An Embarrassment of Housing Riches

The FWD #151  •  693 Words

With contributions by Brian Koziol, Executive Director of the Virginia Housing Alliance

More money is flowing into affordable housing than ever before. What are we going to do about it?

Be careful what you wish for. After years of asking for greater funding to meet Americans’ housing needs, lawmakers are starting to deliver. Continued federal pandemic relief—along with a possible national infrastructure bill, a surprise state budget surplus, and other big investments—will mean Virginia is flush with more cash for housing than anytime in decades. This places great demand on the network of affordable housing providers and developers that will need to scale up to meet the potential flood of funding.

There are three major pots of money to watch.

First, the latest round of major federal relief coming via the American Rescue Plan. The ARP will give Virginia:

  • $258 million for homeowner assistance
  • $570 million for emergency rental assistance (on top of substantial reserves from the CARES Act)
  • $4.3 billion in aid to the state
  • $2.9 billion in aid to local governments
  • Billions more for capital projects, small businesses, and other relief activities.

Second, the half-billion state budget surplus announced earlier this month, thanks to much better than expected revenues into Virginia’s coffers. 

Third, the proposed American Jobs Plan—AKA the big infrastructure bill. Despite the recently reduced counteroffer (still $1.7 trillion), housing provisions in the plan remain fully funded. The Biden administration projects 2 million affordable homes built or preserved nationwide if the current version were to pass. As of today, the $318 billion for housing would include:

  • $213 billion into the National Housing Trust Fund, HOME, a new zoning reform program, and other funds
  • $55 billion additional for LIHTC
  • $20 billion for a new Neighborhood Homes Investment Act (NHIA) tax credit.

But wait, there’s more: The brand new Virginia Housing Opportunity Tax Credit, a record increase in the Virginia Housing Trust Fund, and a bill in Congress that would greatly expand the LIHTC program.

What can it be used for?

While a fair amount of the ARP aid has specific uses, such as homeowner and renter relief, there is much more flexibility for Virginia and its localities to use the $7.2 billion coming to them directly. The Treasury department has published its interim final rule for this funding, which generally tells governments to use it for anything related to COVID-19—including services to address individuals experiencing homelessness, affordable housing development, and housing vouchers.

Earlier this month, the Governor gave his list of priorities for these funds. These covered small business assistance, refilling the state unemployment trust fund, and further investments in broadband, schools, and public health. It remains uncertain whether the state will use much of this aid—along with the surplus—to bolster affordable housing and homelessness services. Lawmakers will hash out their spending plan at a special session later this summer.

And while the American Jobs Act still faces steep hills in Congress, its potential passage would provide a huge boon to affordable housing production and preservation in Virginia, supporting tens of thousands of affordable homes.

What do we need to do?

First, we should continue our work to educate local officials about the benefits of affordable housing and homelessness prevention. These investments—both guaranteed and proposed—are a historic opportunity, but will often require amenable land use and zoning to be fully realized. We know NIMBYism can win if we’re not proactive, so let’s stay ahead of the curve.

Second, we should continue to educate lawmakers about the importance of housing as a way to help Virginia exit the pandemic. As the Virginia Housing Alliance suggests, they can elect to carve out some of the state’s $4.3 billion for the Virginia Housing Trust Fund, a flexible tool designed to provide loans for the development of affordable housing and homelessness services. 

Making a significant investment in the fund (currently at $70.7 million) would allow the state to coordinate with local governments to best meet the needs of local residents and provide an opportunity for much needed capacity building within the housing community. This support should cover salaries, new hires, training, better technology, and anything else needed to overcome the remnants of COVID-19 and successfully scale the mountain ahead of us.

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