A new brief from the Urban Institute offers lessons from six cities and counties on using the American Rescue Plan Act (ARPA)’s $350 billion State and Local Fiscal Recovery Funds (SLFRF) for affordable housing purposes. The brief utilizes program data reported by SLFRF recipients along with qualitative interviews with local program administrators to better understand how localities are directing funds to affordable housing development and preservation efforts.
The authors identify recipients’ challenges and opportunities encountered in using the SLFRF funds for these purposes. Unencumbered, flexible funds helped meet important local housing needs, including those of households with very low incomes. Localities used a range of strategies to increase affordable housing supply, including development, preservation, and investment in housing trust funds. Planning and local capacity were important for meeting short obligation timelines. Most localities used competitive processes to award funding to developers and community organizations, and some incorporated a strong focus on equity and community engagement in the project selection process.
The brief also provides recommendations for how future federal funding can be structured to reduce barriers for localities attempting to address affordable housing needs. While Treasury’s SLFRF guidance consistently indicated that affordable housing was an accepted and desirable use of the fiscal recovery funds, this guidance conflicted with some of the practical guidelines of the program. The short obligation timeline made it difficult for recipients to create thoughtful plans that incorporated community input. Modifications to program guidance, such as streamlining recipients’ ability to braid other funding streams with federal dollars, could better support the use of federal emergency affordable housing funds.