In a positive development championed by NAHB that will allow more multifamily developers to boost production through the Low-Income Housing Tax Credit (LIHTC), the U.S. Department of Treasury today announced guidance to increase the ability of state, local, and tribal governments to use American Rescue Plan (ARP) funds to increase the supply of affordable housing in their communities.
The Treasury plan allows state housing agencies to use State and Local Fiscal Recovery Funds (SLFRF) to provide financing for LIHTC projects. This is something that NAHB has been fighting for on the legislative front. Bipartisan legislation backed by Sens. Patrick Leahy (D-Vt.) and Susan Collins (R-Maine) and Reps. Alma Adams (D-N.C.) and David Rouzer (R-N.C.) called the LIFELINE Act would achieve this goal but congressional passage is no longer necessary thanks to today’s actions taken by the Treasury.
Specifically, the Treasury action will allow state and local governments to use SLFRF funds to fully finance long-term affordable housing loans, including the principal of any such loans, subject to certain conditions. These changes will facilitate significant additional financing for affordable housing projects, including those that would be eligible for additional assistance under the LIHTC.
In addition, Treasury is updating guidance to clarify that SLFRF funds may be used to finance the development, repair, or operation of any affordable rental housing unit that provides long-term affordability of 20 years or more to households at or below 65% of the local area median income.
To further encourage state and local governments to make use of these increased flexibilities, Treasury and the Department of Housing and Urban Development jointly published a “how-to” guide to help governments easily combine American Rescue Plan funds with other sources of federal funding.
Over the coming months, Treasury will conduct a series of webinars and briefings with states, local governments, and both nonprofit and private sector entities involved in the development and preservation of affordable housing to provide continued engagement on how SLFRF funds can be used to expand the housing supply.
As part of its implementation of the Americans Rescue Plan, Treasury is also implementing additional programs to ease housing costs, including the Emergency Rental Assistance Program, which has provided millions of Americans support to prevent evictions, and the Homeowner Assistance Fund, which provides nearly $10 billion in support to home owners to prevent foreclosures.
To learn more, Treasury has released updated FAQs, which include new guidance on affordable housing development.