US Treasury to ease rules on COVID aid to boost affordable housing supply
By David Lawder
WASHINGTON (Reuters) — The U.S. Treasury Department on Tuesday announced new steps to boost the supply of affordable housing by unlocking unspent COVID-19 aid funding to state and local governments to support a wider array of housing projects.
The initiatives are part of a Biden administration drive to address a key economic challenge facing Americans: lack of housing affordability. This is in turn contributing to inflation and negative voter sentiment on President Joe Biden's handling of the economy.
In the biggest of the moves, the Treasury said it would allow state and local governments to use unspent funds from the $350 billion State and Local Fiscal Recovery Fund to support housing projects serving families earning up to 120% of the area's median income, a big jump from 65% previously.
These funds can also now be spent on projects that meet terms of one of a dozen or more federal housing programs as well as those supported by government mortgage enterprises Fannie Mae and Freddie Mac to house essential workers such as teachers, firefighters and nurses. This will open up a significantly wider array of housing projects eligible for support.
The amount of funding still available for such projects could be as high as about $40 billion, based on Reuters calculations. Treasury estimates that about 12% of the $350 billion in state and local funding from the 2021 American Rescue Plan Act has not yet been obligated by states and the largest metropolitan areas, which received the lion's share of the funding.
In addition, the Treasury said that communities with unspent COVID-era Emergency Rental Assistance Program funds can divert them to supporting «pre-development» and land acquisition costs for low-income
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