HUD and the Treasury Department recently highlighted the Biden administration’s efforts to increase access to safe, quality housing by encourage the use of American Rescue Plan (ARP) funds for affordable housing production and preservation. The State and Local Fiscal Recovery Funds (SLFRF), authorized by the ARP, delivers $350 billion to state, territorial, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency.

According to Treasury’s latest reporting data, SLFRF recipients have committed over $5.4 billion for affordable housing development and preservation, as part of a larger commitment of $16 billion overall in housing-related projects, which also includes rental assistance, mortgage aid, and services for unhoused people.

Examples of ARP in LIHTC Developments

HUD and the Treasury Department put the spotlight on three state examples in Illinois, Nevada, and Massachusetts, which used SLFRF in LIHTC developments.

In one example, the Illinois Housing Development Authority (IHDA) is using SLFRF in Chicago to fill financing gaps in LIHTC developments. One of the challenges of putting together the capital necessary for a LIHTC project is the complexity associated with navigating the regulations from the various programs. Because of the flexibility of the SLFRF, funds can be allocated without necessitating significant adjustments to the project that may result in additional costs or delays. To make one redevelopment project possible, IHDA utilized SLFRF funding, 9 percent LIHTC resources, Illinois Affordable Housing Tax Credits, and other resources from the city, the Chicago Housing Authority, and partners. SLFRF was critical to making this project a reality. With SLFRF, IHDA was able to address a large financing gap caused by construction cost increases and delays resulting from the COVID-19 pandemic.

HUD-Treasury Partnership

HUD and Treasury are expected to continue to partner to address the nation’s shortage of affordable housing. The HUD and Treasury Department Secretaries have committed to an ongoing partnership to boost affordable housing supply with state and local fiscal recovery funds. Secretaries Fudge and Yellen jointly stated, “We now have the chance to address the longer-term affordability challenge that too many families face.”