The American Rescue Plan Act (ARPA) allocated $350 billion in Coronavirus State and Local Fiscal Recovery Funds (Fiscal Recovery Funds) to help states, counties, cities, and tribal governments respond to the COVID-19 public health emergency, address its economic fallout, and lay the foundation for an equitable recovery. Fiscal Recovery Funds provide flexibility for governments to meet local needs, including providing emergency rental assistance, addressing the housing and health needs of people experiencing homelessness, and building and preserving affordable housing in impacted communities. See the NLIHC fact sheet for more information on eligible housing and homelessness uses for ARPA Fiscal Recovery Funds.
States and localities can use the substantial infusion of funding for affordable housing construction through ARPA Fiscal Recovery Funds to begin addressing the severe shortage of homes affordable, accessible, and available to the lowest-income renters. Even before the pandemic, nationally only 37 affordable, available rental units existed for every 100 of the nation’s lowest-income households – those earning below the poverty level or 30% of area median income (AMI) every year – and not one state or congressional district in the country had enough affordable, accessible homes to meet demand. In the absence of affordable housing, approximately 70% of the lowest-income households must routinely spend over half their incomes on rent, leaving little to save for emergencies, buy nutritious food, or obtain needed medication.
Fiscal Recovery Funds present a significant opportunity for communities to address the systemic discrimination that has led to the pandemic’s disproportionate toll on people of color, people with disabilities, immigrant communities, and other historically marginalized groups. To maximize the impact of these funds, the U.S. Department of the Treasury must ensure resources are targeted to the lowest-income and most marginalized households. NLIHC is preparing a letter to Treasury outlining recommendations for developing guidance on the implementation of Fiscal Recovery Funds. These recommendations are designed to ensure any funds used for affordable housing are targeted to the lowest-income and most impacted communities and to ensure they advance racial and economic equity.
Treasury’s Interim Final Rule governing the implementation of ARPA Fiscal Recovery Funds, for example, restricts the construction of new affordable housing to Qualified Census Tracts (QCTs, as designated by HUD) or other disproportionately impacted areas, and when provided by tribal governments. Restricting the construction of new affordable housing to primarily QCTs threatens to reinforce housing segregation and patterns of racial discrimination. Rather than relying primarily on QCTs, communities should be encouraged to consider factors that are more likely to reflect affordable housing needs in an area, including the number of extremely low-income renters and severely housing cost-burdened renters in a census tract.
Additionally, Treasury’s Interim Final Rule notes that Fiscal Recovery Fund recipients may allocate funding for services provided to “populations, households, or geographic areas disproportionately impacted by the pandemic,” but does not clarify how recipients can support their determination that a particular area or household has been disproportionately impacted by COVID-19. Rather than limiting funds to the geographic areas impacted most by COVID-19, Treasury should provide guidance to state and local governments to direct resources to the populations disproportionately impacted: people with the lowest-incomes; Black, Indigenous, and people of color; people with disabilities; people with limited English proficiency; immigrants; and others. Additionally, Treasury should consider allowing affordable, accessible housing that serves the lowest-income renters and is constructed outside of Tribal areas or QCTs to meet the criteria of assisting households disproportionately impacted by the pandemic.
At least eleven state and local governments have so far allocated or are considering allocating Fiscal Recovery Funds for affordable housing.
Learn more on Treasury’s Coronavirus State and Local Fiscal Recovery Funds webpage: https://bit.ly/3eT9Rp7
Read Treasury’s FAQ on Coronavirus State and Local Fiscal Recovery Funds at: https://bit.ly/3uYeOSY
Read Treasury’s Interim Final Rule at: https://bit.ly/3byMGy7
See NLIHC’s fact sheet on Fiscal Recovery Funds at: https://bit.ly/3vCAtAM