The Council on Federal Financial Relations established the Affordable Housing Working Group (AHWG) in 2016 to investigate innovative financing options to attract greater private and institutional investment in the affordable housing sector.
The AHWG’s 2016 report, Innovative Financing Models to Improve the Supply of Affordable Housing, recommended the establishment of a national bond aggregator. By aggregating CHP borrowing requirements and periodically issuing bonds to large-scale investors, the bond aggregator would be able to provide cheaper and longer tenor finance to CHPs compared to existing sources of finance. This would in turn reduce operating costs for CHPs and free up some of their existing capital for new construction. However, the AHWG’s report indicated that a bond aggregator by itself would not be able to entirely close the funding gap, which was estimated to be around 60 percent for social housing and 35 percent for affordable housing. The report noted that “… a key question for further work is the nature and extent of the gap relative to the desired policy outcomes and how it can be funded most efficiently”.