Development of any kind is an uphill battle right now, and affordable housing is one of the steepest climbs.

But some developers are finding creative ways to cut costs and make projects pencil against all odds, panelists said last week at Bisnow ’s DMV Affordable Housing Summit.

Affordable housing starts fell by 28.7% nationally last year to 66,000, the fewest since 2020, and market-rate starts fell by 47%, according to Yardi Matrix . And this year, developers say financing has become increasingly precarious as the Trump administration cuts federal housing funds.

“There needs to be something apart from and above just the federal subsidy that we all love, the tax credit program,” SCG Development principal Jason Duguay said at the event, held at the Washington Marriott Capitol Hill.

To make projects pencil, developers need to find parts of the deal where they can cut costs, and saving money on land acquisition and parking requirements has become a key strategy for some developers. Land value savings can come through partnerships with local jurisdictions or mission-driven organizations that own properties.

“To do new construction these days, we really have to focus on mission-aligned partnerships,” AHC Inc. Vice President of Real Estate Development Mary Claire Davis said. “We really can’t take the risk of taking down a piece of property to do new construction because the timeline is too long.”

Her nonprofit development firm partnered with Habitat for Humanity to build 195 affordable homes on 6 acres owned by Montgomery County . More than 50% of those units will be reserved for households making between 30% and 50% of the area median income, a bar lower than the typical 60% AMI floor that is needed to get low-income housing tax credits .

In Arlington , AHC is partnering with Goodwill to build a 128-unit development on top of a Goodwill retail store and donation center. The units will be affordable for residents making 60% of AMI, and the development will also include a daycare.

Dwell Design Studio principal Ryn Burns said his firm has been interested in projects that look to build housing on top of publicly owned civic facilities like libraries, fire stations and police stations.

“Realizing that there is air rights above them, that if you structure a deal correctly, the municipality can get a new service and provide affordable housing,” he said.

Over the past decade, D.C. has been offering up fire stations for affordable housing redevelopments. Those include the West End’s Engine 1, which in 2017 gained 53 affordable units and a squash facility, and the former Engine 13, which was redeveloped in 2020 into a new hotel and 194 mixed-income apartments with 58 senior affordable homes.

True Ground Housing Partners, formerly APAH , saved on one of the most costly expenses of development by partnering with a public institution.

By colocating its planned 516-unit The Exchange at Springhill Station with a public community center, the affordable developer saved on parking. The spots that are used during the day for community center patrons can then be handed over to residents for parking after work, a process that resulted in the developer eliminating a level of parking.

“That was a tremendous partnership, colocation, cost-savings strategy that really helped that deal from fruition,” said Haley Norris, the nonprofit’s director of development.

That model hasn’t always worked out for True Ground, though. Last month, the nonprofit announced that it was terminating its plan to build an affordable housing development for LGBTQIA+ seniors on an Arlington church site. It had been selected by the Clarendon Presbyterian Church for the project in 2022 but said in a statement that the development was “not financially viable.”

SCG’s Duguay said that in Fairfax County , where he has many public-private partnerships , the county not only has the land assets to help spur affordable development but has also “been systematic about inventorying what they have” and proactively approaching the development community to talk about potential partnerships.

The developer is on the team undertaking a project to turn the 3.3-acre Franconia Government Center into 120 affordable units for residents making between 30% and 80% of AMI. Twenty-five of the units would be earmarked for police, firefighters, teachers and medical personnel.

In Northwest D.C., the Chevy Chase Civic Site presents an opportunity for a developer to come in and take advantage of one of these public land agreements.

The District is looking for a developer to repurpose the 1970s-era library and community center into a new development that replaces the civic facilities and adds housing, 30% of which must be affordable.

D.C. issued a request for proposals for the 73K SF site on Connecticut Avenue Northwest in January 2024 and is reviewing eight proposals , seven of which envision their housing components to be completely income-restricted.

But land isn’t the only thing that jurisdictions can hand out to help projects get to the finish line.

Flexibility on zoning and planning can also go a long way, developers said.

Jair Lynch Real Estate Partners is working on a phased development in Old Town Alexandria that is planned to include up to 750 units on the site of what was an older garden-style apartment community.

The county allowed more density at the project in exchange for making 195 of the units affordable, the Washington Business Journal reported .

“When we brought it to our equity investor at our investor conference a couple weeks ago, they were floored, and it became this, like, ‘How did you do this?’” Jair Lynch Director of Investments Kate Owens said.

“And it's really a partnership with Alexandria [and] Virginia Housing actually coming to the table and being really flexible, being helpful, and HUD,” she added.

A county over, True Ground is also replacing garden-style homes with substantially denser housing.

The nonprofit is turning 134 units into more than 600, relying on a 2021 zoning ordinance that increased the allowable building height from 60 to 130 feet.

The first 234-unit phase of that development, Marbella Site A, broke ground in September 2023 and is slated to deliver in the fall.

“So we're really adding affordability, and it's walkable to Rosslyn, to Courthouse,” Norris said.