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Housing Policy Debate
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A new look at creative finance
Roberto G. Quercia , William M. Rohe & Diane K. Levy
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Date: 05 March 2016, At: 00:47

Housing Policy Debate
Volume 11, Issue 4
943
943
·
© Fannie Mae Foundation 2000. All Rights Reserved.
A New Look at Creative Finance
Roberto G. Quercia and William M. Rohe
University of North Carolina at Chapel Hill
Diane K. Levy
The Urban Institute
Abstract
In his seminal work, Stegman contended that creative finance is an inefficient means
of financing low-income housing production. As evidence, he cited the high transaction
costs associated with the complex financing structures that make a low-income hous-
ing development feasible. In this article, we extend Stegman’s work by examining the
impacts of creative finance over time. We rely on data gathered as part of an evalua-
tion of 36 housing developments sponsored by nonprofits.
The data indicate that most of the developments in our study remained financially
viable in part because of their reliance on creative finance. We find evidence supporting
three positive impacts of creative finance: the establishment of long-term partnerships,
the increased community acceptance of low-income housing developments, and the im-
proved technical skills of organization staff. We also find that none of the long-term
negative impacts are inherent in creative finance and offer four suggestions on mini-
mizing them.
Keywords: Low-income housing; Nonprofit sector
Introduction
In all likelihood, the term “creative finance” acquired its notoriety in the
national housing policy debate with the publication of the often quoted
work on the subject by Stegman (1991). Although Stegman provides
no clear definition of creative finance, he used the term to refer to the
practice of using multiple sources of funding, including moneys from
federal, state, local, philanthropic, private for-profit, and/or nonprofit
sources, to finance low-income housing projects. In his article, he implic-
itly contrasted the disadvantages of creative finance with the advan-
tages of the traditional model of relying on the federal government as
a long-term lender and subsidy provider.
More broadly, the term creative finance was first used to refer to new
patterns of home finance that developed in California during the 1970s
(Stegman 1991). At that time, increased housing demand caused Cali-
fornia home prices to soar. Lenders were unable to meet the demand for
mortgage money at terms that most home buyers could afford. As a
result, by 1982, up to 16 percent of all homes in California were sub-

944
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
ject to liens held by their former owners (Lowry 1984). The typical seller
lien had a term of 10 years, after which it had to be repaid or financed,
thereby creating a potentially risky situation. In addition to seller loans,
other commonly used financing mechanisms included assumed loans,
all-inclusive trust deeds, land contracts, junior liens, unamortized short-
term loans, graduated payments, and graduated interest rates. All of
these mechanisms became associated with creative finance. Stegman
noted that, in the California context in which it evolved, creative finance
was an ad hoc, costly, and potentially dangerous set of financing alter-
natives. Although the dangers believed inherent never fully material-
ized, Stegman cautioned in 1991 against using creative finance as a
basis for national policy.
Creative finance has been institutionalized as a de facto mechanism
for providing affordable housing nationwide. The scaling back of the fed-
eral government from its historic role as a long-term lender and hous-
ing subsidy provider resulted in this institutionalization. Underlying
this process was the assumption that state and local governments
could take on the role of long-term lender/subsidy provider, if they so
desired.
Consistent with the view of many during the early years of the program,
Stegman (1991) saw the Low-Income Housing Tax Credit (LIHTC) pro-
gram as an example of the inefficiencies and risks inherent in creative
finance. As evidence, he cited the high transaction costs associated with
24 creatively financed projects that relied on the LIHTC. He found that
these projects had an average of five separate funding sources. Those
recently completed projects were regarded as state-of-the-art deals.
More broadly, he contended that creatively financed developments
relied on multiple layers of financing, were thinly capitalized, and suf-
fered from uncertain long-term affordability. These concerns are impor-
tant because, since Stegman’s work was published, the LIHTC has be-
come the main financing mechanism for the development of low-income
rental housing.
Stegman implicitly compared the disadvantages of creative finance
with the many advantages of the traditional model that relied on the
federal government. Low-income housing developers needed to secure
only one source of funding: Federal funding was enough to make a proj-
ect viable. Federal subsidies were committed for relatively long periods,
up to 30 or 40 years in some cases. This extended funding guaranteed
the affordability of subsidized units, as well as increased the viability
of developments over time. Unfortunately, the traditional model also
had drawbacks. Because funding came from Washington, DC, the tra-
ditional model did not require low-income housing developers to search
for local and other partners or to secure local support for their projects
to the extent required when creative finance is used. In addition, rely-
ing on a single source of funding meant that when federal housing sub-

A New Look at Creative Finance
945
sidy programs were changed or cut, no other sources were available to
take their place.
In any case, it is unlikely that the federal government will reassume
its former role as the sole long-term lender and subsidy provider. This
raises the question of whether it is possible to develop a coherent nation-
al housing policy that relies on creative finance, not by default, but by
design. To answer this question, we must first identify the ways in
which creative finance may affect the performance of developments
over time.
In this article, therefore, we take a new look at creative finance. We
extend Stegman’s work by examining the impact of creative finance on
affordable housing developments over time. We conduct a longitudinal
examination of some of the developments Stegman reviewed, as well
as others. In particular, we address the following questions: What is the
impact of creative finance on the financial health of low-income hous-
ing developments over time? Broadly defined, what are the positive ef-
fects of creative finance? Can the negative effects be ameliorated? To
address these questions, we present data gathered as part of our eval-
uation of the sustainability of nonprofit-sponsored housing developments
(Rohe et al. 1998). Our sample included developments that the Fannie
Mae Foundation recognized with the Maxwell Award of Excellence for
their innovative financing, design, or services.
We emphasize that this study is not designed or intended to prove that
the creative finance model is better or worse than the traditional sin-
gle source model or to counter Stegman’s contentions. More narrowly,
we take the creative finance model as a given, identify its long-term
impacts, and explore the ways in which it can be improved to address
its shortcomings. We identify issues and raise questions rather than
provide definite answers. The study is exploratory. Ideally, the insights
gained will constitute the basis for a later, more comprehensive research
effort.
The rest of this article is divided into four sections. First, we present a
background discussion of the potential impacts (positive and negative)
of creative finance on housing developments over time. Next, we describe
the methodology and data used to examine potential key impacts. Fol-
lowing the methodology section, we present our findings. In the final
section, we derive implications for policy and research.
The impacts of creative finance
Creative finance has two types of impacts: short term and long term. In
the short term, creative finance may raise (or lower) the cost of produc-
ing a low-income unit relative to some market benchmark or make it

