North Star Group, Inc.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
1
Mixed-Income Housing Development Using
SIP Construction and MRB Financing
Project Analysis for Alabama Implementation
Date: July 30, 2025
Overview
This model issues mortgage revenue bonds (MRBs) to build a single development that blends
market‑rate “workforce” homes with an affordable rental component. After the sale of the
workforce units which repays most of the debt, the remaining bond balance stays in place to
finance the affordable rentals.
In effect, the sale revenue from the workforce homes underwrites roughly half the true
construction cost of the affordable units—cutting their effective financing burden in half and
eliminating any need for up‑front local government subsidies.
SIP construction further boosts affordability by halving residents’ utility bills, which can expand
mortgage eligibility and reduce operating costs on the rental side
Alabama Mixed-Income Housing Development Using SIP Construction and MRB Financing
2
How The Financing Works
Regular MRB Projects:
● Issue bonds to build workforce housing
● Home sales pay back the bonds
● Project is done
This Approach:
● Issue bonds to build mixed development (workforce + affordable rental)
● Home sales in our example development pay back most of the bonds (85%)
● Remaining bond balance stays as financing for the rental component
● Rental income pays the debt service on that remaining balance
● The developer/owner (housing authority, nonprofit, or for-profit) keeps any surplus (about
$300k/year in our example.
● County puts in $0
Why SIP Construction Makes Sense
SIP (Structural Insulated Panel) buildings use about half the energy of regular construction. That
cuts utility bills by around $70-100 per month, which means people can qualify for bigger
mortgages.
Practical Benefits:
● Faster construction (sometimes weeks instead of months)
● Less waste on the job site
● Better insulation than stick-built
● Lower monthly costs for residents
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Alabama Mixed-Income Housing Development Using SIP Construction and MRB Financing
3
In Alabama: There's already a SIP project in Birmingham's Goldwire Heights neighborhood where
they put up houses in 4 days. The technology works here. (Source:
https://www.navigatehousing.com/sip-housing-construction/)
Patent-Pending Improvements: North Star Group has developed enhanced SIP systems
including "Integrated Sustainable Housing System" (Application #63/767,801) and "Fully
Integrated Reinforced Modular SIP System" (Application #63/757,822) that could further improve
construction efficiency and performance.
How This Compares to Low Income Housing Tax Credits
(LIHTC)
Most affordable housing gets built using LIHTC, but this approach has some advantages:
LIHTC Challenges:
● Complex 15-year compliance period with income restrictions
● Developer usually has to sell to tax credit investor after construction
● Limited control over long-term operations
● Extensive regulatory oversight and reporting requirements
● Hard to get financing for mixed-income projects
This MRB Approach:
● Developer (likely nonprofit) keeps ownership of rental component
● Simpler compliance - just maintain affordability requirements
● Mixed-income by design (workforce sales + affordable rentals)
● Less regulatory complexity than LIHTC
● Generates ongoing revenue for the owner/operator
Bond Issuer Requirements: In Alabama, tax-exempt mortgage revenue bonds must be issued by
a governmental entity. AHFA issues multifamily housing revenue bonds on a project-specific
basis for affordable rental housing, and conduit financing allows the issuer to finance projects for
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Alabama Mixed-Income Housing Development Using SIP Construction and MRB Financing
4
third parties where "proceeds of the bonds are either loaned to the private business which then
uses the bond proceeds to pay for all or a portion the capital project". So AHFA would likely serve
as the conduit issuer, but the nonprofit or for-profit developer could be the ultimate borrower and
owner/operator of the rental component.
Available Programs in Alabama
AHFA already does mortgage revenue bonds for affordable housing. They've helped about
50,000 families so far. This approach would use their existing program but structure it a bit
differently.
Federal Programs That Could Help
● HUD RAD Program: Lets housing authorities convert to project-based vouchers with
better financing options
● Project-Based Vouchers: Any qualified developer can apply to administer these, not just
housing authorities
● USDA Rural Development: Grants for community facilities (could help with the community
center)
● Energy Efficiency Rebates: New federal programs offering up to $14,000 per home for
efficiency improvements
State and Local Support
● Workforce Development: Alabama Community College System and AIDT could provide
job training for residents
● CDBG Funds: Could help with infrastructure like roads and stormwater management
● Local Economic Development: Addresses housing shortage that employers keep
complaining about
Potential Issues to Consider
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Alabama Mixed-Income Housing Development Using SIP Construction and MRB Financing
5
Construction Risks
● SIP construction requires contractors familiar with the system
● Weather delays can still happen, though less than with stick-built
● Need to find reliable SIP manufacturers (a few serve Alabama already)
Financial Structure
● Bond markets need to accept the mixed-use approach
● The entity taking on rental operations (housing authority, nonprofit, or for-profit developer)
has to be willing and capable
● Need to make sure the numbers actually work in practice
Market Factors
● Still depends on people wanting to buy the workforce housing units
● Local job market needs to support the target income levels
● Competition from other housing developments
Regulatory
● City/county has to approve the zoning and development plan
● State housing finance authority needs to be on board
● Federal programs have their own requirements that might not line up perfectly
Next Steps
Short Term
● Talk to AHFA about whether they'd consider this financing approach
● Find a housing authority, nonprofit, or for-profit developer that might be interested in the
rental component
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
Alabama Mixed-Income Housing Development Using SIP Construction and MRB Financing
6
● Get some ballpark costs from SIP manufacturers in the region
Medium Term
● Line up the basic approvals (zoning, environmental, etc.)
● Apply for any grant programs that could help with infrastructure
● Start the bond application process if the other pieces fall into place
Long Term
● If it works, see if the model can be replicated in other Alabama communities
● Document what worked and what didn't for future projects
Summary
This approach solves several problems at once: workforce housing shortage, need for more
affordable rental housing, and high utility costs for residents. The financing structure means the
county doesn't have to put up money upfront, and whoever operates the rental component gets
both affordable units and ongoing revenue.
It's not necessarily better than other approaches, but it might work where traditional funding
sources aren't available or sufficient. The key is making sure all the pieces actually fit together in
practice, not just on paper.
________________________________________________
© North Star Group, Inc. 2025 All rights reserved.
19901 Quail Circle
Fairhope AL 36532
701-770-9118
michaelh@nsgia.com
