Affordable housing manager Rick McQuadey reports $53M invested; $1.5M available as challenges persist

Affordable Housing Manager Rick McQuadey told the Social Services and Public Safety Committee on April 14 that Lexington’s Affordable Housing Fund has received "just over $53,000,000" in public allocations over the last 12 fiscal years and has committed about $59,000,000 to projects. He said the fund’s approach is to serve households at or below 80% of area median income (AMI) and to prioritize lower-income households, noting that "the vast majority" of funded units serve households at or below 60% AMI.

McQuadey defined affordable housing in operational terms: "Housing is affordable when it cost for a household when it costs no more than 30% of their income" for rent, utilities or mortgage, taxes and insurance. He described the fund primarily as a gap financier that uses repayable loans, deferred or forgivable loans and deed restrictions to lower a project’s debt service so owners can charge lower rents. The federal low-income housing tax credit (Section 42) administered by the Kentucky Housing Corporation, he said, remains a major lever to attract equity and enforce long-term rent limits.

Providing program metrics, McQuadey said the fund has supported 3,826 units at an average investment of about $15,474 per unit; the program has received roughly $9,000,000 in loan repayments for recycling into new projects and currently has about $1,500,000 uncommitted. He added the fund has a $20,000,000 outstanding loan portfolio and is hiring a finance person to help administer and service those loans. "We are currently interviewing for a finance person to help in administering a $20,000,000 loan portfolio and servicing those loans," he told the committee.

Council members pressed McQuadey on deed-restriction lengths and program strategy. He said deed restrictions vary by project type and subsidy level — homeownership subsidies typically carry 5–10 year restrictions, rental developments typically 15 years, and many tax-credit deals include land‑use restrictions extending up to 30 years. On balancing preservation versus new construction, McQuadey said decisions are driven by applications but stressed that "if you don't preserve what's already available, you're never gonna catch up with the need," arguing preservation is often the better investment when feasible.

McQuadey acknowledged cost pressures from higher construction costs and elevated interest rates and said the board now requires that although projects may serve up to 80% AMI, rents must remain affordable to households at or below 60% AMI on new approvals to reduce displacement risk. He pointed to a pending development awaiting HUD approval that could fully commit available funds if funded and highlighted recent senior-focused projects such as a 38-unit senior development at Woodland.

The committee was also told how the fund operates: all awards are approved by the Affordable Housing Board and the program currently accepts applications on an open-window basis rather than a single competitive round. McQuadey said the board includes bankers, housing advocates, builders and council members who review financial viability and compliance.

Next steps noted in the meeting included the hire of additional finance and compliance staff to manage growing loan administration needs and continued outreach to potential developers and congregations after state law changes that may make faith-based partnerships easier to pursue. The presentation concluded with committee members expressing support for preserving affordable units and exploring innovative paths to increase homeownership opportunities.