An affordable home
in a good neighborhood.
Cities build affordable housing where land is cheap, which is usually far from the best schools, transit, and jobs. So the families we mean to help get a roof, but not the neighborhood. Spokane is running a small, careful experiment to change that, and to report honestly on what it finds.
- Partner
- City of Spokane · Heart Fund
- Scale
- 2–3 projects · under $4M
- Cost to the city
- Every dollar repaid
The goal is simple. Homes for working families, in the neighborhoods they would choose anyway.
The way we finance housing rewards building where it is already easy, and does almost nothing for the hard part: new homes in good neighborhoods. So Spokane's pilot pays developers to include a few affordable homes inside ordinary buildings in good areas. The city gets every dollar back when construction ends. If it works, the whole state can copy it.
"60% AMI" is not a statistic. In Spokane it is a medical assistant married to an apprentice electrician, earning about $52,000 together, who can afford $1,300 in rent where the good neighborhoods ask $1,800. They are the workforce, and today the math sorts them out of the best parts of town.
A carrot, not a stick.
Most cities chase affordable units with a mandate. It has a real logic, but it adds cost to the one thing we want more of, so builders build less or build elsewhere. The pilot does the opposite. It pays builders to want to.
"You must, or you can't build."
Forces affordability as a condition of approval. Thin deals walk. Fewer projects start. A brawl with builders every time, that each city has to win on its own.
"Here's a reason you'll want to."
Pays the builder more in saved loan interest than the affordable units cost them. More gets built, in good neighborhoods by design. A deal any city can copy.
That is the spine: geographic equity through incentivized construction, not mandated restriction. Same goal as inclusionary zoning. Opposite mechanism. One accelerates building, one throttles it.
The money guards the easy end.
Government backing concentrates on the safe end of housing: the long-term loan on a finished building. The federal agencies have backed over 95% of all mortgage-backed securities every year since 2008, and fund well over half of apartment lending. That mostly makes existing buildings more valuable. It does almost nothing to get a new one out of the ground.
The country has a construction supply problem, not a demand problem. Build more, affordable especially, and new supply also frees up older, cheaper homes nearby as people move up into it. Speed of construction is itself an affordability policy.
A pilot inside the Heart Fund. Not a redesign of it.
The Heart Fund's best use is leverage: a local dollar can pull roughly five state and federal dollars in behind it, and nothing here competes with that. The pilot is a different tool for a different kind of building, the market-rate projects that would never carry a deep, decades-long affordability covenant and were never candidates for the fund's deep-subsidy money. Any developer can use it. The two tracks run side by side without overlapping.
Don't take our word for it. Two live calculators let you run your own project and challenge every assumption, including setting the filtering boost to zero.
Filtering figures are probabilistic and never counted in the restricted unit-years. All figures illustrative, for planning purposes only.
Two tools. Different jobs.
No criticism of the current Heart Fund, which does careful work under real constraints. This just shows what each tool is built to do, and where the pilot complements it.
| What You're Comparing | Current Heart Program | Pilot Mechanic |
|---|---|---|
| How the money is used | Grant or soft loan, usually forgiven | Zero-interest construction loan, fully repaid |
| Cost to the city per unit | ~$162,000, uncertain repayment | ~$48,000 time-cost, principal returned |
| Speed | 12–24+ months through RFP | ~60–90 days to funding |
| Where the units land | Concentrated in dedicated projects | Dispersed in good neighborhoods |
| Does the money come back? | Rarely | 100%, at permanent financing close |
| How often a dollar works | Once | Four to five times per decade |
Bounded, protected, reversible.
The whole case rests on the money coming back. So that is protected in writing, the pilot is fenced so it can't quietly become a standing program, and we are plain about what it does not do.
- Funds held so undrawn money stops and returns if a project stalls, by escrow or a city-held account, to be settled in design.
- City holds a second-position lien on drawn funds.
- Repayment likely priced at the senior lender's rate, with a possible step to senior plus 100 basis points on missed milestones, under consideration.
- Committed only at Notice to Proceed, to vetted, shovel-ready builders.
- A reserved share stays for traditional leverage deals.
- Draws only idle cash, never match-eligible capital.
- Hard cap: $3–4M, up to 3 projects, no expansion without re-approval.
- Open criteria and annual public reporting.
To keep risk low, the pilot favors established, shovel-ready developers, so it does not build emerging or by-and-for developer capacity. That work matters, and it lives in the traditional track the pilot protects, not replaces.
If it works here, it travels.
Because it is an incentive, not a mandate, it copies from one city to the next without a new political fight in each one. Good Spokane data earns the city the chance to show the rest of Washington what fast, dispersed, fully repaid housing policy looks like.
Careful policy.
Measured progress.
Courage Housing helps cities and partners run careful experiments inside their existing housing programs: designing the mechanic, structuring the partnerships, and producing the evidence that makes good policy possible.
The Heart Fund is administered by the City of Spokane's Community, Housing, and Human Services Department. This page describes a pilot in development. Washington Trust Bank and Numerica have been consulted in the pilot's design phase; no commitment to originate pilot loans has been finalized. All figures are illustrative; final parameters subject to pilot term sheet and city authorization. Nothing on this page is intended to characterize the Heart Fund's existing operation or to announce any change to its broader framework.