Iowa Governor Announces $100 Million in ARPA Funds for Affordable Housing Programs

Iowa Governor Kim Reynolds announced on September 8 that $100 million in discretionary funding from the American Rescue Plan Act will be deployed to expand housing availability in the state. A lack of affordable housing options have long been a primary barrier to economic development in Iowa, especially in rural areas, and the new funding is intended to bolster Iowa’s workforce by providing more housing affordability.

The $100 million commitment includes several programs. Significantly, $20 million is allocated for rental housing development in the downtown areas of Iowa cities with populations below 30,000 people. These communities have seen large reductions in population due in part to aging and dilapidated housing stock that is not being replaced with newer options.

Another $10 million in ARPA funds will be devoted to the Homes for Iowa program, through which workers involved with the criminal justice system can learn building trades and other useful job skills while contributing to the development of new housing. Local Councils of Governments (CoGs) determine who is eligible to purchase or occupy newly developed housing through Homes for Iowa.

Occupants of aging homes will get a boost from the new funding as well, as Governor Reynolds has allocated $4 million for home repair to preserve housing stock and equip homes for weather to drive down utility costs. The $4 million will constitute new program spending and will be considered a pilot program that might be supported with future funding, if successful. The pilot is limited to communities of fewer than 30,000 people. 

The majority of the funds will go to development of affordable housing through the federal Low-Income Housing Tax Credit program (LIHTC); $45 million will be devoted to proposed developments that were passed over in previous funding years due to scarcity of resources. A statement from the governor’s office estimates that committing these resources to the 9% credit projects will create 700 new rental homes affordable to either 60% or 50% of area median income (AMI).

“These new federal resources are going to be very helpful in creating new workforce housing throughout Iowa,” said Eric Burmeister, executive director of the Polk County Housing Trust Fund. “We want to thank members of our federal delegation who funded American Rescue Plan as well as our state leaders who allocated $100 million of those resources to housing. With over 50% of our low-income renters burdened by rents they cannot afford, Iowa must work to find a sustainable solution to its growing housing challenges.”