On July 27, the Treasury Department released new guidance to increase the flexibility of how governments can use State and Local Fiscal Recovery Funds (SLFRF) to expand affordable housing in their areas. The new guidance:
- “Increases flexibility to use SLFRF to fully finance long-term affordable housing loans”
- “Expands presumptively eligible affordable housing uses to further maximize the availability of SLFRF funds for affordable housing”
The SLFRF program, a component of the American Rescue Plan (ARP), allocates $350 billion to state, local and tribal governments across the country. Data from the Treasury found that over 600 state and local governments had budgeted $12.9 billion of these funds for housing-related needs through March 31, 2022. The new guidance aims to build on these efforts to “increase the nation’s housing supply” and “ease housing costs” as part of the White House’s Housing Supply Action Plan.
With increased flexibility to use SLFRF to fund long-term affordable housing loans, governments can now fully finance the principle of these loans. In the prior rule, only the subsidy costs of the loan could be covered using SLFRF.
Additionally, an expanded list of federal programs, including the HOME Investment Partnerships Program (HOME) and the National Housing Trust Fund (HTF), are now presumptively eligible under SLFRF. The funds may be used as GAP financing for rental housing that “provides long-term affordability of 20 years or more to households at or below 65% of the local area median income.”
The full press release can be found here.
- The Treasury and HUD’s “Affordable Housing How-To Guide” provides information on the new guidance to help governments make use of this increased flexibility.
- The Final Rule: Frequently Asked Questions document updates previous FAQs and answers new FAQs about the guidance.
- The Treasury Department’s website contains more information on the SLFRF program.