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Page last updated on February 12, 2024 at 3:43 pm

Developing and Implementing an Affordable Housing Strategy for Bloomington

Bloomington is a diverse community. Home to Indiana University, it is rich with cultural, educational and economic opportunities for its residents. The large and growing student population affects housing costs and availability, particularly with rental prices among the highest in the state and pressures on owner-occupied housing neighborhoods. Our city consequently faces challenges in its ability to provide a range of housing options for non-students, especially those at low and moderate income levels. Recent studies calculate Bloomington's rental occupancy rates at around 97%. Based on unit prices for new housing being built in the downtown, the cost is as much as $1,000 for a 1-bedroom unit. The prices for single family housing are also high in relation to income. The average home cost in Indiana is well over $200,000; in Bloomington, the average sales price for a home is nearly $275,000 (as of July 2022). Both of these affordability issues reflect market pressures; new supply and new approaches are advisable to help reduce the gaps in affordability.

'Affordable housing' refers to housing serving those whose income is up to 130% of Bloomington's Area Median Income (AMI) as determined by the U.S. Department of Housing & Urban Development, encompasses all types of housing from special needs to senior housing. The Hamilton Administration has made substantial progress over the last few years in enhancing housing opportunities for lower income and special needs residents, using already available tools such as tax abatements, Low Income Housing Tax Credits, PILOT (Payment in Lieu of Tax Agreement), and the development review process. 

In the longer term, housing strategies are incorporated in the City's 2018 Comprehensive Plan and the Unified Development Ordinance (UDO).  These documents are designed to steer the City's course for the built environment with a twenty-five year horizon, and include specific goals, policies and programs for enhancing affordable housing supply. The goal is to make available to Bloomington residents at all income levels and abilities a menu of housing options to suit their needs whether they want to own their own homes or rent, while encouraging a sense of community, supporting urban density, and reducing our carbon footprint.

The UDO has voluntary affordable housing incentives available (see section 20.04.110 Incentives). These incentives are based on standards for many zoning districts within the City. This tool is widely used across the country to help create affordable housing units.  The UDO incentive provides a means that integrate affordable housing throughout a community and offers a wide range of low to moderate income based housing. In some unique instances the UDO does allow for an affordable housing payment in-lieu option.  The incentive still allows for the building height increase, but rather allows a payment into the Housing Trust Fund. The UDO stipulates the procedures used for calculating, collecting, accounting for, and spending shall be reviewed frequently and updated as local housing market conditions change.  More information is available in the UDO Administrative Manual and data on private housing development projects approved by the Plan Commission provides a means to track progress towards affordable housing supply (Private Housing Development Approved 2016 to 2021).  The Plan Commission is charged with the review and any adjustments to these values.  

Below are the current rental rates and contribution levels established.  

  • Rental rates are based on 100% of AMI is derived by doubling HUD’s “Very Low Income” (50% of AMI) for a 1 person household from the most recent FY Income Limits Documentation System from HUD for Monroe County, Indiana. The baseline one-bedroom rents are calculated on 25% of the monthly AMI (AMI/12) which allows some room below the 30% cost-burdened maximum threshold promoted by HUD to allow for the absorption of utility costs. Studio, two-bedroom, and three-bedroom rates are calculated as a percentage of the baseline one-bedroom rate as follows: 75% of rate for studio units; 125% for two bedroom units; and 150% for three-bedroom units.


  • Contributions to the Housing Development Fund are governed by the City’s Unified Development Ordinance and will be calculated on on a bedroom basis as follows: Eligible bedroom calculation is based on the UDO mandated 15% of total project bedrooms, rounded up to the nearest whole bedroom.
    • The contribution rate per eligible bedroom is $20,000. This contribution rate may be changed annually by City staff to reflect changing construction costs or other economic factors affecting development costs. 

Workforce Housing

Workforce housing provides housing for families and individuals whose income falls above the threshold to qualify for affordable housing, but below the income necessary to pay for market-rate housing. To qualify for workforce housing in Bloomington, your household income must fall between 80% and 120% of the area median income (AMI), as calculated be the US Department of Housing and Urban Development (HUD). 


Housing Development Fund

This Fund includes a formal application and guidelines for consideration.  Applications are accepted on a rolling basis.  Though a dedicated revenue source has yet to be secured, significant contributions on several occasions have allowed for the moving forward of multiple community projects such as putting the City's first "workforce housing" units online in downtown Bloomington.


2018 Strategy Update

In 2018, the City's affordable housing strategy was updated to account for past efforts and adjustments moving forward.  Read the update here.  Additional updates will be issued on a regular basis.


2016 Initial Strategy Document

Focus areas, past effort documentation, and an initial 2016 affordable strategy plan were developed by City Administration.  Read the original strategy here.

Affordable Housing Updates