The U.S. Department of the Treasury released updated guidance on July 27 to increase the ability of state, local, and tribal governments to use Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to boost the supply of affordable housing in their communities. Treasury issued a Final Rule for SLFRF in January 2022 that provided broad flexibility for the use of funds, including for affordable housing (see Memo, 1/10). Treasury’s new guidance provides further flexibility to use SLFRF to develop affordable housing and help lower housing costs. Additionally, Treasury and HUD jointly published an "Affordable Housing How-To Guide” to assist state and local governments implement use of these funds for affordable housing. The new guidance was informed by consultations with housing advocates and members of Congress, including those who cosponsored the bipartisan NLIHC-supported LIFELINE Act (see Memo, 5/16).
The new guidance, in Final Rule FAQs 2.14 and 4.9, makes the following changes:
- Expands Presumptive Eligibility: The guidance clarifies two uses of SLFRF funds for affordable housing that are presumed to be eligible. First, the guidance states that affordable housing projects under the “public health and negative economic impacts” (PH-NEI) eligible use category are presumptively eligible if the projects meet four core requirements of the following: national Housing Trust Fund (HTF), HOME Investment Partnerships Program (HOME), Low Income Housing Tax Credit (LIHTC), public housing Capital Fund, Section 202 Supportive Housing for the Elderly, Section 811 Supportive Housing for Persons with Disabilities, Section 8 Project-Based Rental Assistance, USDA multifamily preservation, Indian Housing Block Grant program, Indian Community Development Block Grant program, or Bureau of Indian Affairs Housing Improvement Program. The four core requirements include resident income restrictions, affordability and related covenant requirements, tenant protections, and housing quality standards. Second, the guidance clarifies that Treasury will presume that SLFRF funds used for affordable rental housing under the PH-NEI use category are eligible if the units funded serve households at or less than 65% of area median income (AMI) for a period of 20 years or greater.
- Increases Flexibility to Use SLFRF for Long-Term Affordable Housing Loans: The guidance states that governments can now use SLFRF to fully finance long-term affordable housing loans, including the principal of such loans, subject to certain requirements. The loans must have maturity and affordability requirements of 20 years or longer and must fund units serving tenants with income less than or equal to 65% of AMI. Additionally, the project owner must repay any loaned funds if the property becomes noncompliant, and in the context of a LIHTC project must waive the right to request a qualified contract. The guidance clarifies that repayment of long-term loans can be reinvested into future affordable housing uses consistent with the final rule. Affordable housing loans are considered expended at the point of disbursement, and repayments of such loans are not subject to program income rules.
The “How-To Guide” provides an overview of the updated guidance and outlines how governments can layer SLFRF with other sources of federal funding such as LIHTC, HOME, HTF, HOME-ARP, project-based vouchers, and other sources of funding to maximize resources and meet housing needs in their communities. Governments can use SLFRF in conjunction with a wide range of federal, state, local, and private resources to develop and rehabilitate affordable housing, acquire and convert properties into affordable housing, and fund predevelopment activities, among other eligible uses. Treasury will hold a series of webinars and briefings with state and local governments and other stakeholders to provide continued engagement and support on how SLFRF funds can be used to increase housing supply.
The updated SLFRF guidance follows a commitment in the Biden Administration’s Housing Supply Action Plan to leverage American Rescue Plan funds for investments in affordable housing as part of a broader effort to increase the nation’s housing supply and lower housing costs (see Memo, 5/16).
Read Treasury’s press release at: https://bit.ly/3PKLJoA
Treasury’s Final Rule FAQ is available at: https://bit.ly/3vpfHq1
Read the “Affordable Housing How-To Guide” at: https://bit.ly/3Q2wtTS
NLIHC is tracking the use of SLFRF for affordable housing at: https://bit.ly/3cRRJgV