Article
New opportunities in affordable housing from the American Rescue Plan Act
Public sector housing corner
Oct. 25, 2021 · Authored by Mikaela R. Huot
Providing attainable housing options for residents continues to be a priority for communities and has become even more urgent as a result of the pandemic. COVID-19 has escalated the housing affordability issues that were already challenging most communities. Many renters and homeowners are unable to make their monthly rent and mortgage payments due to loss of income. Homelessness is on the rise, putting pressure on communities to provide safe and sanitary housing options, both short- and long-term. Constructing new housing units, especially at manageable rates, has become difficult to make financially feasible due to lack of land availability as well as increasing construction costs and market support/demand.
Municipalities have taken varied positions on financing for housing. Some have established programs that facilitate the construction and ownership of housing to meet community needs not met by the market. Those that do not physically own or construct housing properties offer funding sources that can provide gap financing. Some tools that are available to municipalities include:
- Tax increment financing (TIF)
- Tax abatement financing
- Community Development Block Grant (CDBG) funds
- HOME Investment Partnership Program (HOME) funds
- Affordable housing trust funds
- Revolving loan funds
- Community land trust
- HUD program lending
- Housing improvement areas
- Private activity bonds
- Municipal bonds
Communities have also started looking beyond local financing tools and programs as a result of continued pressure on local units to provide attainable housing. We are seeing a trend in providing loans as opposed to grants as well as leveraging additional resources from the regional, state and federal government levels, subject to the type of development. Municipalities are considering investing public funds only after other resources have been exhausted. Many are exploring opportunities to use American Rescue Plan Act of 2021 (ARPA) Fiscal Recovery Funds (FRF) and ARPA economic development grants along with several other relief funding programs to provide support for affordable housing development.