946
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
more difficult (or easier) to serve low-income households. In the long
term, creative finance may have direct and indirect impacts on the
viability of the development, or the sponsoring organization, or both.
Although Stegman did not provide comparable benchmark information,
he expressed several short-term concerns, including the inappropriate
targeting of benefits, insufficient monitoring, and high transaction costs
of the LIHTC program. Since his article, the first two concerns have
been addressed1; his concern about short-term high transaction costs,
however, may still be relevant. Unfortunately, to our knowledge, no one
has examined the transaction costs in low-income housing develop-
ments financed by the traditional federal government–centered model
relative to those relying on creative finance.
Even if creative finance is associated with higher short-term transac-
tion costs, long-term benefits might still outweigh these initial disad-
vantages. As mentioned earlier, long-term benefits may be direct or
indirect. Directly, creative finance may positively affect the financial
health of developments or allow rents to be kept low. These impacts
can be measured if the financial health of developments can be attrib-
uted to the use of creative finance.
Indirectly, creative finance may have an impact on sponsoring organi-
zations and their staff. First, creative finance requires the establishment
of partnerships with other institutional actors. Such partnerships may
help sponsoring organizations achieve goals beyond the original devel-
opment. Second, the development of local partnerships through creative
finance may counteract NIMBY (not in my backyard) forces because of
the high visibility, publicity, and media coverage that typically empha-
size the positive aspects of the proposed development and its residents.
Third, local partnerships may provide a means for different parties to
work together to better understand the goals of the development and
to address residents’ and other concerns. If this is the case, organiza-
tions may have a greater ability to develop and locate other affordable
housing in the area. Finally, over time, creative finance will probably
increase the technical competence of the staff at the sponsoring orga-
nizations. Acquired skills are likely to include generic skills that may
be useful in a wide range of activities, as well as specific skills that may
not be transferable beyond applying for a specific program like the
LIHTC. Moreover, the skills acquired by staff to structure, attract, and
secure complex financial deals with multiple layers of financing may
increase the long-term sustainability of affordable housing develop-
ments. A more competent, confident staff may be better able to address
future problems, including securing additional sources of funding.
1 Since the publication of Stegman’s article, changes to the LIHTC program extended
affordability restrictions to 30 years, improved targeting of benefits, and tightened
monitoring requirements.

A New Look at Creative Finance
947
The above contentions suggest that creative finance may have complex
and long-lasting effects. The data and methodology used to examine
these contentions are described below. It should be emphasized that the
goal of this research was not to examine the efficiency of creative finance
as a means of producing low-income housing nor to examine the whole
range of long-term cost and benefits associated with it. More narrowly,
the goal was to identify the important long-term impacts of creative
finance, as evinced in part from the insights of key staff at the non-
profit organizations responsible for developing and managing creatively
financed developments.
Data and methodology
We examined the impact of creative finance on 20 developments that
received the Maxwell Award of Excellence from 1989 to 1994. These
include 10 rental and 10 special-needs developments.2 Each year the
Fannie Mae Foundation recognizes six innovative affordable housing
developments with Maxwell Awards, which are intended to identify,
recognize, and showcase the outstanding work of nonprofit organizations
in developing and maintaining housing for low-income Americans. A
committee of prominent professionals in the housing field selects the
winners from a large number of applicants. In his analysis, Stegman
(1991) used information from a sample of 24 organizations that had
applied for Maxwell Awards.
In our study, we obtained data on Maxwell Award developments in
three ways. First, we collected financial information from the original
Maxwell Award application prepared by each sponsoring organization.
We used this information to identify the financial structure of each proj-
ect and to develop baseline performance data. Second, we conducted
telephone interviews with representatives of the sponsoring organiza-
tions to obtain information on the long-term performance of the devel-
opments and the impact of creative finance. Finally, we visited eight
of the developments to further understand the factors affecting perfor-
mance over time.3
This data set provides a unique opportunity for analysis. First, the 20
developments in the sample were recognized for the innovative design
2 Two other rental developments and two other special-needs projects were contacted,
but for a variety of reasons the sponsoring organizations declined to participate. Data
on rental and special-needs developments were separated by type of housing because
the latter were considered unique in that they have to secure funding over time for
the services offered.
3 The eight sites chosen represented developments in urban and rural areas throughout
the country. Moreover, the telephone interviews indicated that the selected sites repre-
sented successful developments as well as those that had experienced problems.

948
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
and financing that made them affordable to low-income households. By
definition, innovative financing is creative, but success at origination
does not guarantee long-term viability. Second, the developments varied
greatly in terms of geography, community size, and project type, thus
providing diversity. Third, the developments had been in operation from
4 to 10 years, making it possible to gauge long-term impacts. Finally,
extensive data were available on the developments, both from the orig-
inal Maxwell Award applications and from follow-up contacts.
This sample does have some drawbacks. Primarily, the nonrandom
nature of the sample limits the generalizability of the findings. The
sample may not be representative of all housing developments that rely
on creative finance; further, the relatively small sample size precludes
all but the most basic quantitative analyses of the data collected.
General description of the developments
The developments examined are diverse in several respects (table 1):
their financial structure; the location, size, and configuration of the
units; the characteristics of the families served; and the range of sup-
portive services provided.4
The rental developments, ranging in size from 16 to 119 units, were
located in communities of all sizes. They included high-rise and low-
rise buildings, town houses, and single-family detached homes. Seven
of the 10 rental developments were new construction; the rest involved
rehabilitating existing structures. The average tenant income in all
rental developments was less than 50 percent of the area median in-
come.5 In general, tenants represented the racial and ethnic character-
istics of the surrounding communities. Also, most were single-parent
households.
Similarly, the special-needs developments6 ranged in size from 9 to 189
units (table 2) and were located in each region of the country and in
communities of all sizes, although most were in urban areas. Most were
single structures; four were newly constructed and six involved rehabil-
itation. Three of the developments provided transitional housing and
five offered permanent housing for homeless persons or people with HIV
4 It should be noted that we describe rental and special-needs developments separate-
ly to account for the fact that the viability of special-needs developments is often tied
to the provision of services, which is not directly linked to creative finance.
5 Area median income figures refer to a household of four, except for one area, in which
the area median income figure refers to a household of one.
6 The majority of special-needs housing developments are SRO or group-living devel-
opments that provide support services to individuals or households.

