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The U.S. Treasury Department<\/strong> has issued new guidance empowering state, local and tribal governments to direct more of the funding appropriated under the American Rescue Plan Act of 2021<\/a> toward affordable-housing investments.<\/p>\n The $350 billion American Rescue Plan (ARP) includes a range of aid focused on reducing hardships that individuals, businesses and communities face due to the COVID-19 pandemic. The Treasury Department\u2019s new guidance is focused on the ARP\u2019s flexible funding \u2014 called the State and Local Fiscal Recovery Funds (SLFRF) program.<\/p>\n The new rule guidance is designed to expand the supply of affordable housing by making it easier to develop, repair or operate affordable housing. <\/p>\n Some 600 state and local governments have already appropriated nearly $13 billion in SLFRF funds through the first quarter of this year for housing expansion and lowering housing costs, including $4.2 billion for affordable-housing development and preservation. The new guidance from Treasury builds on the existing SLFRF-backed efforts by expanding the scope of eligible affordable-housing projects and enhancing the flexibility of directing funding toward those projects.<\/p>\n \u201cIncreasing the nation\u2019s housing supply is essential to lowering shelter costs over the long-term,\u201d said Deputy Secretary of the Treasury Wally Adeyemo. \u201cTreasury continues to strongly encourage state and local governments to dedicate a portion of the historic funding available through President Biden\u2019s American Rescue Plan toward building and rehabilitating affordable housing in their communities, and the actions being announced today will make it even easier for them to do so.\u201d<\/p>\n The new Treasury guidance will increase the flexibility of using SLFRF program to fund long-term affordable-housing project loans, \u201cincluding those that would be eligible for additional assistance under Treasury\u2019s Low Income Housing Tax Credit,\u201d Treasury\u2019s announcement<\/a> of the rule changes states. <\/p>\n The new guidance also expands the range of presumptive uses for SLFRF-supported projects \u2014 offering state, local and tribal governments greater flexibility to leverage other sources of federal funding for affordable-housing efforts. Previously, the funding rules limited presumptive use of SLFRF funds to two programs sponsored by the Department of Housing and Urban Development<\/strong>.<\/p>\n \u201cIn addition, Treasury is updating guidance to clarify that SLFRF 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% of the local area median income,\u201d the announcement of the new guidance by Treasury states.<\/p>\n Marvin Owens, chief engagement officer at\u00a0Impact Shares<\/a><\/strong>\u00a0and former NAACP senior director, said the lack of affordable housing affects people across the board \u2014 particularly when interest rates are rising as they are now. \u201cBut it hits and impacts people of color \u2014 Black, Latino and low-income families \u2014 even harder because of the broader economic conditions that they have to deal with,\u201d Owens said.<\/p>\n \u201cI think the Treasury Department’s decision to leverage an existing program to be able to begin to address this is something that that I celebrate, because it’s been something that housing advocates have been asking for some time,\u201d he added. \u201cIt\u2019s a good example of the federal government listening and understanding and hearing from folks who are on the ground, who are seeing what’s happening and bringing new insight to the conversation.\u201d<\/p>\n Impact Shares is a nonprofit investment firm that manages socially responsible exchange-traded funds (ETFs), including the\u00a0Impact Shares Affordable Housing MBS ETF (NYSE: OWNS)<\/a>\u00a0launched in in 2021. It is an ETF focused on purchasing agency mortgage-backed securities that are secured by \u201cpools of mortgage loans made to minority families, low- and moderate-income families, and\/or families that live in persistent poverty areas,\u201d according to\u00a0Impact Shares\u2019 website<\/a>.<\/p>\n \u201cWhen you are able to create more avenues for affordability, you then open the door to access, and access is really the big key,\u201d Owens said. \u201cWe can’t close the racial-wealth gap and [expand] homeownership without access. And I think that’s why this program really makes a lot of sense because it will help to close that gap.\u201d<\/p>\n Owens said expanding affordable housing opens the door for more mom-and-pop minority ownership of rental properties, which helps to build intergenerational wealth. It also allows more people of color to build solid credit credentials as renters to bolster their chances of qualifying for homeownership \u2014 and to save for down-payment necessary to purchase a home. Today, the gap in homeownership rates between Black and white families, for example, is greater than when it was still legal to not sell a home to someone because of skin color \u2014 a discriminatory act made illegal by the 1968 Fair Housing Act.<\/p>\n In 1960, a 27-point gap<\/a> existed between black and white homeownership. As of the first quarter of this year, according to data from the Federal Reserve Bank of St. Louis<\/a><\/strong>, that gap is 29.3 points \u2014 with the white homeownership rate at 74%; the African American homeownership rate at 44.7% and the Latino homeownership rate at 49.1%.*<\/p>\n \u201cWith housing construction slowing amidst inflationary pressures, economic uncertainty and higher interest rates, both public- and private-sector financing will be necessary to create the supply of affordable rental housing that is needed to help ease costs for families, especially minorities and those with low and moderate incomes,\u201d said Bob Broeksmit, president and CEO of the\u00a0Mortgage Bankers Association<\/strong>.<\/p>\n The post Treasury Department expands funding options for affordable housing<\/a> appeared first on HousingWire<\/a>.<\/p>\n