WASHINGTON, March 5, 2024 – In a bid to address the ongoing housing shortage, the US Department of the Treasury has unveiled a comprehensive plan to increase the supply of housing across the United States.
The announcement on March 5, 2024, encompasses key initiatives aimed at leveraging existing programs and introducing new measures to foster affordable housing development.
The three major components of the plan include:
1. SLFRF Guidance Update: The American Rescue Plan’s (ARP) State and Local Fiscal Recovery Funds (SLFRF) will see updated guidance to facilitate easier utilization of remaining funds for the construction of affordable housing. Recipients will now have greater flexibility, with the presumption of eligibility for housing projects catering to families earning up to 120% of the area median income. This marks a significant increase from the previous threshold of 65%. Recipients can also support projects aligned with federal housing programs or backed by Fannie Mae and Freddie Mac, targeting essential workers facing housing challenges.
2. ERA Clarifications: The Emergency Rental Assistance (ERA) program under the ARP will receive clarifications to explicitly allow qualifying recipients to use remaining funds for predevelopment and acquisition costs for affordable housing serving very low-income families. This adds to the already successful ERA program, which has made over 12.3 million household payments to prevent evictions and support housing stability.
3. FFB-HUD Risk Sharing Extension: The Federal Financing Bank’s (FFB) financing support for a risk-sharing initiative between the Department of Housing and Urban Development (HUD) and state and local housing finance agencies is extended indefinitely. This initiative aims to substantially lower the cost of capital for low-risk housing developments. The Treasury Department estimates that tens of thousands of additional affordable homes will be created or preserved through this initiative over the next decade.
These initiatives align with the broader Housing Supply Action Plan of the Biden-Harris Administration, focusing on affordability and reduced housing costs. The Treasury Department’s commitment to addressing the housing crisis extends beyond financial incentives, including innovative use of ARP funds, tax incentives like the Low-Income Housing Tax Credit (LIHTC), and support for community development programs like the Capital Magnet Fund.
Deputy Secretary of the Treasury Wally Adeyemo emphasized the significance of these measures in a blog post, detailing the commitment to increasing housing supply while ensuring the security of all Americans. The Treasury Department plans to engage stakeholders throughout the year to identify effective strategies for housing supply expansion, supporting wider Administration and legislative efforts.
As the housing crisis remains a pressing concern, these comprehensive initiatives are poised to make a substantial impact, fostering housing security and affordability for communities across the United States.
