Fund It

Land lowers the cost of housing, but it does not eliminate it. Even with a parcel contributed at low or no cost, deeply affordable homes and modern green infrastructure still need financing. The way communities finance projects, and what they negotiate in return for their land, determines whether a project pencils out and whether the public keeps a stake in what it helped build.

The Challenge

The most immediate pressure on public land is the pressure to sell it. A one-time sale produces revenue a community can use now, and for a government facing budget constraints, that can be hard to pass up. But a sale converts a lasting asset into a single payment, hands over control of what gets built, and forecloses any continuing public return. Meanwhile, the financing that affordable housing depends on (especially federal tax credits) is oversubscribed and structured in ways that can disadvantage public-to-public transfers and permanent affordability. A community committed to affordable housing on its land has to solve two problems at once: how to capture lasting value from the land, and how to fill the funding gap that remains once the land is in hand.

The Solution

Three principles shape how communities are financing housing on public land.

Retain what you build on. Rather than selling, a community can lease its land long-term or take an equity position in the development. This keeps the land in public hands, preserves the ability to enforce affordability over time, and can generate ground-lease revenue to reinvest in the next project. Retaining ownership turns a one-time transaction into a durable public asset.

Fill the funding gap. Affordable housing is assembled from a stack of capital sources. Treating land value as public equity in that stack, and weaving it together with state housing funds, tax-credit equity, mission-driven and concessional lending, and local gap financing, helps projects pencil out. A growing number of communities have created dedicated public development entities and revolving funds to provide the early, below-market capital that private lenders won’t.

Leverage partnerships. Public-private partnerships bring private capital and development capacity to projects a government cannot build alone, while structures that keep the public as majority partner preserve accountability and control. The aim is to attract private investment without surrendering the public interest in the outcome.

Atlanta’s Urban Development Corporation

The Atlanta Urban Development Corporation, established in 2023 as a nonprofit subsidiary of the Housing Authority of Atlanta, was built to finance and develop affordable housing on over 700 acres of city-owned land identified by the city’s Housing Strike Force. AUDC’s structure gives it tools a standard city agency lacks. It can receive public land at low or no cost through intergovernmental agreements, access municipal debt markets, and offer below-market loans covering up to 20 percent of a project’s construction costs from a $38 million revolving Housing Production Fund. It provides property tax abatement under Georgia law and structures joint ventures with private developers in which it retains majority ownership. Developers are selected through competitive RFQ processes scored on experience and affordability capacity rather than the highest land bid. The corporation has 40 public-land projects in its development pipeline; its first major project, Fire Station 15 in Midtown, will place 231 apartments (about a third of them affordable) above a working fire station, with the corporation holding a majority stake in the joint venture.

Fairfax County, Virginia: Land as a long-term subsidy

Fairfax County has used the value of land it already owns to make affordable housing pencil out, while keeping the land itself. At One University, the county’s housing authority ground-leased a 10.8-acre parcel at a nominal rate for 99 years; the land contributed an estimated $12 million subsidy to the project, and because the buildings are privately owned and operated, they return hundreds of thousands of dollars a year in property taxes to the county. The site replaced 46 aging townhomes with a fivefold increase in affordable units across three buildings, including 120 affordable apartments for seniors. The county is now applying the same approach to other land it controls, including library parking lots and the parcels next to its Government Center, where the 279-unit Fairfax Crest is nearing completion (A New Ground Lease on Life, Land Lines).
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