The Banking Executive Magazine - July 2022 Issue

U.S. Treasury U.S. Treasury TO ALLOW COVID FUNDS FOR STATE, LOCAL AFFORDABLE HOUSING LOANS The U.S. Treasury said that it will allow state, local and tribal govern- ments more flexibility to use COVID- 19 rescue funds to boost the supply of affordable housing, including per- mission to issue direct long-term project loans. The changes for the $350 billion State and Local Fiscal Relief Fund program are aimed at filling a financ- ing gap for affordable housing proj- ects, allowing them to be more easily developed, especially those that are eligible for the Treasury's Low-In- come Housing Tax Credit. State, local and tribal governments can fully provide loan principal under the new guidance, provided projects meet certain criteria. The Treasury also said it is expanding the range of uses of the funds for projects beyond those currently al- lowed under two major Department of Housing and Urban Development programs to additional federal pro- grams from multiple agencies. U.S. Deputy Treasury Secretary Wally Adeyemo said Treasury is making clear that state and local funds may be used to finance the de- velopment, repair and 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's me- dian income level. Treasury had previously called on states and municipalities to use more of their COVID-19 allocations to ad- dress a severe shortage of affordable housing, a driver of inflation. . But Adeyemo said that state and local housing agencies had asked for more flexibility and broader uses of the funds. "The thing that I have seen more and more is that there are a number of af- fordable housing projects today that started during the pandemic that have become more expensive, and there's a need for additional gap fi- nancing," Adeyemo told reporters. "And that's hard to find." Through March 31, over 600 com- munities had budgeted $12.9 billion from their state and local funding al- locations to meet housing needs and lower housing costs, including $4.2 billion for affordable housing devel- opment and preservation. the BANKING EXECUTIVE 48 ISSUE 163 JULY 2022