMRs, which are calculated as the 40th percentile of gross rents, by unit size (1-bedroom, 2-bedroom etc.) for each region of the country and updated annually based on HUD-conducted surveys of household incomes.  Recently HUD has allowed Section 8 administrators to become more precise with payment standards by introducing Small Area Fair Market Rents (SAFMR) which are determined by zip code, thus allowing higher Section 8 rent subsidies in sections of a municipality with higher market rents than is the average in the larger regions; this has given Section 8 voucher holders greater market rental options.

First-Time Homebuyer Programs

Programs aimed at helping low- and moderate- households acquire their first home, which can include single-family homes, condominiums, and owner-occupied two- and three-family homes.  These programs involve counseling on loan applications and home-ownership, assistance in repairing poor credit ratings, financial assistance with closing costs (which are often the biggest impediment to homeownership for low- and moderate-income persons seeking their first home), and working with participating banks to obtain loans that fit the financial capacity of the borrower.  In Massachusetts, the well-known first-time homebuyer programs are ONE Mortgage by Massachusetts Housing Partnership, and similar programs offered by MassHousing and by the private non-profit Neighborhood Assistance Corporation of America (NACA). 

Green Building

A whole-building and systems approach to design and construction that employs building techniques that minimize a project’s negative environmental impacts and reduces the energy consumption of buildings while contributing to the health and productivity of its occupants.   “Passive House” is the term applied to the highest standard of construction for energy savings and indoor air quality.  There is another set of green building ratings, involving certifications by the private non-profit US Green Building Council, referred to as LEED (Leadership in Energy and Environmental Design), which provide ratings (“silver”, “gold” and “platinum”) on buildings based on their degree of positive environmental impact. Recent efforts emanating from climate change coalitions in local communities, including in Brookline, have sought to require that newly built commercial and multi-family developments not use fossil fuels (oil or natural gas), a concept referred to as “fossil fuel free” (FFF).  

Housing Appeals Committee (HAC)

A quasi-judicial body within DHCD which hears appeals by developers of local zoning board denials of, or approvals with unfavorable conditions to, their 40B permit applications.  The Housing Appeals Committee employs a small team of lawyers with expertise in 40B and multi-family housing to adjudicate these appeals, and its membership consists of three members – an employee of DHCD (appointed by the Massachusetts Secretary of Communities and Development) and a city councilor and select board member, appointed by the Governor.    

Inclusionary Zoning (IZ)

A provision within a local government’s zoning ordinance that either requires or encourages a developer to include affordable housing a part of a development, or to contribute financially to a fund for such housing.  The IZ provision may provide incentives like increased density, reduced parking requirement, or expedited permitting in exchange for the affordable units.  In Brookline, developments of 4 units or more are subject to IZ requirements, meaning that the developer must either contribute to the Town’s Affordable Housing Trust Fund according to a formula in the ordinance, or include affordable units on site equal to 15% of the total units.  The choice to contribute to the fund rather than include affordable units on site is available for projects of between four and 19 units. If the project is 20 units or more the development must include affordable units on-site rather than contribute to the fund.   

Infill Development

The practice of building on vacant or undeveloped parcels in dense areas, especially urban and inner suburban neighborhoods. 

Leverage

In affordable housing finance, leverage refers to the use of one source of funds in a project to encourage investment by other sources.

Limited Equity Homeownership

Ownership housing where resale values are restricted in order to maintain the long-term affordability of the unit or units involved.   The resale restrictions are contained in the deed to the property or in a separate recorded legally binding agreement.   Affordable units required in condominium developments under either Chapter 40B or Inclusionary Zoning are a form of “Limited Equity Homeownership”.  Local Housing Partnerships and Local Housing Trusts

A local housing partnership is a committee appointed by the municipality with the purpose of promoting opportunities to produce and preserve affordable housing; some communities also have local housing trusts, like Brookline’s Housing Advisory Board, which control and disperse financial resources, gathered from Inclusionary Zoning payments and other sources, to support affordable housing developments.

Low-Income, Extremely Low-Income, Moderate-Income 

These definitions are slippery and sometimes used to mean different things in different Federal and State programs.  The most common usage for affordable housing is that term “low-income” is generally used to describe households below either 50% or 60% of Area Median Income (AMI); “extremely low-income” refers to households below 30% AMI; and “moderate-income” refers to households up to 80% of AMI.    

Low-Income Housing Tax Credit (LIHTC) Program

The LIHTC program, created by the Tax Reform Act of 1986, provides federal income tax credits to companies and individuals who invest in low-income housing developments.  It provides by far the largest source of equity for affordable housing and has resulted in more than 3 million affordable units nationwide.  The funds come entirely from private investors – most commonly from commercial banks but also from insurance and other companies – who both get the tax benefits and obtain enhanced Community Reinvestment Act ratings when they make these investments.  Each year the tax credits are authorized by Congress and then allocated by the US Treasury Department to all the states and territories in the country on a per-capita basis.  Each state’s designated housing agency (DHCD in Massachusetts) then awards the credits, applicable only to those units in a development serving households at or below 60% AMI (though in rare cases up to 80% AMI), to specific affordable housing developments.  These  tax credits are awarded  on a competitive basis in annual rounds, and are often accompanied by credits from a similar state program and other funding.  In Massachusetts, the demand for tax credits from affordable housing developers is so high that worthy developments must wait as much as three years from their first applications to get awarded. 

Massachusetts Housing Partnership (MHP)

A quasi-public agency created by the state legislature in 1985 to support affordable housing and neighborhood development.  MHP is funded by state-mandated contributions from interstate banks, and has received other state funds as well.  It is governed by a seven-member board appointed by the governor and the state’s banking industry, and provides below-market financing for affordable rental properties, a first-time homebuyer program for low-income persons known as OneMortgage, technical assistance to local governments and housing authorities on housing issues, and research on housing policy.

