Government Efforts Could Spark Affordable Housing Development
- May 26, 2009
As part of the government’s efforts to relieve the pressure cooker that is the American housing market, the U.S. Department of the Treasury will inject more than $330 million into affordable housing development in Kansas, Michigan, Ohio, Wisconsin, and Puerto Rico.The Treasury funding will be doled out under the American Recovery and Investment Act, which was signed into law in mid-February. The Department of Housing and Urban Development, meanwhile, also announced $83 million for housing development in Ohio. “The Recovery Act offers multiple opportunities for property owners, developers and other stakeholders in the commercial real estate arena,” stated information from the law firm of Frost Brown Todd. “There are over $10 billion in funding initiatives for affordable housing projects. Among some of the programs deemed beneficial by Frost Brown Todd include low income housing funding with $2.25 billion allocated to fund the gap caused by the collapse of the low-income housing tax credit (“LIHTC”) market. The funds will be distributed to housing tax credit allocating agencies based on the federal formula for the HOME program; low income housing grants, which allows state agencies to use a portion of their allocated LIHTCs as grants instead of credits. States will be able to exchange 40 percent of their 2009 LIHTCs plus unused 2008 credit ceiling for grants at a reduced rate of $0.85 on the dollar; and public housing capital fund in which $4 billion is allocated for the Public Housing Capital Fund, with $3 billion being distributed by the capital fund formula and $1 billion through competitive grants. These funds will be used to retrofit the public housing projects to make them more energy efficient. The Treasury Department and HUD launched two programs that will provide more than $5 billion from the Recovery Act. The Treasury Department will work with state housing agencies to provide $3 billion in funding to jump start the development or renovation of qualified affordable housing for families across the country. Under this program, after meeting certain eligibility requirements, state housing agencies will receive funding to construct affordable housing developments. Late last week, the Treasury Department announced the first round of recipients: $115 million in Wisconsin; $99 million in Puerto Rico; $78 million in Michigan; $23 million in Kansas; and $21 million in Ohio. In addition, HUD will be awarding $2.25 billion in grants to state housing credit agencies under the Tax Credit Assistance Program (TCAP) program to complete construction of qualified housing developments. HUD announced its first award, providing $83 million to kick-start stalled multi-family developments in Ohio. Submissions from the remaining states, Puerto Rico, and the District of Columbia are due to HUD by no later than June 3, so this is the first of many similar announcements HUD anticipates making in the coming weeks.