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In our urban infill projects, my city requires that 15% of new construction be set aside for low-income housing. Habitat for Humanity, for example, has successfully skirted set-back requirements to build homes in a certain plighted neighborhood on 30-foot-wide lots. Plenty of incentives are offered, including reducing or waiving water and sewer fees, which can run $5,000 per 40x80 lot.

Contractors who accept city subsidies are required to sell at price points that will allow a low-income resident to buy and support a loan based on 80% of the median income for a family of four. This restricts profit, however, and induces some contractors to cut corners to boost the bottom-line return.

There is also renewed interest in building zero-lot line homes (free standing without connected walls but barely no land) and attached housing such as townhomes or condos. Otherwise, no one could afford to build and no one could afford to buy.

--RR
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