The U.S. Treasury Department has issued guidelines aimed at increasing the ability of state, local and tribal governments to use U.S. bailout (ARP) funds to boost the supply of affordable housing in their communities.
The Treasury Department step follows a commitment in the Biden administration’s housing supply action plan to mobilize ARP funds for affordable housing investments as part of a broader strategy. aimed at increasing the country’s housing supply and reducing housing costs over time.
“Increasing the country’s housing supply is key to reducing long-term housing costs,” said Under Secretary of the Treasury Wally Adeyemo. “Treasury continues to strongly encourage state and local governments to direct a portion of the historic funding available under President Biden’s U.S. bailout to build and rehabilitate affordable housing in their communities and the actions announced today will allow them to do so even more easily. .”
The Treasury Department has encouraged governments to direct a portion of the $350 billion available to them through the State and Local Fiscal Stimulus Fund (SLFRF) to develop, repair, and operate affordable housing. Through March 31, 2022, more than 600 state and local governments have earmarked $12.9 billion in SLFRF funds to address housing needs and reduce housing costs, including $4.2 billion for the development and preservation of affordable housing.
Guidelines published by the Treasury:
- Increases flexibility to use the SLFRF to fully fund long-term loans for affordable housing
- Expands eligible uses of affordable housing to further maximize the availability of FSLFR funds for affordable housing.
The Treasury Department updates were informed by consultations and partnership with housing advocates and members of Congress, including those who co-sponsored the LIFELINE Act, a bipartisan, bicameral bill designed to provide flexibilities additional to the existing directives that the Treasury had issued. encourage the use of the SLFRF for affordable housing.
The LIFELINE (Low-Income Housing Tax Credit Financing Enabling Long-Term Investment in Neighborhood Excellence) Act is intended to allow states and localities to lend stimulus funds to LIHTC (Low-Income Housing Tax Credit) projects.
“The lack of affordable housing was a national crisis before the pandemic, and this crisis has made it even clearer that millions of Americans are just one missed paycheck away from not being able to pay their rent or their mortgage,” said Senator Ron Wyden, chairman of the Senate Finance Committee. “This country needs more affordable housing, not less. We must ensure the creation of new affordable housing by ensuring the continuation of current projects.
Actions taken by the Treasury to support affordable housing efforts include:
- Increase the flexibility to use the SLFRF to finance long-term loans for affordable housing: The Treasury has updated its guidance to allow the SLFRF to be used more easily to fund long-term loans for affordable housing. The SLFRF authorizes the use of funds to address public health and the negative economic effects of the pandemic, including building affordable housing. The Treasury engaged with members of Congress, local leaders and affordable housing developers on how to further increase clarity and flexibility regarding the use of the SLFRF for affordable housing. These changes will facilitate significant additional funding for affordable housing projects, including those that would qualify for additional assistance under the Treasury’s Low Income Housing Credit (LIHTC).
- Extension of presumed eligible uses: The Treasury’s final rule was originally designed to allow flexibility in the use of affordable housing funds, identifying uses consistent with two major HUD programs as presumed eligible under the SLFRF. The Treasury Department’s latest guidance expands that list to include an expanded range of federal programs from multiple agencies, allowing more options for how states and local governments can use affordable housing funds — changes intended to build on Treasury efforts to facilitate the use of SLFRF to leverage other sources of federal funding for affordable housing.
“With housing construction slowing amid inflationary pressures, economic uncertainty and rising interest rates, public and private sector financing will be needed to create the supply of affordable rental housing that is necessary to help reduce costs for families, especially minorities and low- and moderate-income individuals,” said Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB.” We will further review Treasury guidance and look forward to our ongoing work with the administration, Congress and industry stakeholders on safe and responsible policies that increase single and multi-family housing for buyers. and tenants.”