Table 1. Characteristics of the Rental Developments
Units
Created
Type of
Year
Project Name
Sponsoring Organization (State)
Construction Occupied
Village Commons
Coleridge Park Homes
Anchorage Neighborhood Housing Services, Inc. (AK)
103
49
Rehabilitation
New
1991
1989
Bernal Heights Neighborhood Center/BRIDGE
Housing Corporation (CA)
Guyon Towers
Bethel New Life (IL)
114
50
Rehabilitation
New
1988
1990
Rancho Sespe Farm Worker Family
Housing
Cabrillo Economic Development Corporation (CA)
West Side Development
Community Service Programs of West Alabama, Inc. (AL)
38
New
New
1990
1990
Frank G. Mar Community Housing
East Bay Asian Local Development Corporation/BRIDGE
Housing Corporation (CA)
119
Eastside Day Care Homes Cooperative Eastside Community Investments, Inc. (IN)
16
30
Rehabilitation
New
1989
1988
Griffin-Mandela Complex
Federation of Southern Cooperatives Land Assistance
Fund (AL)
Quality Heights
Casa Loma
Kansas City Neighborhood Alliance (MO)
New Economics for Women (CA)
40
New
New
1988
1993
110

Table 2. Characteristics of the Special-Needs Developments
Units
Type of
Year
Project Name
Sponsoring Organization (State)
AIDS Housing of Washington (WA)
Brooklyn Community Housing and Services (NY)
Catholic Charities of San Francisco (CA)
Committee to End Elder Homelessness, Inc. (MA)
H.E.L.P. (NY)
Created
Construction Occupied
Bailey-Boushay House
Brooklyn Gardens
Peter Claver Community
Bishop Street House
H.E.L.P. 1
35
New
Rehabilitation
Rehabilitation
Rehabilitation
New
1991
1991
1988
1992
1987
1989
136
32
9
189
50
West Central Wisconsin Housing
Renewal Project
Impact 7 (WI)
New
The Initiative
The Initiative, Inc. (MS)
13
57
26
69
New
1992
1988
1990
1989
Rose Apartments
REACH Community Development, Inc. (OR)
Regional Economic Community Action Program, Inc. (NY)
Las Familias del Pueblo/Skid Row Housing Trust (CA)
Rehabilitation
Rehabilitation
Rehabilitation
Community Re-Entry Project
Pershing/Roma Hotel

A New Look at Creative Finance
951
or AIDS. The remainder provided a mix of permanent and transitional
housing. All residents had incomes below 50 percent of the surrounding
area median income.
Characteristics of the financing
As with most low-income housing developments built in recent years,
those in our sample relied on multiple sources of financing. The aver-
age development had five different sources, while the maximum was
eight. The characteristics of the financing for each type of development
are described next.
Rental developments
The financial structures of the rental developments are summarized in
table 3. On average, a rental development received funding from 4.3
different sources. Eight of the rental developments relied on outright
grants to cover a portion of their development costs, thus enabling them
to serve lower-income households. Seven of the rental developments
relied on at least one federal source, including the three from the now
defunct Housing Development Action Grant (HODAG), and one from
the defunct Rental Rehabilitation program.
State and localities were also important sources of permanent financing.
The host city and/or state provided loans or grants to nine of the rental
developments. In many cases, these loans had below-market rates or
were silent loans, in which payments were deferred until a future time.
For example, in the Casa Loma development, all three loans from the
state of California carried a 3 percent interest rate and had deferred
payment schedules.
The LIHTC program also played an important role in financing rental
developments, greatly reducing the amount of money that had to be
borrowed. Seven developments had equity investments made by cor-
porations or equity funds, such as the National Equity Fund and the
Chicago Equity Fund.
Special-needs developments
The sponsoring organizations brought together a range of public and
private resources to initiate and maintain the special-needs develop-
ments over time (see table 4). On average, a special-needs development
received funding from 5.5 different sources. Pershing/Roma Hotel and
the Peter Claver Community raised equity for their developments

Table 3. Permanent Financing of the Rental Developments
Village Commons
Sources
Federal Home Loan Alaska Housing
Bank
Finance Corporation
(AHFC) Bond
Types/terms
Amount
Grant
Bond/loan, 7.5%,
30 year
$200,000
$3,006,369
Coleridge Park Homes
Sources
Metropolitan Life
HUD HODAG
City of San
Francisco
Local Initiatives
Support Corporation Paint
(LISC)
Standard Brands
Foundation
Types/terms
Amount
Loan, 6%, 20 year
$2,000,000
Loan, 5%, 30 year,
deferred
Loan, 0%, 20 year,
surplus cash only
Equity
Grant
$1,449,792
$1,313,998
$1,489,825
$231,000
Guyon Towers
Sources
Harris Bank
Loan, 8%, 30 year
$1,549,588
City of Chicago
Loan, 0%, 30 year
$1,960,626
Illinois Development Chicago Equity
Action Grant
Fund
Types/terms
Amount
Loan, 3%, 30 year,
deferred
Equity
$1,000,000
$1,262,720
Rancho Sespe Farm Worker Family Housing
Sources
Farmers Home
Administration
Section 516
Farmers Home
Administration
Section 514
Campaign for
Human
Development
State of California
Housing Community Community Development
Development Grant Block Grant (CDBG)
County of Ventura
Types/terms
Amount
Grant
Loan, 1%, 33 year
$2,345,620
Grant
Grant
Grant
$1,200,000
$100,000
$500,000
$76,000

