Updated federal guidance released Wednesday expanded the use of federal COVID-19 relief funds for affordable housing, providing additional flexibilities for how states and local governments use those funds.
The Treasury Department released updated guidance on the use of $350 billion in Coronavirus State and Local Fiscal Relief Funds program monies allocated as part of the American Rescue Plan for pandemic response and recovery efforts.
The final rule on eligible uses of SLFRF funds was issued in January. Although affordable housing was listed as an eligible use, it was either difficult or impossible to use funds for low income housing tax credit and other long-term housing development, LeadingAge Vice President of Housing Policy wrote Wednesday in a blog post.
The update, which allows governments to use ARP funds to fully finance long-term affordable housing loans, is expected to help local officials expand on affordable housing commitments and boost the supply of affordable housing across the nation. This expansion will facilitate “significant additional financing for affordable housing projects,” according to LeadingAge, which supported the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence, or LIFELINE, Act to facilitate use of the funds in long-term housing investments.
Wednesday’s Treasury update also expanded the list of Housing and Urban Development programs “presumptively eligible” across a range of federal programs from multiple agencies, including the Section 202 Supportive Housing for the Elderly Program, the Section 811 Supportive Housing for Persons with Disabilities Program, Project-Based Rental Assistance, the Multifamily Preservation & Revitalization Program, the low-income housing credit and others.
“LeadingAge welcomes the updated guidance from Treasury, which will benefit organizations developing and preserving affordable senior housing, including those with new Section 202 awards and in RAD [Rental Assistance Demonstration] for PRAC [Project Rental Assistance Contracts] conversion transactions that have faced significant and ever-increasing costs for construction materials, labor and, most recently, financing,” Couch wrote.
In addition, the Treasury clarified that funds can 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.
This clarification means more options for how states and local governments can use the funds for affordable housing, according to Couch.
The Treasury and HUD also released an “Affordable Housing How-To Guide” to help governments combine ARP funds with other federal funding sources.
The guide “provides examples of how these flexibilities can help facilitate affordable housing deals using multiple sources of federal funding by combining eligibility for using SLFRF with existing sources of federal financing,” Couch wrote.