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NCSHA Leads Coalition Urging Treasury to Align Fiscal Recovery Fund Rules with the Housing Credit

Published on December 10, 2021 by Jennifer Schwartz
NCSHA Leads Coalition Urging Treasury to Align Fiscal Recovery Fund Rules with the Housing Credit

Today, NCSHA, together with 18 other organizations representing state and local governments and affordable housing industry participants, sent a letter to Treasury Secretary Janet Yellen urging the U.S. Treasury Department to modify existing guidance on the Coronavirus State and Local Fiscal Recovery Fund to provide more flexibility in the use of these funds in developments financed with the Housing Credit program.

Congress authorized the Fiscal Recovery Fund program under the American Rescue Plan to provide states and localities with flexible resources to help them respond to challenges they face due to the coronavirus pandemic. Nearly half the states and many local governments have committed to use significant amounts of these funds for affordable housing purposes.Ā In particular, states and local governments are seeking to use these funds to help fill financing gaps in Housing Credit developments due to rising costs related to supply chain and workforce shortages caused by the pandemic.

However, Treasuryā€™s guidance complicates the gap financing structure approach when these resources are used as loans, as the principal on loans made with the Fiscal Recovery Fund must be repaid no later than December 31, 2026.Ā While Fiscal Recovery Funds may be used as grants, grants typically reduce Housing Credit eligible basis.

NCSHA and our partners in this effort have urged Treasury to issue guidance allowing Fiscal Recovery Funds structured as grants to not result in an eligible basis reduction when used with the Housing Credit. The groups also pressed Treasury to allow loans made with Fiscal Recovery Funds to have maturities beyond 2026.