Table 3. Permanent Financing of the Rental Developments (continued)
West Side Development
Sources
City of Tuscaloosa
State of Alabama
First Alabama Bank Bank of Tuscaloosa
CDBG
Types/terms
Amount
Grant
Grant
Equity
Equity
$150,000
$40,000
$1,358,425
$166,608
Frank G. Mar Community Housing
Sources
Citibank
HUD HODAG
City of Oakland
Parking Authority
U.S. Department of
Health and Human Agency
Services
Redevelopment
Equity
Types/terms
Amount
Loan, 10.47%,
30 year
Loan, 3%, 30 year,
deferred
Equity
Grant
Loan, 3%, 50 year,
Equity
deferred
$3,350,000
$5,523,579
$3,400,000
$500,000
$4,000,000
$507,636
Eastside Day Care Homes Cooperative
Sources
Union Federal
Savings Bank
ECI Inc.
CDBG
HUD Rental
Rehabilitation
NEF Ltd.
Partnership
Types/terms
Amount
Loan, 8%, 30 year
Loan, 8%, 30 year,
based on surplus
Loan, 0%, 17 year,
deferred
Grant
Equity
$254,900
$51,200
$33,700
$50,600
$238,450
Griffin-Mandela Complex
Sources
Section 515
Rural Housing
Service
Alabama Gas
Company
Federation of
Southern
Cooperatives
Types/terms
Amount
Loan, 1%, 50 year
$912,000
Bridge loan
$70,000
Grant
Grant
$15,000
$43,000

Table 3. Permanent Financing of the Rental Developments (continued)
Quality Heights
Sources
Missouri Housing
Development
Commission
HUD HODAG
National Equity
Fund
LISC
Types/terms
Amount
Loan, 4%, 30 year
Second mortgage,
deferred
Equity
Grant
$800,000
$750,000
$612,000
$49,000
Casa Loma
Sources
Rental Housing
Construction
Funds
Century Freeway
Housing Program
Community
Redevelopment
Agency
Syndication
Types/terms
Amount
Loan, 3%, 30 year,
deferred
Loan, 3%, 30 year,
deferred
Loan, 3%, 30 year,
deferred
Equity
$3,595,000
$2,948,841
$4,941,954
$4,300,000

A New Look at Creative Finance
955
through the sale of tax credits. Eight of the developments took loans
with favorable terms from banks, city or state agencies, or foundations.
For example, two loans to Brooklyn Gardens were forgivable and a
third (renewable) loan required no payments. One development, The
Initiative, was debt free because it was financed solely through grants
and donations. Seven of the developments received grants from local or
national foundations. Most of the organizations sought and received
donations of money, materials, and in-kind services from individuals
and corporations.
It is important to point out that these special-needs developments also
relied on creative finance to cover social services and other operating
costs. Four of the developments received HUD Section 8 subsidies,
mostly project-based subsidies, although there were exceptions. The
Initiative secured both project- and tenant-based subsidies. This ar-
rangement enabled residents to take their certificates with them when
they moved into permanent housing. Residents of the Community Re-
Entry Project received tenant-based Section 8. Both H.E.L.P. and the
Community Re-Entry Project arranged for city, county, or state funds
to be rerouted to the development from shelters or welfare hotels. These
public funds covered all or a portion of rent and costs for support ser-
vices. H.E.L.P. estimated that its facility provides housing and services
at approximately two-thirds the cost of welfare hotels, which provide
only housing. Bailey-Boushay House received Social Security Disability
Insurance payments for residents, plus funds from a state insurance
program for people with HIV/AIDS, to cover costs.
An examination of developments’ financial health over time can provide
a direct indication of the long-term impact of creative finance. The long-
term financial performance of rental and special-needs developments
is described in the next section.
Long-term financial performance
Rohe et al. (1998) rely on four indicators to assess the long-term perfor-
mance of low-income housing developments: (1) fiscal health, including
currency of mortgage, utility, and other payments, adequacy of reserve
accounts, and the percentage of the rent roll collected; (2) the physical
condition of the properties, including the building and the landscaping;
(3) management performance, including occupancy rates, percentage of
units that turned over in the previous year, and time to prepare units
for occupancy; and (4) resident satisfaction. Of the four, we consider
fiscal health the best direct indicator of the impact of creative finance
on the developments over time. The physical condition of the property,
however, can be considered an indirect indicator because lack of main-
tenance can be used to compensate for insufficient resources. Not per-

Table 4. Permanent Financing of the Special-Needs Developments
Bailey-Boushay House
Sources
City of Seattle Robert Wood
Kresge
Foundation
State Health
Department
State Housing Three county
Individual
donors
Corporate
donors
Special Needs
Housing Levy
Johnson
Trust Fund
sources
Foundation
Types/terms
Amount
Forgivable loan Loan, 3%
Challenge
grant
Two grants
$950,000
Grant
Grants
Donations
$630,000
Donations
$312,000
$1.65 million $1.5 million
$500,000
$250,000
$462,000
Brooklyn Gardens
Sources
New York State State Office of State Division
Homeless
Assistance
Program
Mental Health of Housing and
Community
Renewal’s
Housing Trust
Fund
Types/terms
Amount
Forgivable loan Forgivable loan $0 payment,
renewable loan
$4,722,710
$404,000
$883,290
Peter Claver Community
Sources
City of San
Savings
Irvine
Foundation
Koret
Foundation
Macy’s
Private
donor
Francisco
(CDBG)
Association
Mortgage
Company
Types/terms
Amount
Conventional
loan
Conventional
mortgage
Syndication
proceeds from
tax credits
Grant
Grant
Grant
Donation
$800,000
$400,000
$355,000
$830,460
$50,000
$20,000
$18,000

Table 4. Permanent Financing of the Special-Needs Developments (continued)
Bishop Street House
Sources
Federal Home CDBG
Roslindale
Bank
Local
foundations and
individuals
Loan Bank
Affordable
Housing
Progam
Terms/types
Amount
Loan converts Conventional
Conventional
loan, 8.5%
Grant
to grant
loan, 3%
$80,000
$136,321
$150,000
$145,185
H.E.L.P. 1
Sources
New York
state
Types/terms
Amount
Tax-exempt
revenue bonds
$13,965,000
West Central Wisconsin Housing Renewal Project
Sources
HUD
Osprey, Inc.
Bank of
Turtle Lake
Wisconsin
Housing and
Economic
Impact Seven, Village of
Individuals
Glen Flora
Lutheran
Church
Section 202
Inc.
Glen Flora
Development
Foundation
Types/terms
Amount
NA*
NA*
NA*
NA*
NA*
NA*
NA*
Loan and
equity
NA*
NA*
Donations
NA*
NA*
NA*
NA*
NA*

