The City of Iowa City encourages housing developers to review federal, state and local financing incentives that increase the supply and availability of affordable housing in Iowa City. Affordable housing incentives are generally available for housing that is occupied by low to moderate income households. For rental properties this is typically for households under 60% of area median income and for homeownership it is typically for households under 80% area median income. You can find the income limits at www.icgov.org/actionplan under the references for CDBG/HOME recipients. 

Details in the following summaries may have changed. Contact program administrators for current deadlines and availability. 

City Assistance

If you are a business or agency seeking City assistance, visit the following pages for available local programs:

HOME & CDBG Programs

The U.S. Department of Housing & Urban Development provides HOME Investment Partnerships Program (HOME) and Community Development Block Grants (CDBG) funds to states and localities -- often in partnership with local nonprofit groups -- to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership. Housing providers may apply for City and/or state HOME funds through a competitive process.

  1. City of Iowa City HOME/CDBG applications are available annually in December and applications are typically due in mid-January. If awarded funds, the funds are available after July 1. Contact Neighborhood Services, City of Iowa City, 410 E. Washington St., Iowa City, IA 52240, 319.356.5230, neighborhoods@iowa-city.org for more information.

  2. State of Iowa HOME funds: The Iowa Finance Authority administers the program for the State.  Low-interest loans and grants are available to developers of affordable single-family and multifamily housing developments through several HOME program funding categories.  Due date may vary from year to year.  

    Other Iowa Finance Authority housing programs can be found online here. 

    Contact Iowa Finance Authority, 2015 Grand Ave., Des Moines, IA, 50312, 515.725.4900, rita.eble@iowa.gov for more information.

HOME Rental Rehabilitation

Property owners may be eligible for an incentive to invest in the City’s existing rental stock while maintaining affordability for tenants. Projects can receive up to $24,999 per unit for rehabilitation.  50% of the costs are eligible for a 0% interest loan and the remainder is in the form of a grant (forgiven at end of the compliance period). Up to $90,000 is currently available for the program and applications will be accepted on a first come, first serve basis. 

Eligible properties include single family and duplex structures within certain Targeted Areas. During the 5-10 year affordability period, a tenant’s household income must be at or below 60% of the area median income and rents are limited to the High HOME Rents minus an allowance for tenant paid utilities.  

For more information or to submit an application, please visit our Rental Rehab program webpage.

Contact Neighborhood and Development Services, City of Iowa City, 410 E. Washington Street, Iowa City, IA 52240, 319.356.5230, neighborhoods@iowa-city.org for more information.

Tax Exemption for Affordable Rental Housing

Developers are eligible for a 40% property tax exemption for 10 years in new residential developments with at least six units.  To qualify, 15% to 20% of the total units must be leased to households under 40% of the area median income.  The maximum rents for those units is limited to what a household at 40% could afford minus the estimated utility allowance for tenant-paid utilities.  The exemption applies to all property taxes, including those by the County and school district.

Developers must apply for the tax exemption during the planning process and well in advance of the issuance of the building permit. Upon application, City staff will prepare an urban revitalization plan to be established by City Council prior to construction.

Contact Neighborhood & Development Services, City of Iowa City, 410 E. Washington Street, Iowa City, IA 52240, 319.356.5230, neighborhoods@iowa-city.org for more information.

Density & Height Bonuses for Affordable Housing

For projects located in the Riverfront Crossings District, additional building height may be granted for projects that reserve a minimum percentage of dwelling units within the building as affordable or workforce housing, as defined by the City. Certain approval criteria must be satisfied. City Council approval is required for approval of more than two stories of bonus height.

In the Central Business Zones and Riverfront Crossings District, a density bonus in the form of an exemption from the parking requirements may be granted by the City for dwelling units that are committed to the City’s assisted housing program or any other affordable housing program approved by the City. 

Contact Neighborhood & Development Services, City of Iowa City, 410 E. Washington Street, Iowa City, IA 52240, 319.356.5230, neighborhoods@iowa-city.org for more information.

Housing Trust Fund of Johnson County – Revolving Loan Program

The Housing Trust Fund of Johnson County provides loans and grants for affordable housing projects in Johnson County.  The housing must be occupied by households under 80% of median income.  Eligible uses include the construction or rehabilitation of affordable rental, owner occupied, and transitional housing as well as shelter facilities.

Applications can be found at: http://www.htfjc.org

Contact:  Housing Trust Fund of Johnson County, 26 E. Market Street, Room 123, Iowa City, IA 52245, 319.358.0212, info@htfjc.org for more information.

Low Income Housing Tax Credit (LIHTC)

20% of the City's Affordable Housing Fund is dedicated to LIHTC projects (currently $200,000 for FY20). Funds are awarded through The Housing Trust Fund of Johnson County's Revolving Loan Program.  Preference is given to viable projects providing the most units at the highest levels of affordability. 

The Tax Reform Act of 1986 created the tax credit as an incentive for Housing Tax Credit project owners to invest in the development of rental housing for individuals and families with fixed or limited incomes. The Housing Tax Credit, rather than a direct federal subsidy, provides a dollar for dollar reduction (or credit) to offset an owner's federal tax liability on ordinary income for a 10-year period.

The credit is determined by taking a percentage of the "qualified" cost of development.

  • The maximum percentage for new construction and rehabilitation is 9%. Applications are due in December annually.
  • The maximum percentage for acquisition and federally subsidized projects is approximately 4%.

The 9% and 4% programs have separate application processes. Both can be found at www.iowafinanceauthority.gov.

Contact Iowa Finance Authority, 2015 Grand Ave., Des Moines, IA 50312, 515.725.4900, dave.vaske@iowa.gov for more information.

Federal Home Loan Bank of Des Moines

The Competitive Affordable Housing Program (AHP) is one of the largest sources of private sector grants for housing and community development in the nation. This competitive grant program encourages member financial institutions to partner with local housing providers (sponsors) to secure funds for the purchase, construction or rehabilitation of affordable owner-occupied or rental housing units. Projects serve low-to-moderate income households, and may include households with special needs including seniors, persons with disabilities and the homeless.

FHLB will make grant awards of up to $500,000 for qualifying homeownership and rental projects. Grants are available to project sponsors including nonprofits, governments, housing authorities and other qualifying organizations. Sponsors require the support of a FHLB Des Moines member financial institution to apply.  Application and AHP Implementation Plan can be found online here.

Contact Federal Home Loan Bank of Des Moines, 801 Walnut Street, Suite 200, Des Moines, IA 50309, 515.281.1000 or 800.544.3452x1173, communityinvestment@fhlbdm.com for more information.

Brownfield/Grayfield Incentives

Brownfield sites are abandoned or underutilized industrial or commercial properties where real or perceived environmental contamination prevents productive expansion or redevelopment. Examples of Brownfield sites include former gas stations, dry cleaners, and other commercial operations that may have utilized products or materials potentially hazardous to the environment.

Grayfield sites are abandoned public buildings, industrial or commercial properties that are vacant, blighted, obsolete, or otherwise underutilized. A Grayfield has been developed and has infrastructure in place but the property's current use is outdated or prevents a better or more efficient use of the property.

If the property meets eligibility requirements, benefits include state tax credits of up to 24% for qualifying costs and 30% if the project meets green building requirements for Brownfield sites and state tax credits of up to 12% of qualifying costs and 15% if the project meets green building requirements for Grayfield sites.

Visit www.iowaeconomicdevelopment.com/brownfield or contact Iowa Economic Development Authority, 200 E. Grand Avenue, Des Moines, IA 50309, 515.725.3126, brownfields@iowa.gov for more information.

City Government