AN OVERVIEW OF

Using State & Local Fiscal Recovery 

Funds for Affordable Housing 

August 2022
American Rescue Plan

Last year, President Biden signed the American Rescue Plan Act into law, which has resulted in 

one of the strongest periods of economic growth in a century. 

The American Rescue Plan includes:

• State and Local Fiscal Recovery Funds, which delivers $350 billion for states, territories, 

localities, and Tribal governments to respond to the COVID-19 emergency and build a 

strong, resilient, and equitable recovery.

Key objectives of this funding:

• Fight the pandemic and support families and businesses struggling with its public health 

and economic impacts

• Maintain vital public services, even amid declines in revenue resulting from the crisis

• Build a strong, resilient, and equitable recovery by making investments that support 

long-term growth and opportunity

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State and Local Fiscal Recovery Funds Final Rule Overview

Treasury’s final rule provides flexibility and simplicity for recipients to turn the tide on the 

pandemic, maintain vital public services amid revenue shortfalls, and build a strong, 

resilient, and equitable recovery.

1 Public Sector Revenues

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Public Health and Economic Response

Premium Pay for Essential Workers

Water, Sewer & Broadband Infrastructure

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Housing Updates At-A-Glance

–SLFRF permits funds to be used, 

among other uses, to respond to 

the public health and negative 

economic impacts (PH-NEI) of the 

pandemic, including for the 

development, repair, and 

operation of affordable housing. 

–Treasury has updated its guidance 

(1) to clarify two presumptively 

eligible ways to use SLFRF to fund 

affordable housing investments 

under the final rule and (2) to 

enable grantees to use SLFRF to 

fully finance long-term affordable 

housing loans.

Expanded Presumptive Eligibility

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Housing Updates At-A-Glance

–SLFRF-funded affordable housing projects under the PH-NEI eligible use 

category are presumptively eligible if the project meets certain core 

requirements of the following expanded list of federal housing programs

» National Housing Trust Fund (HTF)

» HOME Investment Partnerships Program (HOME)

» Low-Income Housing Credit (LIHTC) 

» Public Housing Capital Fund

» Section 202 Supportive Housing for the Elderly Program 

» Section 811 Supportive Housing for Persons with Disabilities Program 

» Project-Based Rental Assistance 

» Multifamily Preservation & Revitalization Program 

» Affordable housing projects provided by a Tribal government if they would be 

eligible for funding under the Indian Housing Block Grant program, the Indian 

Community Development Block Grant program, or the Bureau of Indian Affairs 

Housing Improvement Program

Expanded Presumptive Eligibility:

Option 1

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Housing Updates At-A-Glance

–Treasury has clarified that there are four core program 

requirements of these federal housing programs that must 

be met for presumptive eligibility:

»Resident income restrictions; 

»The affordability period and related covenant 

requirements for assisted units; 

»Tenant protections; and 

»Housing quality standards. 

Expanded Presumptive Eligibility:

Option 1

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Housing Updates At-A-Glance

–SLFRF-funded affordable rental housing investments under the PH-NEI 

eligible use category are presumptively eligible if the units funded serve 

households at or below 65% of AMI for a period of 20 years or greater. 

–A broader range of affordable housing investments may also be eligible 

uses of SLFRF funds under the final rule if they are related and are 

reasonably proportional to addressing the negative economic impacts 

of the pandemic and otherwise meet the final rule’s requirements. 

Depending on the needs of the local rental market, it may be 

reasonably proportional to address the negative economic impacts of 

the pandemic by funding units (e.g., up to 80% AMI) that do not fall into 

the presumptively eligible categories listed in Option 1 or Option 2.

Expanded Presumptive Eligibility:

Option 2

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SLFRF and Long-Term Loans

Flexibilities and Requirements for Long-Terms Loans for Affordable Housing

Treasury has determined that SLFRF funds may be used to fully finance 

certain long-term loans that support affordable housing investments. 

