26 Apr BPC Action Applauds Bipartisan, Bicameral Bill to Unlock American Rescue Plan Funds for Affordable Housing in Housing
BPC Action commends Reps. Alma Adams (D-NC) and David Rouzer (R-NC) and Sens. Patrick Leahy (D-VT) and Susan Collins (R-ME) for introducing the bipartisan, bicameral LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence (LIFELINE) Act. The bill provides a technical fix to the American Rescue Plan Act that would allow states and local governments to repurpose unused COVID-19 recovery funding to support affordable housing developments.
The United States suffers from a severe shortage of affordable homes, forcing low-income families to pay burdensome housing costs and leaving them financially insecure. As the nation recovers from the pandemic—which exacerbated housing disparities and highlighted the importance of safe, stable housing—increasing the supply of affordable housing is vital for vulnerable households, now more than ever.
Meanwhile, rising construction costs, supply chain disruptions, and workforce challenges have made it more difficult to secure financing for affordable housing developments, even with federal subsidies. Many state and local governments—who know the needs of their communities best—have already expressed their intent to use recovery dollars to finance needed affordable housing. Unfortunately, states and local entities are currently unable to use State and Local Fiscal Recovery Funds—$350 billion in flexible funding for COVID recovery through the American Rescue Plan Act—to support gap financing for developments subsidized by the Low-Income Housing Tax Credit, the federal government’s largest and most successful program to support the construction and rehabilitation of affordable rental housing.
Specifically, because the Treasury Department’s final rule required SLFRF dollars to be obligated by 2024 and spent by 2026, the funds could not be used as long-term loans for LIHTC development gap financing. SLFRF dollars could only be provided immediately as grants, which would reduce the cost basis for LIHTC developers and disincentivize construction. The LIFELINE Act would solve this problem by statutorily allowing states and local governments to use SLFRF funding as gap financing for LIHTC developments. This would allow states and local governments to overcome barriers to low-income housing development and increase the affordable housing supply, leveraging unused recovery funds without any extra cost to the federal government.
The LIFELINE Act advances the priorities of BPC’s J. Ronald Terwilliger Center for Housing Policy—which seeks impactful, bipartisan solutions to address the affordable housing supply crisis. BPC has also long supported the expansion of LIHTC, an evidence-based program with a record of expanding the supply of affordable housing, and additional gap financing, which can make a critical difference when development costs exceed the funding available through the equity raised by LIHTC and the debt supported by projected rents.
BPC Action looks forward to working with Congress to pass this commonsense and critical piece of legislation.