The Treasury Department on Wednesday released new guidance allowing state and local governments to tap into $350 billion in COVID-19 stimulus aid to build affordable housing as home prices skyrocket nationwide.
Under the new rules, state and local governments can use funds from the $1.9 trillion American Rescue Plan, which President Biden signed in March 2021, to finance housing long-term loans for nonprofit developers.
The guidance also expands federal housing programs eligible to draw on the reserve to include low-income housing credits, affordable housing preservation, elderly and disabled housing, and public housing.
“Increasing the nation’s housing supply is essential to lowering shelter costs over the long-term,” said Deputy Treasury Secretary Wally Adeyemo.
“Treasury continues to strongly encourage state and local governments to dedicate a portion of the historic funding available through President Biden’s 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,” officials said.
The Treasury and the Department of Housing and Urban Development published a “how-to” guide with the new guidance to help state and local governments combine the funds available under the new guidance with other sources of federal funding.
Mr. Biden has scrambled to control skyrocketing inflation, as his poll numbers have fallen and the Democratic Party eyes an uphill battle ahead of the upcoming midterm elections.
Home prices hit an all-time high last month even with declining sales. The median home price ticked up to $416,000 in June, according to National Association of Realtors figures, up 13.6% over last year.