On March 5, 2024, the U.S. Department of the Treasury (Treasury) announced a series of policy changes aimed at adding housing supply across the country. These initiatives were announced a week after the White House published a series of administrative actions to address the housing shortage.
Treasury updated their guidance for recipients of State and Local Fiscal Recovery Funds from the Covid-era American Rescue Plan (ARP) to allow remaining funds to be used to construct affordable housing. Now, a project will be eligible for these funds if it will house families earning up to 120 percent of the area median income (AMI) rather than the previous threshold of 65 percent AMI, or if it meets other federal program requirements.
Funds from the ARP’s Emergency Rental Assistance 2 program will also be eligible for use on affordable housing for very low-income families. If a state or local government has used at least 75 percent of these funds for financial assistance, housing stability services and administrative costs, they can use the remaining resources for the predevelopment and acquisition of affordable housing for very low-income households.
Treasury is also indefinitely extending their Federal Financing Bank’s financial support for a risk-sharing partnership with the Department of Housing and Urban Development (HUD) and state and local housing finance agencies.This will allow state and local housing finance agencies to originate HUD-insured mortgages for the construction and rehabilitation of properties with affordable units. The Federal Financing Bank will then purchase the mortgage to free up capital to be devoted to the financing of more units. The National Apartment Association (NAA) has been actively encouraging the Biden Administration to take this action, most notably through a letter sent in February.
NAA commends the Biden Administration for taking seriously the unprecedented shortage of affordable housing. These new actions from Treasury will help ensure countless families gain access to stable housing of their choosing. Building upon these efforts, NAA encourages support for legislation to sustainably address the housing supply challenge. For example, the Yes In My Backyard (YIMBY) Act would incentivize state and local governments to reduce their barriers to new housing construction. These policy proposals are critical for the country to reverse decades of inaction on housing supply.