Indianapolis Successfully Combines HOME and Tax Credits Development of affordable multifamily housing in the central core of Indianapolis has increased dramatically since the city began targeting its HOME funds to projects using the Low-Income Housing Tax Credit. Given the need to leverage scarce public resources and the low incomes of potential residents, affordable rental housing development generally requires multiple sources of funding. For inner city areas, developers and investors can be particularly difficult to attract. When combined, HOME and the tax credit make rental housing development more financially feasible. Although both resources provide permanent funding for multifamily projects, their roles differ.
HOME provides gap financing and the tax credit generates equity.
For multi-family projects where development is expensive or where the income of tenants is extremely low, these two programs work especially well together. Key to the city's success is the financial analysis it conducts for each project. To get the most out of its dollars, it determines the least amount of HOME funds needed to make a project feasible and then decides what combination of grants or loans most efficiently fills the gap. It allows developers to use HOME for acquisition, rehabilitation, or new construction. It rehabilitated 22 existing housing units and built 32 new townhomes.