Raleigh’s Affordable Housing Bond: Balancing Urgency With Long-Term Fiscal Stewardship
In recent weeks, news outlets have reported that several advocacy groups are urging Raleigh City Council to consider a significantly larger affordable housing bond for the November 2026 ballot. Some suggest a bond closer to $200 million, which is roughly double the $101.5 million housing bond currently under discussion as part of a broader capital package that also includes transportation investments.
The motivation behind these calls is understandable. Raleigh’s housing affordability challenges have intensified alongside rapid population growth, and the demand for assistance continues to outpace available resources. But the central policy question facing Council is not simply how large a housing bond should be. The more consequential issue is how Raleigh should structure its housing investments so they can be deployed effectively and sustained over time.
Understanding that question requires unpacking two key ideas: how affordable housing bonds work, and why the City has begun moving toward a more predictable “steady state” approach to capital financing.
Why the Timing of Housing Bonds Matters
A common misconception is that when Raleigh voters approve a housing bond, the City uses those funds to build housing directly. The City does not generally purchase existing or construct new affordable housing. Instead, it provides funding to nonprofit and mission-driven developers who assemble complex financing packages to make affordable housing projects feasible.
A typical development may require six to eight separate funding sources: federal Low Income Housing Tax Credits (LIHTC), state housing grants, bank loans, federal HOME funds, philanthropic contributions, and local subsidy dollars such as Raleigh’s bond proceeds. The City’s role is usually to provide “gap financing” that helps close the remaining funding shortfall.
This approach allows a relatively modest local investment to leverage significantly larger amounts of external funding, resulting in more housing units than the City could finance on its own. But it also means bond funds can only be deployed when projects are ready and when other funding sources align:
Developers with viable projects. Nonprofit developers must first identify sites, secure control of the land, and develop detailed financing proposals.
Available land. Suitable sites must be acquired and entitled before construction can begin, a process that can take one to two years even under favorable conditions.
Federal tax credit cycles. The LIHTC program, which finances most affordable housing development in the United States, is allocated through annual competitive rounds. Local subsidies are often needed to make these applications competitive.
City staff capacity. Deploying bond funds requires specialized staff to underwrite projects, manage compliance, and oversee long-term affordability requirements.
When local funding arrives in large but infrequent bursts like Raleigh has done since 1996, it can be difficult to align all these moving pieces. Projects don’t materialize overnight, and staff capacity cannot easily expand and contract with irregular funding cycles. As a result, “lumpy” funding can slow the pace at which resources are deployed.
By contrast, predictable funding allows developers to plan projects with greater confidence, helps staff maintain consistent expertise, and improves coordination with federal tax credit cycles, as well as the redevelopment/acquisition plans of the Raleigh Housing Authority.
What Raleigh Means by a “Steady State” Bond Strategy
In response to these challenges, Raleigh has been exploring a broader shift in how it approaches capital financing. cycle. As older bonds retire, that capacity can support new borrowing without increasing the property tax rate. In effect, the City maintains a consistent level of debt service over time while continuing to invest in major infrastructure priorities. Current projections suggest Raleigh’s steady-state borrowing capacity is roughly $200 million every four years, although that amount may grow as the tax base expands.
Importantly, that capacity must cover a variety of major capital priorities, including transportation, parks, and housing. The current $204 million proposal under discussion combined is for housing and transportation and reflects an attempt to balance those needs within that fiscal framework. Within that broader capital program, the proposed steady state housing bond of roughly $101 million represents a substantial expansion of the City’s housing investments compared with previous cycles, particularly with the implementation of the steady state bonding program.
Why Not Simply Approve a $200 Million Housing Bond
In theory, the City could ask voters to approve a $200 million dollar housing bond (or even more). But the practical constraint for doing so is not simply the mechanics of borrowing and the desire to avoid property tax increases. It’s the capacity of the housing ecosystem to deploy funds effectively and within the 7-year statutory bond authorization time limit.
Raleigh’s most recent housing bond, approved in 2020, totaled $80 million and took about 6 years to exhaust. Even spreading $200 million over a similar time period would represent a significantly faster pace at which housing bond proceeds have historically been deployed.
Scaling programs that quickly can be difficult for several reasons:
The number of nonprofit developers with projects ready to move forward is limited.
Federal tax credits remain highly competitive and are allocated annually.
City staff must have the capacity to evaluate and monitor a larger pipeline of projects.
High land prices.
Limited supply of suitable building sites.
How the Proposed Bond Would Be Used
The proposed housing bond is designed to support multiple parts of Raleigh’s housing strategy:
Gap financing for affordable housing developments.
Local subsidies help nonprofit developers secure federal Low Income Housing Tax Credits and other financing needed to build income-restricted housing.
A revolving loan fund.
The City is proposing to expand a construction loan program that provides flexible, lower-cost financing to build new mixed-income housing projects or acquire naturally occurring affordable housing communities. Because loans are repaid with interest and then redeployed, the fund becomes self-sustaining over time.
Investments to reduce homelessness.
This funding would be combined with Federal, State and Wake County resources to enhance coordinated homeless response strategies through the Wake County Continuum of Care.
Housing rehabilitation and repair.
Programs would help low-income homeowners, particularly seniors, to make essential repairs so they can remain safely housed. Together, these programs address both the production of new housing and the preservation of existing homes.
Where Additional Bond Funds Could Be Most Effective
If Council ultimately decides to increase the size of the housing bond, some program areas are better positioned than others to absorb additional resources. The revolving loan fund stands out as the most scalable option. Because loans are repaid and reissued, the initial capital investment is evergreen. Interest payments on loans also help replenish the fund, allowing it to support multiple generations of projects. Additional capitalization here could significantly expand the City’s long-term financing capacity for even more affordable mixed income housing.
By contrast, programs such as housing rehabilitation face practical constraints. Raleigh has struggled to recruit enough contractors willing to participate in these programs, which can slow the pace at which funds are deployed. For that reason, expanding the revolving loan fund may offer the clearest path for scaling the housing bond while maintaining program effectiveness.
The Broader Ballot Context
Finally, it is important to recognize that the housing bond will not appear on the ballot in isolation. Wake County is expected to consider a school bond approaching $800 million during the same election cycle. Voters in Raleigh and Wake County have historically supported public investment in infrastructure and housing. But the overall size of the ballot package matters. Rising property values, higher interest rates, and general economic uncertainty mean that ballot scale can influence voter perception. This is not a mere academic risk. In 2024, voters in Cary rejected a $30 million housing bond when it was paired with a much larger parks and recreation bond. For City Council, the challenge is not only determining the appropriate size of the housing bond itself but also ensuring that Raleigh’s broader capital program remains fiscally sustainable.
A Deliberate Path Forward
Raleigh’s housing challenges are real and growing, and the City has an important role to play in addressing them. But effective housing policy requires more than large funding commitments. It also requires a financing strategy that aligns with how housing development occurs. The steady state bond approach under discussion represents an effort to enhance fiscal discipline as Raleigh deals with the same fiscal stress other cities are facing due to macroeconomic headwinds, not to mention state and federal budget cuts. Not only is this approach fiscally sustainable, but a more frequent, predictable investment cycle also allows developers, staff, and funding partners to plan more effectively. Within that framework, Council retains flexibility to adjust the size and structure of each housing bond. However, the larger goal remains: to implement a bond financing strategy that is not only ambitious and more effective, but predictable and durable enough to sustain progress over the coming decades.