The Power of the Public-Private Partnership for Affordable Housing

Without access to a safe, stable and affordable place to live, people lack the foundation for financial, physical and emotional well-being. 

Yet, right now, far too many Americans are struggling to find homes they can afford, and, as costs continue to rise, the challenge becomes more acute. According to the U.S. Chamber of Commerce, the United States remains 4.7 million homes short and nearly a third of households are cost burdened. 

Twenty-six states have fewer than 4.7 million people. This housing trajectory, if continued, will prove ruinous for the American economy. Housing is foundational to financial, physical and emotional well-being, but the path to solving the housing crisis is not one-dimensional. It requires understanding where existing models have fallen short — and building a better framework from there. 

Two models have defined American affordable housing for a generation. We’re seeing the failures of both systems play out in real time. 

The public housing authorities that oversee some of the country’s biggest affordable portfolios often face significant challenges in keeping pace with repairs, modernization and expansion. This is not a criticism of these essential institutions, but rather an acknowledgement of the structural constraints under which they operate. While working at the New York City Housing Authority, the country’s largest housing authority, I saw firsthand that operating roughly 177,000 apartments on a limited budget within a massive bureaucracy is extraordinarily difficult and there’s no easy answer.

The private real estate sector is motivated primarily by market dynamics, which can mean mass displacement when affordability agreements expire and rents rise. Private capital, meanwhile, excels at mobilizing resources, managing risk, and executing projects at scale. But left to market forces alone, it is not designed to preserve affordability indefinitely, particularly as housing demand and rents rise exponentially.

In this environment, no single entity can be wholly effective — not the solo developer, nor the government agencies. Only by working together can we truly begin to chip away at the problem. 

I’ve long said that a bad deal with good partners can become a good deal, but a good deal with bad partners will always end up a bad deal. At the end of the day, successfully developing affordable housing requires the understanding that this is a partnership business. The strongest projects are built on aligned incentives, shared goals and trust between public and private stakeholders. As every major city across the country faces the housing death spiral, public and private partners united by a shared goal of stemming said spiral must work together on creative solutions to bring about meaningful change.

The public sector, guided by its policy goals, must harness private sector expertise and collaborate on mission-aligned development. And though there’s no one-size-fits-all approach, several innovative programs and projects can serve as a model for growing and improving the housing stock throughout the country.

Finance 

When we talk about the housing crisis, most conversations revolve around building new homes, but not enough is said about preserving the affordable housing we already have — and it may be the single most overlooked lever the country has.

Every year, we lose affordable housing when regulatory agreements expire, properties transition to market-rate housing, or buildings become so burdened by deferred maintenance that they are no longer viable as affordable homes. According to the 2026 Harvard Joint Center for Housing Studies report, roughly seven million affordable rental homes have disappeared nationwide since 2014. Some were converted to higher rents, some were lost through underinvestment, and many simply aged out of the affordable housing stock with too little new affordable housing coming online to replace them.

Replacing those homes is far from simple. Developing new affordable housing is expensive, time-consuming, and often slowed by a complex web of regulatory requirements, permitting processes, financing challenges and community opposition. As a result, the affordable housing crisis is not just a production problem — it’s also a preservation problem. 

While increasing housing supply remains essential, protecting and reinvesting in the affordable homes we already have is just as critical if we’re going to keep pace with the growing need for affordable housing.

But proven tools are available right now to address this existential threat to our existing affordable housing stock. The public-private financing architecture of low-income housing tax credits (LIHTCs), tax-exempt bonds, project-based Section 8, payment in lieu of taxes (PILOT) agreements, tax abatements, grants and other public incentives is the mechanism through which we can preserve housing at scale — and keep families, seniors and working renters in their homes for the long term. 

LIHTC, one of the most successful affordable housing programs in American history, works by allocating federal tax credits to states, which in turn allocate them to developers. Developers monetize these credits by selling them to private investors to generate equity for affordable housing projects. 

Tax-exempt bond financing is the second component, whereby state housing finance agencies issue bonds. When paired with the 4 percent credit, the program produces a financing structure that allows for the acquisition, renovation and recapitalization of existing affordable properties and the extension of their long-term affordability for another 30 or 40 years. 

Yet, in many states, including New York, demand for tax-exempt bonds far exceeds available volume cap. As a result, preservation transactions often compete with new construction projects for scarce resources, limiting the number of affordable homes that can be preserved each year despite strong market demand and proven program effectiveness. 

Policymakers should continue looking for ways to stretch scarce bond resources further, building on recent reforms that permanently reduced the bond-financing threshold required to access 4 percent LIHTC from 50 percent to 25 percent.

State and local governments also play a critical role through PILOT agreements, property tax abatements, grants and subordinate financing programs, which often help close funding gaps and make preservation transactions economically viable.

No single program can solve the housing crisis alone. But, together, these tools demonstrate what is possible when public policy and private capital align around a common goal: preserving affordable housing and expanding opportunity for the people who call it home.

City-owned land

Publicly owned real estate portfolios are one of the greatest untapped assets in both states and cities — Class B offices going dark, sprawling parking lots in crowded neighborhoods, large municipal buildings no longer fit for purpose. Scanning these vast inventories for vacant land or underutilized properties can yield amazing results, especially in instances when cities can add affordable housing to neighborhoods with high land costs that would otherwise be prohibitively expensive. 

Whether through long-term ground leases or sales, leveraging their own real estate affords the public sector greater power to advance their policy goals. In their capacity as landlord, agencies can request project bids that meet certain requirements and incorporate public benefits such as health care facilities and libraries while also setting affordability bands.

These projects are ripe for public-private partnership. Again, by harnessing private capital and construction know-how, governmental bodies can help deliver state-of-the-art development that meets the constituents’ needs.

At my firm, we are on track to own approximately 20,000 apartments across over 35 states by the end of the year, with the vast majority focused on preservation rather than ground-up development. But we are under no illusions about the scale of the challenge ahead. Millions of Americans continue to struggle to find housing they can afford, and the need for action has never been greater. 

Only by working together — public and private partners aligned around a common purpose — building by building and resident by resident, can we make meaningful progress toward solving the housing crisis. 

Will Blodgett is the founder and CEO of Tredway, a national affordable and workforce housing investment and development firm based in New York City.