If you’ve listened to any discussion about affordable housing, invariably you’ve heard the phrase “80% of AMI” (Area Median Income). Rarely does anyone take time to explain how that actually translates to cost. The basic premise is that a household should only spend 30% of their income on housing. By capping the rent or home cost, people in those income brackets should be able to afford the rent or mortgage.

Example: A one bedroom apartment capped at 80% AMI means a single individual can make up to $58,450. 30% of that is $17,535. That breaks down to $1,461.25 a month rent. For a 2 bedroom apartment and a family of 3 that increases to $75,150 or $1,878.75 a month.

As the cap is increased, the question becomes where is market rate and should government be subsidizing the development? If an average market rate 1 bedroom apartment is $1800-$2000 a month, why would the city subsidize 120% AMI which comes out to $2,190 a month? Could market rates outstrip AMI in the future? Debatable.