Table 4. Permanent Financing of the Special-Needs Developments (continued)
The Initiative
Sources
Mississippi
Department of CDBG
Economic and
Community
Development
Vicksburg
Vicksburg
General Fund
Warren County Energy
Region VI
Public
Housing
Authority
Federal Home City/county
Supervisors
Corporation
Loan Bank,
Dallas
in-kind
preconstruction
Types/terms
Amount
Grant
Grant
Grant
Grant
Grant/contract/ Grant
Grant
Grant
heating system
$553,743
$117,829
$260,000
$30,000
$62,400
$30,282
$15,000
$54,404
Rose Apartments
Sources
Citizen’s S&L
Portland
Development
Commission
Portland
Development
Commission
Community
Action Agency
Types/terms
Amount
Conventional
loan, 9.5%
Two deferred
loans, 3%
Deferred
loan, 3%
Grant
$270,000
$464,350
$115,000
$442,831
Community Re-Entry Project
Sources
New York
State
Housing
Finance
Agency
New York State New York
Department of State
NA*
Orange County
Office of
Community
Development
Social Services, Division of
Homeless
Housing
Housing and
Community
Renewal
Assistance
Programs
Types/terms
Amount
Conventional
loan, 8.25%
Grant
Grant
Equity
Rehabilitation
loans and
bridge loans
$1,000,000
$666,250
$110,000
$183,421
NA*

Table 4. Permanent Financing of the Special-Needs Developments (continued)
Pershing/Roma Hotel
Sources
First
California
Los Angeles
California
California
Equity Fund
Ahmanson
Foundation
Developer
contribution
Nationwide
Bank
Department of Redevelopment Housing
Housing and
Community
Development
Agency
Rehabilitation
Fund
Types/terms
Conventional
Deferred
Loan (3%)
$1,846,987
Deferred
loan, 3%
Proceeds from Grant
tax credits
Grant
mortgage loan loan, 3%
Amount
$1,001,650
$945,000
$150,000
$2,415,546
$35,000
$301,847
* Not available.

960
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
forming necessary maintenance is likely to lead to deteriorating phys-
ical conditions.
On the basis of the financial health indicators, we find that the impacts
of creative finance are complex. All of the developments continued to
serve low-income households at the time of the study. Similarly, none
has deteriorated below an acceptable standard of repair.7 Moreover, all
but two of the developments were current on all their payments, and
most had rent collections in line with market standards.8 A number of
developments, however, were found to lack adequate reserves to cover
operating, repair, and maintenance costs.
Financial performance of rental developments
Three indicators of the financial health of rental developments were
examined: currency of payments, adequacy of reserves, and percentage
of the rent roll collected.9
One of the basic indicators of the financial performance of rental proj-
ects is the currency of mortgage, tax, and other payments. Of the nine
developments reporting information, seven were current on all payments
7 Information on the acceptable level of repair for all developments was obtained
from telephone interviews. Sponsors were asked about the level of repair at the time
of the interview relative to the time when the project was developed. In addition, the
authors inspected eight sites using a checklist of building and grounds elements. The
self-reported level of repair was found to be an accurate indicator of the ratings made
through direct observation.
8 Stockard (1993) suggests a 95 percent rent collection standard. Of the nine rental
developments for which information is available, six met this standard. Of the eight
special-needs developments for which information is available, four met this standard.
9 The ratio of rental income to operating expenses is another way to assess the financial
health of housing developments. As noted by Bratt et al. (1995), it is possible for devel-
opments to take in less in rental income than is spent on a short-term basis, but this
is not sustainable over the longer term unless other sources of income are available.
Two such ratios were also examined: net rental income as a percentage of total oper-
ating expenses and gross potential income as a percentage of total operating expenses.
The figure for net rental income as a percentage of total operating expenses will be
influenced by both the occupancy rate and management’s success in collecting rents.
But in some instances the rent being charged may simply be too low to cover operating
expenses. The measure of gross potential rent as a percentage of operating expenses
indicates whether the development is financially sustainable even at full occupancy
and 100 percent rent collection. Among the six rental developments with audits, only
one, Guyon Towers, had rental income that was less than operating costs for the pre-
vious year (as indicated by values under 100 percent). The other five developments had
rental income that was greater than operating costs (as indicated by values over 100
percent). Moreover, Guyon Towers would have had less rental income than operating
expenses even at full occupancy and 100 percent rent collection.

Table 5. Financial Indicators for the Rental Developments
Rancho Sespe
Farm Worker
Frank G. Mar
Community
Housing
Griffin-
Mandela
Complex
Village
Coleridge
Guyon
Towers
West Side
Quality
Heights
Commons Park Homes
Family Housing Development
Casa Loma
Currency of payments
Mortgage payments
in arrears
Tax payments
in arrears
Other payments
in arrears
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$59,603
$22,113
Adequacy of reserves
Amount of
operating reserves
Amount of
NA*
NA*
$15,974
$0
$0
$300,000
NA*
$50,000
$50,000
$229,398
$268,476
$0
$0
$349,882
$190,378
$198,509
$35,440
$14,159
replacement
reserves
Rent collection
Percentage of rent
roll collected
95.2%
99.8%
82.1%
98.8%
96.3%
97.3%
98.0%
90.2%
59.8%
* Not available.

962
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
(table 5). Of the other two, Guyon Towers in Chicago was in arrears on
tax and service and material payments amounting to approximately
$60,000. For the past several years, rents had not covered the develop-
ment’s expenses because of high vacancy rates and low rents. The lim-
ited partner, the Chicago Equity Fund, had to contribute approximately
$60,000 for the previous several years to keep the development above
water. The other development in arrears, Quality Heights in Kansas
City, was approximately $22,000 behind on payments to service and
material providers. Again, the limited partner, the National Equity
Fund, provided assistance by making a $40,000 grant to the develop-
ment to pay its bills and build up a reserve account.
An important indicator of financial health is the amount of reserves.
All rental developments should have operating reserves to be used for
unexpected increases in operating expenses, such as higher heating fuel
costs. Developments should also hold replacement reserves to be used
when a major structural or mechanical system, such as the furnace,
needs to be repaired or replaced. Operating reserves should be between
20 percent and 50 percent of the annual operating budget (Stockard
1993). Capital or replacement reserves should total between 5 and 20
percent of the entire replacement cost (Stockard 1993).
Unfortunately, 4 of the 10 sponsoring organizations could not provide
development audits. In most instances, the organizations had conducted
organization-wide audits that did not break out individual developments.
Among the six developments for which we had audits, the amounts in
operating reserve accounts varied greatly. Three developments had no
funds in operating reserve accounts, one had operating reserves equal
to 6 percent of annual operating expenses, and the remaining two had
operating reserves in excess of 20 percent of annual operating expenses,
the lower limit suggested by Stockard (1993).
Turning to capital replacement reserve accounts, one development
had no capital reserves. The remaining five had amounts ranging from
1 to 4 percent of replacement costs, all below the range suggested by
Stockard (1993).
The final indicator of financial performance to be considered is the per-
centage of rent roll collected. Stockard (1993) suggests that 95 percent
of a development’s monthly maximum potential rent roll should be col-
lected. Six of the nine developments that collected rent met this stan-
dard in 1996. Not surprisingly, two of the three developments with
lower rent collections (Guyon Towers and Quality Heights) were also
behind on their payments. Casa Loma had the lowest rent collection,
60 percent of maximum potential rent. Fortunately, Casa Loma has
considerable balances in its operating, replacement, and service reserve
accounts. Guyon Towers had an 82 percent collection rate in 1996, but
at the time of our site visit, this situation had improved markedly.

