Glossary

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Risk-Adjusted Return - A measure of investment return in relation to the amount of risk. Often used to compare a high-risk, potentially high-return investment with a low-risk, lower-return investment.

Section 8 - A federal housing assistance program in which participants pay a portion of their adjusted gross income (i.e. income after standard deductions) for rent and the remainder of the rent is paid by HUD. Section 8 is either project-based or tenant-based.

Section 8 Project-Based Assistance - This form of assistance is linked to a particular property so that tenants moving into the building pay 30% of their adjusted gross income in rent and the remainder is subsidized. Tenants receive the rental assistance as long as they live in the building and remain income eligible.

Section 8 Tenant-Based Assistance - This form of assistance is linked to a particular tenant. The tenant receives a voucher for the fair market rent in the area based on family size and income level. This voucher can be used to rent any apartment. If the rent is more than the voucher value, the additional rent is the responsibility of the tenant.

Securities and Exchange Commission (SEC) - The primary U.S. government agency responsible for the regulation and oversight of the securities industry and markets. The SEC’s mission is to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation.

State Housing Finance Agencies - State-chartered authorities established to help meet the affordable housing needs of the residents of their states. Although they vary widely in characteristics such as their relationship to state government, most HFAs are independent entities that operate under the direction of a board of directors appointed by the state's governor. They administer a wide range of affordable housing and community development programs.

Subsidy - Generally any funds provided from a source (generally a unit of local, state or the federal government) that reduces the amount of financing a borrower needs to obtain from a conventional lender, or that provides support payments, low-interest loans or grants that allow low-income people to afford to live in housing that would otherwise be unaffordable or unavailable.

Syndication - The sale of equity interests (shares) in real-estate projects to investors other than the original developers. The concept extends generally to any group of investors who have contributed funds for the common purpose of carrying out a real-estate project requiring concentration of capital. It can take several business forms, but the most common is the limited partnership.

Tax Credit - A dollar-for-dollar reduction against income tax payments that would otherwise be due. Contrasted with tax deductions that reduce taxable income.

Tax Increment Financing (TIF) - A public financing tool used to assist economic development projects by capturing the projected property tax revenue stream to be created by the development or development area and investing those funds in improvements associated with the project.

Taxable Bonds - An obligation to which the income on an interest-bearing bond is taxable by the federal, state and/or local governments.

Tax-Exempt Bonds - An obligation to which the interest income is exempt from the taxation of either federal or state governments. Municipal bonds issued by state or local governments are an example of these.

Total Development Cost (TDC) - The cost to acquire the land or building plus the hard and soft construction costs to carry out a construction or rehabilitation project.

Total Return - Return equal to income plus the change in value or market price of an asset.

Transitional Housing - Shelter for homeless individuals and families for six months to two years in an environment of security and support designed to help residents progress toward self-sufficiency. A middle point between emergency shelter and permanent housing.