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(U. S. Treasury corrects “obligated” to “budgeted” in paragraph 5 for reference to remaining state and aid funds)
By David Lawder
WASHINGTON, March 5 (Reuters) – The U. S. Treasury Department on Tuesday announced new measures to breathe life into the affordable housing pipeline by releasing the unspent COVID-19 relief budget to state and local governments for a broader diversity of housing projects.
These projects are part of an initiative by the Biden administration to address a key economic challenge facing Americans: homelessness. This, in turn, contributes to inflation and negative voter sentiment toward President Joe Biden’s handling of the economy.
In a broader move, the Treasury said it would allow state and local governments to use the unspent budget of the $350 billion State and Local Fiscal Recovery Fund for housing projects that serve families earning up to 120% of the domain median income, a significant amount. up from 65% previously.
This budget can now also be spent on projects that meet the needs of one or more federal housing systems, as well as those supported through government loan corporations Fannie Mae and Freddie Mac for personnel such as teachers, firefighters and nurses. This will pave the way for a much wider diversity of housing projects to be eligible for assistance.
According to Reuters calculations, the amount of funding still remaining for such projects could reach as much as $40 billion. Treasury estimates that about 12% of the $350 billion in state and local investments from the American Rescue Plan Act of 2021 has yet to be budgeted through the states and largest metropolitan areas, which earned the lion’s share of the funding.
In addition, the Treasury said communities with unspent budget under the COVID-era Emergency Rental Assistance Program can divert it to “pre-development” pricing and land acquisition for low-income affordable housing projects, in addition to the legal structure and rehabilitation of the past. prices.
As of June 30, 2023, according to the latest available data, there was approximately $6. 9 billion left in the initial $46 billion rental assistance program introduced during the Trump administration and expanded during the Biden administration to address homelessness during the pandemic.
Home prices are expected to rise in the coming years as homeowners with low interest rates stand still, real estate experts say. Increasing the supply of housing has proved difficult amid high interest rates.
“The lack of sources is contributing to driving up housing prices for American families,” U. S. Deputy Treasury Secretary Wally Adeyemo said in a blog post. “This in housing prices is not only concentrated in coastal cities, but is also being felt in the central cities, rural spaces and suburbs of the country. “(Reporting via David Lawder; editing by Andrea Ricci)