Bill Allows Fiscal Recovery Funds for Housing Credit Projects

Legislation | May 13, 2022 | by Linda Couch

Legislation was introduced on May 11 to allow the use of Coronavirus State and Local Fiscal Recovery Funds as long-term loans to Low Income Housing Tax Credit developments. The Senate bill, S. 4181, the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act (LIFELINE Act), follows House introduction of a similar bill in March (H.R. 7078).

Legislation was introduced on May 11 to allow the use of Coronavirus State and Local Fiscal Recovery Funds as long-term loans to Low Income Housing Tax Credit developments. The Senate bill, S. 4181, the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act (LIFELINE Act), follows House introduction of a similar bill in March (H.R. 7078).

The 2021 American Rescue Plan Act’s allocated $350 billion via State and Local Fiscal Recovery Funds for state and local governments to respond to COVID-19 impacts.

 “By the end of 2021, nearly 570 state, local, and Tribal governments had committed $11.7 billion to meet housing needs, including preventing evictions and foreclosures, helping individuals experiencing homelessness become stably housed, and expanding the supply of affordable housing to address the root cause of housing insecurity,” the U.S. Treasury has noted while also urging “ state, local, and Tribal governments to deepen their housing investments and use these funds to dramatically ramp up production and preservation of affordable housing.” The legislation would help states and local governments support more affordable housing efforts by allowing SLFRFs to be used as long-term loans to LIHTC developments.

Without statutory change, the current statutory and regulatory requirements that dictate the use of SLFRFs “make it difficult to use the funds with the Housing Credit, as it requires all SLFRF dollars to be obligated by December 31, 2024 and expended by December 31, 2026. Further, use of the funds as a grant can result in a basis reduction for developers and disincentivize construction,” according to the Rental Housing ACTION Campaign, a broad coalition that works together in support of improving and expanding the LITHC program. LeadingAge is on the steering committee of the ACTION Campaign.