Guidance on COVID Relief Money for Affordable Housing

August 1, 2022

On July 27, Treasury published guidance on expanding the use of American Recue Plan funds for affordable housing projects. The guidance is specific to the $350 billion of state and local relief funds (SLFRF) passed as part of Biden’s COVID aid package in March 2021. State and local governments have fairly broad discretion to direct those federal funds to the following categories:

  • Replacing lost public sector revenue

  • Respond to the public health and negative economic impacts of the pandemic;

  • Provide premium pay for essential works; and

  • Invest in water, sewer, and broadband infrastructure.

Treasury issued rules in January 2022 to increase the flexibility on the $350 billion, including housing, and this guidance expands on the affordable housing focus. According to Treasury, $12.9 billion of these funds have already gone toward housing and lowering housing costs, and $4.2 billion of that total has been allocated for affordable housing development and preservation.

More Flexibility and Eligibility
The guidance aims to:

  • Increase Flexibility to Use SLFRF to Fund Long-Term Affordable Housing Loans: The guidance clarifies that state and local governments can use SLFRF funds to fully finance affordable housing loans, including principal. Treasury expects this change will promote funding for affordable projects, including Low Income Housing Tax Credits (LIHTC).

  • Expand Presumptively Eligible Uses. The January rule allowed funds to be presumptively eligible for two major HUD programs (National Housing Trust Fund and the Home Investment Partnership Program), but the guidance expands the eligibility to presumptively allow funds “to finance the development, repair, or operation 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. Treasury released a detailed “Affordable Housing How-To Guide” that outlines the criteria for various affordability investments.

Contact 

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org
Treasury issued rules in January 2022 to increase the flexibility on the $350 billion, including housing, and this guidance expands on the affordable housing focus.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.

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