Massachusetts Rental Voucher Program (MRVP)

A state-funded rental assistance program begun in 1992 which provides rental assistance to low-income renters, and rental subsidies to developers of low-income developments.  Just as is the case with the federal Section 8 program, MRVP offers both “mobile” MRVP vouchers which are owned by households and can be used anywhere in the state with landlords participating in the program, and “project-based” MRVP subsidies, which write down the cost of affordable housing developments and provide rent subsidies to the owner of the development for those units covered by MRVP and occupied by income-eligible residents. 

MassDevelopment

A quasi-public agency created in 1998 by the merger to two previous state agencies focusing mostly on economic development and large-scale real estate development projects in the state.  For affordable housing, MassDevelopment issues bonds which banks can purchase to finance affordable housing, awards grants to clean up hazardous wastes in housing development sites, and is one of the four agencies authorized to administer the Chapter 40B program.

MassHousing

A quasi-public agency created in 1966 to help finance both rental and homeownership affordable housing programs.  Formerly known as Massachusetts Housing Finance Agency, MassHousing sells bonds to finance its programs and regulates the properties it has assisted, and is one of the four state agencies authorized to administer the Chapter 40B program. 

Metropolitan Area Planning Council (MAPC)

The MAPC is the regional planning agency serving the people who live and work in the 101 cities and towns of Metropolitan Boston, whose mission is to promote smart growth and regional collaboration.  It is one of 12 such regional planning agencies in Massachusetts, and it is governed by representatives from each city and town in its region.

Mixed Income Housing Development

A housing development that includes housing affordable to various income levels, including, in some cases, market-rate tenants.

Public Housing

Public housing is owned and managed by local housing authorities (LHAs), and overseen and funded by the federal government, to house low-income families, elders, individuals and disabled persons.   At present, some 1.8 million people in the US live in roughly 960,000 units of public housing in all 50 states.  In public housing “low-income” is defined as 80% of Area Median Income, though most residents of public housing have much lower incomes (for example, in Brookline, the average income of resident households is less than 20% of AMI).  The LHAs employ maintenance, administrative and resident services personnel to meet the needs of the properties and their residents.  

Public housing residents pay 30% of their income out of pocket (with rent re-set every year for every resident according to an updated review of income), and the remaining costs of operating public housing are funded by the federal or state government.  In Massachusetts, roughly half of the public housing units are owned and funded by the state, which is very unusual nationwide, with only a few other states (most notably New York) having state public housing programs.   The operating and capital funding for public housing properties is almost always insufficient  to truly meet the physical needs of the buildings.  

A major trend in public housing across the country is the conversion by LHAs of their properties from public ownership reliant on operating subsidies from the government to privately-owned properties, using rent subsidies from the Section 8 program and other funding sources available to private affordable housing properties to obtain the capital needed to stabilize or improve the properties, all while requiring that the long-term affordability to the residents be maintained in perpetuity.  This type of conversion has occurred in many public housing developments in Boston and Cambridge, and also in Brookline (where the “private” owner will be an affiliate of the Brookline Housing Authority), at four public housing properties for seniors – completed conversions at 51 Park Street and 90 Longwood, and pending conversions at 50 Pleasant Street and 32 Marion Street.

Section 8

A federal rent subsidy program administered by HUD, officially called the Housing Choice Voucher Program, which provides funding for rental assistance to low-income households.   Section 8 assistance can be “mobile”, using vouchers awarded to individual households who can use these vouchers to obtain housing in the private marketplace with participating landlords, or “project-based”, whereby it provides the rent subsidy to the owner each month to supplement the out-of-pocket rent paid by the Section 8 tenant.  The Section 8 program requires the resident to pay 30% of their household income out of pocket, and the Section 8 subsidy covers the remaining portion of the rent.   The maximum rent that the landlord can charge for a unit with Section 8 support is set at the “Fair Market Rent”, a rent level established by HUD for every unit size and for every county or municipality in the country.

Single-Room Occupancy (SRO)

An SRO unit is an efficiency apartment which may or may not include separate bathroom or kitchen facilities.

Smart Growth

An approach to planning and development that promotes a more efficient use of land to reduce sprawl using compact development patterns that are less dependent on the automobile, make more efficient use of water and sewer resources, and include a range of housing options and improve the balance of jobs and housing within a region.

Soft Costs

The non-bricks-and-mortar portion of the cost of building a housing development.  These costs include architectural and legal fees, surveys, building permit fees, appraisal costs, interest and financing fees, and the costs of holding a property prior to the start of construction.  Soft costs tend to comprise between one-quarter and one-third of total project costs.

Special Needs Housing

General term of affordable  housing for persons with disabilities or special medical problems, including substance abuse, or who were formerly homeless.  Special needs housing can include emergency shelters, transitional housing, halfway houses and group homes.

Subsidy

Nearly all affordable housing developments required some type of subsidy.   See Debt and Subsidy Financing.

Transit Oriented Development (TOD)

Mixed-use higher density development centered on existing or new transportation facilities including bus, rail, bicycle and pedestrian pathways.

Transitional Housing

A short-term housing option for families or individuals that do not have permanent housing but benefit from more stability than that of an emergency shelter.

Zoning

The classification of land by (a) types of uses permitted, and (b) densities and intensities permitted and prohibited in a given district, including regulations regarding the location of buildings on their lots.  Zoning has often served as an impediment to multi-family development, especially in suburban locations, where most residential zoning districts limit development to single- or two-family buildings on large lots.  Some communities are seeking to redesign their zoning ordinances to better facilitate multi-family development.