Several States Receive Recovery Act Funds to Create Jobs, Provide Affordable Housing

As part of the Obama Administration’s effort to create jobs and ease pressures on the housing market, the U.S. Department of the Treasury announced more than $330 million in American Recovery and Reinvestment Act funding to spur the development of affordable housing units in Kansas, Michigan, Ohio, Wisconsin, and Puerto Rico. HUD also announced $83 million for housing development in Ohio.

In making the announcement, Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan noted that the labor and housing crises in this country are deeply interconnected. Since their peak level at the beginning of 2006, housing starts have fallen 80 percent. Houses currently under construction are at a 12-year low, down 60 percent from the peak in the first quarter of 2006. This collapse had led to severe job losses in the residential building and specialty trades sector related to housing, with employment down by nearly one-third.

In response, Treasury and HUD have launched two programs to provide more than $5 billion from the Recovery Act to put people to work building affordable housing. First, the Treasury Department will work with state housing agencies to provide $3 billion in funding to jumpstart the development or renovation of qualified affordable housing developments. Second, HUD will be awarding $2.25 billion in grants to state housing credit agencies under the Tax Credit Assistance Program (TCAP) to complete construction of qualified housing developments for 35,000 low-income households.

HUD announced its first award, providing $83 million to kick-start stalled multifamily developments in Ohio. Submissions by Puerto Rico and the District of Columbia are due to HUD by no later than June 3.

PRACTICAL POINTER: The TCAP program provides grant funding for investment in LIHTC projects via a formulas-based allocation. The housing credit agency in each state shall distribute these funds competitive and according to their qualified allocation plan. Projects awaiting income housing tax credits in fiscal years 2007, 2008, or 2009 are eligible for funding, but housing credit agencies must give priority to projects that are expected to be completed by February 2012. To view the terms and conductions for the Treasury application, go to: http://treas.gov/recover/LIH-grants.shtml. To view the terms and conditions for the HUD application, go to: http://portal.hud.gov.