Specifically, under the PH-NEI eligible use category, recipients may use 

SLFRF funds to make loans to finance affordable housing projects, 

funding the full principal amount of the loan, if the loan and project 

meet the following requirements:

– The loan has a term of not less than 20 years; 

– The affordable housing project being financed has an affordability period of 

not less than 20 years after the project or assisted units are available for 

occupancy after having received the SLFRF investment; and

– To protect affordability, the project owners of any properties receiving SLFRF 

loans which also receive LIHTC financing must agree to waive their right to 

request a qualified contract as defined in Section 42(h)(6)(F) of the Internal 

Revenue Code and repay any loaned funds if the property becomes 

noncompliant.

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Layering SLFRF with Other Funding Opportunities

• LIHTC projects

• Federal Housing Administration (FHA) multifamily mortgage 

insurance

• HOME and HTF

• HOME-ARP

• Project-Based Vouchers (PBVs)

• Recapitalization of Public Housing through HUD’s Rental Assistance 

Demonstration (RAD)

• Community Development Block Grants (CDBG) and Section 108 

Loan Guarantee Program

Flexible funding for new construction and substantial rehabilitation of 

affordable housing

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Layering SLFRF with Other Funding Opportunities

Rehabilitation and Adaptive Reuse

• Recipients may use SLFRF to acquire properties that will be transitioned into 

affordable housing for households that experienced the negative economic 

impacts of the pandemic. 

• This could include acquisition of market rate rental properties, motels, or 

commercial properties that will be converted to affordable housing, or 

acquisition and preservation of publicly supported affordable housing. 

• SLFRF may finance retrofits and weatherization of properties to improve 

energy efficiency, potentially by leveraging new federal funding such as the 

Department of Energy’s Weatherization Assistance Program, or infrastructure 

resources. 

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Layering SLFRF with Other Funding Opportunities

Opportunities for layering with HUD’s FHA Multifamily mortgage insurance:

– HUD’s Mortgage Insurance for Purchase or Refinancing of Existing 

Multifamily Rental Housing under Section 223(f) of the National Housing 

Act to finance property acquisition or refinance

– FHA Risk Share, through which HUD delegates authority to state Housing 

Finance Agencies to underwrite multifamily loans in exchange for taking 

on a portion of the risk in the transaction

Rehabilitation and Adaptive Reuse

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Layering SLFRF with Other Funding Opportunities

Rehabilitation and Adaptive Reuse

SLFRF may be used to convert vacant or abandoned properties to 

affordable housing in disproportionately impacted communities. For 

example, SLFRF may be:

• Layered with Section 108 Loan Guarantee Program funds for the eligible 

housing portion of a mixed-use development;

• Combined with HOME or HTF to provide deeply affordable units within 

mixed-income developments;

• Used to convert office buildings to condominiums for homeownership; 

• Employed to finance the conversion of industrial or commercial 

properties to housing; or

• Used to acquire vacant lots for affordable housing development.

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Additional Uses of Funds

Recipients may use SLFRF to help fund pre-project development 

activities, which could include site work and land acquisition, that 

precede housing development or rehabilitation of affordable housing.

– Land acquisition: Recipients may use SLFRF to acquire land for future 

development or within existing land acquisition programs for purposes 

of affordable housing investments, including those funded with CDBG 

or Section 108 Loan Guarantee Program funds. 

– Predevelopment and site work: SLFRF may be used for 

predevelopment activity and site work to lay the ground for affordable 

housing development. Recipients planning to layer SLFRF with HOME 

for new construction should review HUD environmental review and 

planning requirements. 

Predevelopment

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Promising Practices

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Q&A

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Thank you.

For More Information about SLFRF: 

Please visit Treasury’s State & Local website 

at www.treasury.gov/SLFRF

For Media Inquiries: 

Please contact the U.S. Treasury Press Office 

at (202) 622-2960

For General Inquiries:

Please email SLFRF@treasury.gov

U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds