Workforce Housing in the Time of COVID-19 and Beyond

March 21, 2024

Updated March 21, 2024
Originally published July 29, 2020

Multifamily workforce housing, catering to those earning between 80-120% of the Area Median Income (AMI), remains a strategic choice for developers navigating the uncertainties brought by the COVID-19 pandemic and its aftermath. As the economic impacts of the pandemic continue to unfold, the workforce housing sector presents opportunities for developers seeking stability in a shifting market landscape.

Traditionally, the HUD 221(d)(4) loan program has been instrumental in financing workforce housing projects aimed at moderate-income families. In the aftermath of COVID-19, the program remains a viable option, offering developers a route to finance projects without the risk of penalty for default later on. HUD’s continued support for projects addressing market gaps underscores the relevance of workforce housing, particularly as attention often gravitates toward the luxury and affordable housing segments.

For developers, workforce housing projects under the HUD 221(d)(4) program offer distinct advantages. Non-recourse nature of 221(d)(4) loans ensures mitigation of risks, while streamlined oversight compared to affordable housing projects alleviates administrative burdens. However, navigating the architectural design process for HUD projects demands expertise, with specific HUD requirements influencing design considerations.

In metropolitan areas, workforce housing projects typically find footing in second and third-tier suburbs, leveraging lower land costs to manage project expenses. In regions like the Dallas-Fort Worth metroplex, projects are strategically located in suburbs such as Prosper, Melissa, and Aubrey, emphasizing efficiency in resource allocation and design optimization. These projects are all about finding creative ways to efficiently use resources, something we pride ourselves on at JHP. As with any project, they require high-level design to create great spaces that will rent well so the developer can see a return and for HUD to accept the project. Effective design is pivotal, ensuring desirable living spaces that drive tenant retention and rental income.

Crucially, success in HUD 221(d)(4) projects hinges on collaboration with experienced teams well-versed in HUD regulations and procedures. With a proven track record in HUD projects and established relationships with HUD offices nationwide, JHP offers expertise essential for navigating the intricacies of the process. For developers embarking on HUD 221(d)(4) projects, partnering with seasoned professionals can streamline project execution and enhance the likelihood of project acceptance.

As developers chart their course in the evolving landscape of workforce housing, strategic partnerships and a nuanced understanding of regulatory frameworks will remain pivotal in realizing successful projects that meet the needs of both developers and communities alike. At JHP we have worked on several HUD projects and have developed very strong relationships with HUD offices around the country. HUD is familiar with our work and we know the idiosyncrasies from HUD office to HUD office, so our projects are more likely to be accepted for closing. If you’re ready to begin your HUD 221(d)(4) project, talk to us and we can navigate the process together.