General obligation bonds for affordable housing overview
The proceeds can be used by cities, counties or states to provide subsidies for affordable housing projects or fund other affordable housing programs. General obligation bonds stand in contrast to multifamily affordable housing bonds (and other similar private activity bonds), in which the bond’s revenue is used to issue loans for one or more housing project(s) and the bond holders look for repayment from the projects/developers that made use of the bond proceeds.
Securing general obligation bonds can be challenging, as many jurisdictions require a special election to authorize a bond issue. Once issued, however, the proceeds from general obligation bonds for housing can be used flexibly—to fill financing gaps, fund state and local affordable housing programs, or achieve other goals. Because the interest on the bonds is exempt from federal and sometimes state income tax, and sale of the bonds is subject to a competitive bidding process, the funds can be raised at relatively low interest rates.
General obligation bonds can be used to generate funding for affordable housing trust funds. Click here to learn more about housing trust funds.
Office of Management and Budget and/or Department of Revenue or Comptroller—responsible for issuing the bond.
Local department of housing or community development—responsible for allocating proceeds from the bond sale.
Increasing the affordability of rental housing
Preserving the existing stock of market affordable rental housing
Reducing homelessness and meeting the emergency needs of homeless individuals and families
Meeting the housing and services needs of older adults and persons with disabilities
Increasing access to sustainable homeownership
Improving housing quality and safety
Enhancing resilience to flooding and other climate-related threats
Expanding affordable housing in resource-rich neighborhoods
Strengthening communities through community development activities
Strengthening the resources and opportunities in high-poverty neighborhoods
Reducing energy use and decreasing greenhouse gas emissions
Expanding access to public transit
Improving health of children and adults
Improving educational outcomes for children