U.S. Department of Treasury Announces New Guidance to Use American Rescue Plan (ARP) Funds
The U.S. Department of Treasury (Treasury) released new guidance that provides additional flexibility to use American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (Recovery Funds) to boost the supply of affordable housing. This updated guidance follows the White House’s recently released Housing Supply Action Plan that outlines how counties can leverage ARPA dollars for affordable housing.
Key highlights of the update guidance include:
- Increased flexibility to use Recovery Funds for long-term affordable housing loans: As outlined in the Final Rule, Recovery Funds may be used to finance long-term affordable housing loans. SLFRF permits funds to be used, among other uses, to combat the public health and negative economic effects of the pandemic, including by building affordable housing. The updated guidance allows counties to use Recovery Funds to fully finance long-term affordable housing loans, including the principal of any such loans, subject to certain conditions. These changes will facilitate significant additional financing for affordable housing projects, including those that may be eligible for additional assistance under Treasury’s Low Income Housing Credit (LIHTC).
- Expanded eligible uses: Under Treasury’s Final Rule, counties were permitted to use funds for affordable housing, identifying uses consistent with two major U.S. Department of Housing and Urban Development (HUD) programs – the National Housing Trust Fund (NTF) and Home investments Partnerships Program (HOME) – as presumptively eligible under the Recovery Fund. The updated guidance expands that list to include an expanded range of federal programs from multiple agencies, permitting more options for how states and local governments can presumptively use funds for affordable housing. Additionally, Treasury updated its guidance to clarify that Recovery Funds may be used to finance the development, repair, or operation of any affordable rental housing unit that provides long-term affordability of 20 years or more to households at or below 65 percent of the local area median income.
- Treasury and HUD released new “How-To” guide: Treasury worked with the U.S. Department of Housing and Urban Development (HUD) to publish a How-to Guide for Affordable Housing. The guide provides a summary of how counties can use ARPA Recovery Funds for affordable housing and combine these dollars with other federal funds. In addition to this guide, Treasury and HUD will host a series of webinars, which will be announced at a later date.