A New Look at Creative Finance
963
Financial performance of special-needs developments
We will now examine the same three indicators of the financial health
of special-needs developments. With regard to the first indicator, all 10
special-needs developments were current in their mortgage, tax, and
other payments (table 6).
With regard to the adequacy of reserve accounts, the findings are not
so reassuring. Information on reserves was obtained via telephone in-
terviews except for the Impact Seven sites.10 Because we did not have
data on the developments’ annual operating expenses or replacement
costs, we could not calculate the adequacy of reserves except for the
Impact Seven sites, whose reserves of 5, 6, and 8 percent were within
the standard range suggested by Stockard (1993). Information provid-
ed in the telephone interviews with the other developments suggests
that a number of them may be at financial risk because of their small
or nonexistent reserves.
Reserves for two developments, Bailey-Boushay House and H.E.L.P. 1,
were covered by large accounts that the managing or sponsoring orga-
nizations established to cover all of their developments. In the case of
Bailey-Boushay, Virginia Mason Medical Center’s reserve account of
$500,000 could be drawn on if needed. One development had an oper-
ating reserve account, and four had only replacement reserve accounts.
Three developments indicated that their reserve accounts could be
tapped for either operating or replacement expenses.
Two developments, Brooklyn Gardens and The Initiative, had no re-
serve accounts of any kind. Because state and local government funding
agencies considered Brooklyn Gardens a service provider rather than a
housing provider, it was not allowed to establish reserve accounts. When
The Initiative needs repairs or replacements, it must rely on communi-
ty assistance. At the time of our visit, staff and board members were
discussing ways to establish an account that would cover maintenance
and repair costs.
The third financial indicator is the percentage of rent roll collected by
each development. A total of 9 of the 10 developments collected rent
from the residents or from the city. Of these 9, 3 collected 96 percent or
more of the possible rent roll during the previous fiscal year, thus ex-
ceeding the 95 percent standard suggested by Stockard (1993). Two
developments collected between 90 and 92 percent of their rent roll, and
two collected less than 90 percent. Two of the three Impact Seven sites
10 We received three organizational audits and three audits for developments. Only one
of the development audits contained the information needed to calculate adequacy of
reserves and the percentage of rent roll collected.

Table 6. Financial Indicators for the Special-Needs Developments
West
Central
Wisconsin
Bailey-
Boushay
House
Peter
Bishop
Street
House
Housing
Renewal
Project
Community Pershing/
Brooklyn
Claver
The
Rose
Re-Entry
Project
Roma
Hotel
Gardens Community
H.E.L.P. 1
Initiative Apartments
Currency of payments
Mortgage payments
in arrears
Tax payments
in arrears
Other payments
in arrears
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Adequacy of reserves
Amount of
operating reserves
Amount of
replacement
reserves
b, c
$500,000a
NAd
$0
$0
$0
$0 $1,300,000b
$0
$0
$0
$0
$22,000
$0
c
$2,500
NAd
$15,424 GFe, f
$52,716W
$37,705 M
NAd ~$35,000
Rent collection
Percentage of rent
roll collected
g
c
90%–92%
100%
>97%h
92% GFe, f
97%W
96% M
87%
96%
90%
89%
a Virginia Mason Center has this amount in reserves for all its sites.
b Reserves can be used for operating and replacement costs.
c Information not available.
d Not applicable.
e Source: Project audits.
f GF = Glen Flora, W = Wausau, M = Menomonie.
g No rent is collected. The state pays a daily rate to the facility for each client. If a client receives public assistance, he or she signs the amount over to the state.
h Residents do not pay rent. New York City is the tenant and guarantees payment for 97% occupancy.

A New Look at Creative Finance
965
collected more than 95 percent of their rent rolls, while the other col-
lected 92 percent.
Other impacts of creative finance on rental and
special-needs developments
In addition to the more objective indicators of financial health, spon-
soring organizations were asked more subjective questions. Their re-
sponses were used to further assess the impact of creative finance over
time. In both telephone and on-site interviews, respondents were asked
directly to assess the positive and negative impact of a variety of fac-
tors on long-term development performance, including the character-
istics of the project finance.11 Respondents were also asked what about
the development worked well. Several respondents identified issues
related to or derived from the use of creative finance.12
Rental developments
Most respondents believed that project financing characteristics had a
very strong positive impact on the performance of rental developments.
They noted that various subsidies made the developments affordable to
low-, or in some instances, very low income families. City or state agen-
cies provided grants or silent second mortgages. When these funds were
combined with equity investments from the LIHTC program or other
shallower subsidies, it was possible to keep rents low. For example, the
financing package for Casa Loma entailed no mortgage payments at
all. This not only kept rents low, but it left funds for on-site day care,
job training, and other resident services.
11 Respondents were asked three questions: (1) In what ways has the development’s
financing had a positive effect on project success? (2) In what ways has the financing
had a negative effect on project success? (3) Do you anticipate any problems in the
future due to aspects of the financing package? In addition, telephone interview respon-
dents were also asked to rate the impact of the development’s finance and other factors
on a scale from –5 to +5, with negative numbers indicating a negative impact, 0 no im-
pact, and positive numbers a positive impact. For the relative importance of each fac-
tor, the absolute value of the rating was then averaged across all the developments.
Factors with average ratings of 4 or more were considered to have a strong impact on
performance, average ratings between 3 and 3.99 were considered to have moderate
impact, and average ratings above 0 but below 3 were said to have a low impact.
12 It should be noted that most respondents did not link their responses to the use of
creative finance. We derive the link logically from their responses. For instance, one
respondent stated that learning to work with partners had been valuable. This respon-
dent also said that the organization has continued to rely on these partnerships to im-
plement other projects. In this case, we link the establishment of partnerships to the
requirements of creative finance.

966
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
In identifying what worked well, several respondents emphasized im-
pacts on what might be called the “social capital” of the sponsoring
agencies, impacts that can be linked to creative finance.13 Six out of
eight respondents identified such impacts. The process of securing fi-
nancing from several sources led to long-term relationships with city
agencies, financial institutions, equity investors, and other organiza-
tions. These relationships have been instrumental in other housing and
neighborhood improvement activities undertaken by the sponsoring
nonprofits. Further, the partnerships strengthened the reputation of
sponsoring organizations and enhanced their credibility.
Creative finance also helped develop mutual interest among the various
funders. Once foundations, government entities, and private lenders
contribute financially, they are believed to have an interest in the spon-
soring organizations’ overall success.14 The mutual interest and the
financial nexus act as a safeguard if additional resources are needed,
thus improving the sustainability of the development over time.15 In
our sample, for example, two developments received additional subsi-
dies from equity investors to see them through difficult times.
Conversely, several aspects of financing were believed to have had neg-
ative impacts on the projects. Several respondents indicated that prob-
lems were created by having multiple sources of financing. First, the
reporting requirements placed on management were extensive and bur-
densome. Various funders required different information or the same
information presented in a different format. Second, in many cases, any
amendments to leases, occupancy agreements, and other rules and pro-
cedures had to be reviewed and approved by all funding sources. This
was a difficult and uncertain process that discouraged some manage-
ment entities from making what they thought would be positive changes.
For example, the staff of the East Bay Asian Local Development Cor-
poration wanted to change screening procedures to include home visits
with prospective tenants. However, this would have required a change
in the management plan, which would have to be approved by the
many lenders.
13 Respondents did not use the term “social capital.” They mentioned, however, relation-
ships that serve as resources and can be drawn on when needed. Such expressions are
similar to the definition of social capital proposed by Coleman (1988).
14 Thus, creative finance can be considered instrumental in developing a financial nexus
among private lenders, state housing finance agencies, equity investors, and others who
may face significant losses if the development fails.
15 Keyes et al. (1996) identified similar issues in their discussion of the nonprofit sector.
We believe that it is the use of creative finance by the nonprofit sector that results in
these positive externalities.

A New Look at Creative Finance
967
The difficulties of dealing with multiple sources of financing seem to be
accentuated further by a typical lack of predevelopment support, that
is, money to support predevelopment activities. Sponsoring organiza-
tions reported that already overworked staff had to be pulled from other
responsibilities to focus their energies on securing multiple sources of
finance, with their complex and often conflicting requirements. This
lack must be considered an important omission since Rohe et al. (1998)
found that predevelopment activities have a strong impact on the per-
formance of housing developments over time.
Respondents identified the tenant income restrictions imposed by fi-
nancing sources as another negative impact. These restrictions made
it difficult to find tenants who meet the income requirements and can
still pay the rent needed to keep the development financially viable. In
some markets, the income differential between qualifying for a devel-
opment and being able to afford it is very narrow. In several cases, for
example, unexpectedly high utility costs have necessitated rent increas-
es that have created hardships for tenants. Inadequate budgets also
had negative impacts on project performance. In several instances, an
expense that turned out to be a major operating cost was not included
in original budget projections. For example, the need for security guards
was not anticipated at either Guyon Towers or Frank G. Mar Communi-
ty Housing. The expense of providing security added substantially to
operating costs.16
Finally, inadequate capitalization of the reserve accounts at the devel-
opment’s inception also had negative impacts. As noted earlier, many
developments had little or no funds in reserve accounts for unforeseen
capital, replacement, or operating costs. Instead, they expected to build
these accounts from operating surpluses, which never materialized in
a number of instances. Although the extent to which these last two
impacts are due to creative finance is unclear, they are consistent with
Stegman’s concerns.
Special-needs developments
Most organizations sponsoring special-needs developments believed that
creative financing had only a moderate impact on the performance of
their housing developments.17 Only 4 of the 10 special-needs develop-
ments rated financing as having a strong impact. Aspects that were
seen as beneficial include having federal Section 8 subsidies available
16 It is not known whether the omission of such expenses from original budgets was the
result of restrictions imposed by funding sources or simply an oversight on the part of
sponsoring organizations.
17 See footnote 6 for a description of how these ratings were done.

968
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
to cover a portion of the rent, using bond financing, and having a num-
ber of funding sources rather than just one. For instance, H.E.L.P. 1
was funded with tax-exempt revenue bonds, which are obligations of
the city and state. Because of this bond financing, the development
does not collect rent from residents. A number of government grants
and city contracts cover H.E.L.P. 1’s operating and service costs. The
Initiative, however, has been able to survive cutbacks in funding by
depending on more than one source of funds. While specific aspects of
the project financing might have worked well so far, many sponsoring
organizations expressed serious concerns about the long-term funding
of services and operating costs.
Little can be said about potential positive impacts of creative finance
on the social capital of special-needs organizations. In contrast to spon-
sors of rental developments, only 3 out of 10 special-needs respondents
identified impacts on the social capital of the organization as aspects
of the development that worked well. Thus, we find little evidence that
creative finance might be linked to the creation of partnerships and
other aspects of the social capital of special-needs organizations in-
volved in housing development. It may be possible that because of the
need for support and other services, these organizations are more likely
than rental developments to have partnerships in place. This area
should be explored in future research.
Two negative aspects of creative financing in special-needs developments
were reported: concerns about multiple (and often contradictory) report-
ing requirements and uncertainty of future funding. For instance, be-
cause Brooklyn Gardens is seen by its financial supporters as a service
provider instead of a housing provider, it has not been allowed to estab-
lish reserve accounts. Consequently, it has had to apply for grants from
funders whenever money was needed for major repairs. Brooklyn Gar-
dens also discovered the flip side of multiple sources of funds; each
agency involved in the financing had its own set of regulations, some
of which contradicted the others. This issue was further complicated
because each wing of the three-wing development had its own operat-
ing contract.
Especially troublesome for five of the special-needs developments was
the future of Section 8 subsidies. The initial subsidy agreement for most
of the developments was 10 years. A number were approaching their
10th year and were unsure of the future of the subsidies because of the
move to yearly renewal of Section 8 commitments.

A New Look at Creative Finance
969
Building on the strengths and minimizing the
weaknesses of creative finance
On the basis of the above information, we conclude that the impact of
creative finance over time is more complex than previously believed.
On the positive side, the developments we examined continue to pro-
vide decent, affordable housing to low-income households. No one has
foreclosed on any of the developments in our study. None of them has
altered its focus on serving low-income households or deteriorated
below an acceptable standard of repair. On the negative side, not all
projects have avoided financial or other problems. One rental develop-
ment has, in fact, experienced serious financial problems that have
not been severe enough to lead to foreclosure, abandonment, or a
change in the income levels of the households served, however.
Overall, it seems fair to conclude that the developments examined have
met their original objective of providing decent, affordable housing to
low-income persons in part because of their reliance on creative finance.
Moreover, although the evidence is only indirect, creative finance ap-
pears to increase the social capital of sponsoring organizations in im-
portant ways, including the establishment of partnerships with public,
private, and nonprofit entities that may enhance the long-term viabil-
ity of sponsored developments and other organizational efforts. This
last point should not be underestimated since it is at the core of the in-
creasing importance of nonprofit networks in providing affordable
housing (Keyes et al. 1996).
However, there is still reason for concern about the future of many of
the developments in our study. In particular, a number of them have
grossly inadequate financial reserves. These projects may be one major
repair or one unexpectedly high utility bill away from financial crisis.
As developments age, the need for major repairs will grow. An addition-
al concern, of particular importance for special-needs developments, is
the uncertainty of funding for tenant-based assistance and the social
services that are such an integral part of many developments. Finally,
the reliance on several layers of finance is accompanied by complicated
and often contradictory reporting requirements. This added bureaucracy
taxes often overcommitted staff.
We do not believe that these concerns are inherent in the nature of
creative finance. On the contrary, we believe that they can be minimized
through policy intervention. We therefore make four suggestions.18
18 Whether or not these recommendations are easier to implement under the tradi-
tional single source (federal government) approach is not relevant here. Although
this is an important question, it is beyond the scope of the research presented here.
Instead, the recommendations are derived logically to address the concerns about the
use of creative finance raised by the sponsoring organizations contacted.

970
Roberto G. Quercia, William M. Rohe, and Diane K. Levy
First, public and private funders should provide support for the prede-
velopment activities of nonprofit organizations. Such work has a strong
impact on the performance of housing developments over time, but
funding seems to be increasingly difficult to obtain. Predevelopment
support is particularly important due to the difficulties inherent in
securing multiple sources of finance. Thus, we recommend that both
government organizations and foundations develop programs to provide
funds for predevelopment activities. Such programs would help expand
the number of affordable housing developments and improve their
quality.
Second, long-term funding uncertainty should be minimized. Many de-
velopments rely on government subsidies, such as Section 8 assistance,
to make developments affordable to low-income households. This assis-
tance is crucial to tenants’ ability to pay the rent and developments’
ability to secure funds to cover operating expenses. Unfortunately, annu-
al renewal of Section 8 assistance leaves recipients uncertain about
whether they will be able to stay in their units and leaves rental and
special-needs developments uncertain about whether they will be able
to maintain their rent revenues. Providing longer-term commitments
would minimize that uncertainty.
Third, public and private funders should establish a program to help
developments experiencing financial problems.19 Federal, state, and
local governments as well as private entities have made substantial
investments in affordable housing developments across the country. To
protect those investments, a program to provide a limited amount of
additional support to developments headed for financial crisis should
be developed. For instance, such a program could create operational and
replacement reserves in the form of an insurance pool.
Finally, the various funders of low-income housing need to come togeth-
er and develop a model unified reporting system. Representatives of
the major financial contributors to low-income rental and special-needs
developments, including federal and state governments and foundations,
should develop one reporting system and work toward having it adopted
by the various funders. This would go a long way toward simplifying
the reporting burden now placed on the managers of low-income
housing.
Our findings suggest that creative finance has some disadvantages but
also important advantages compared with the traditional housing fi-
nance model centered around the federal government as the sole lender
and subsidy provider. As Stegman feared, we find creative finance to be
associated with complicated schemes that are difficult to secure and
19 Such a program should be developed to avoid rewarding poor management prac-
tices. It should incorporate a system of both rewards and penalties.

A New Look at Creative Finance
971
arrange, and with developments that are thinly capitalized and typical-
ly lack adequate reserves. However, we also find that sponsoring orga-
nizations believe that creative finance is associated with developments’
long-term financial viability and greater affordability. Moreover, we find
evidence suggesting that creative finance is associated with increases
in social capital that may have important positive impacts on the orga-
nizations themselves and their efforts. The traditional model did noth-
ing to strengthen this aspect of low-income housing development and
therefore has left traditionally financed developments vulnerable to
budget cuts and program changes over time.
The study’s two methodological shortcomings may limit the generaliz-
ability of the findings, however. First, developments that were recog-
nized for their excellence, like the Maxwell award winners, may per-
form better than low-income housing developments in general. This
may result in an overestimation of the positive impact of creative
finance. Second, the lack of a comparison group limits interpretation
of the findings.
Despite these limitations, the findings suggest a more constructive
treatment of creative finance in policy formulation. Instead of relying
on creative finance as a de facto policy, it should be incorporated into
policy by design to build on its strengths and minimize its negative
impacts.
It should be noted that we do not contend that creative finance is the
best approach to develop affordable housing or that the federal govern-
ment has no role to play, although we do believe that the government
is unlikely to reassume the role of sole funder of affordable housing in
the foreseeable future. If our findings were later substantiated in more
generalizable work, they would justify designing a housing policy for
the 21st century that incorporates, by design and not de facto, creative
finance (plus our four policy recommendations) as a core component
with federal money used to leverage state/local and private resources.
Authors
Roberto G. Quercia is Assistant Professor of City and Regional Planning at the Uni-
versity of North Carolina at Chapel Hill. William M. Rohe is a Professor of City and
Regional Planning and Director of the Center for Urban and Regional Studies at the
University of North Carolina at Chapel Hill. Diane K. Levy is a Research Associate
at the Metropolitan Housing and Communities Policy Center at The Urban Institute.