How State and Local Governments Can Get the Most Out of ARP Housing Funds

Last month, the U.S. Department of Treasury issued new guidance giving state and local recipients of American Rescue Plan (ARP) funds more flexibility to boost housing supplies in their communities. Released July 27, the guidance makes it easier to use ARP funds to finance long-term affordable housing loans. Specifically, it clarifies that these funds can be used to finance the development, repair, or operation of any affordable rental housing unit that provides long-term affordability of 20 years or more to households at or below 65% of the local area’s median income. The Treasury also collaborated with the U.S. Department of Housing and Urban Development on a guide to provide technical assistance to state and local governments on combining ARP funds with other sources of federal funding.

The American Rescue Plan Act, enacted in March 2021, extended $350 billion to all 50 states at the statewide, county, and metropolitan levels. The law specified broad categories of eligible uses for the funds including: (1) responding to the pandemic (health and economic); (2) “premium pay” for “essential” work during the health crisis; (3) water, sewer and broadband projects; and (4) replenishing government revenue losses due to the pandemic. Subsequent rulemaking and guidance have increased flexibility to allow communities to respond to unique local challenges in COVID-19 response and to allow the funds to address emerging national issues. The U.S. Chamber of Commerce’s State and Local Initiative has tracked the uses of these funds, encouraged best practices, and supported legislation to further expand responsible flexibility since the law was enacted.

This May, U.S. Chamber President and CEO Suzanne Clark and White House Economic Council Director Brian Deese wrote an editorial in the Wall Street Journal on how best to address the national housing shortfall, specifically calling for policies to make it easier for developers to finance new housing affordable to low- and middle-income families. By increasing flexibility for this type of financing, the Treasury’s latest guidance is a positive step toward the policy vision expressed in this pivotal editorial. We encourage state and local governments to take advantage of this increased flexibility and address critical housing needs in their communities.

Additional resources 

• Treasury guidance overview  
• Treasury’s July 2022 Affordable Housing How-To Guide

Story by Tom Wickham, U.S. Chamber of Commerce

Tom Wickham, former Parliamentarian of the U.S. House of Representatives, serves as senior vice president of State & Local Policy at the U.S. Chamber of Commerce. Wickham leads the Chamber’s new division that monitors state and local policy developments and coordinates state and local policy advocacy strategies within the existing Chamber framework.