HUD to Provide $5B to States for Acquisition, Construction of Affordable Housing
- May 07, 2009
By Anuradha Kher, Online News EditorWashington, D.C.–As part of a partnership aimed at job creation and easing the pressures on the housing market, the Department of the Treasury and Department of Housing and Urban Development (HUD) has announced that it will provide billions of dollars in recovery funds to spur the development of thousands of affordable housing units in states around the country. Funded through the American Recovery and Reinvestment Act (The Recovery Act), the programs together will provide approximately $5 billion for states to finance the acquisition and construction of affordable housing for working families.“It’s been a long time coming and we are all very excited about this very positive step for affordable housing,” Robert J. Greer, President of Michaels Development an affordable housing developer, tells MHN. Through the Recovery Act, the Treasury Department will now for the first time provide state housing agencies resources from which they will in turn provide cash assistance to developers of qualified affordable housing developments to fill the Low Income Housing Tax Credit (LIHTC) gap. The program will increase the supply of newly constructed or recently renovated affordable housing units for families – affordable housing that otherwise may not have come to market due to current economic conditions. Greer adds, “This new act provides a tool during this tough time to access gap financing. Now with the tax credit assistance program we have a vehicle to work with state agencies. We have an opportunity now to return old credits and obtain new credit. Deals that were tough to make can be made now through the new tool this provides.”Treasury Secretary Timothy Geithner says, “As the recession has worsened, unemployment has risen, and working families have suffered a loss of income, which has caused a downward economic spiral for too many American families and made it more difficult for those families to find affordable housing. With this new program, we are not only creating new jobs through new construction, we are ensuring the availability of affordable housing, which is good for the nation’s economic stability and the economic security of millions of American families.”Since the financial crisis began, housing starts have fallen 80 percent from the peak level seen at the beginning of 2006. Houses currently under construction are at a 12-year low, down 60 percent from the peak in the first quarter of 2006. This collapse has led to severe job losses in the residential building and specialty trades sector related to housing, with employment down by nearly one-third — a loss of close to 1 million jobs. Such losses not only indicate the significant problems in the residential construction sector, but also suggest that the need for affordable housing has risen markedly during the recession. In addition to Treasury’s new program, HUD will be awarding $2.25 billion in grants to state housing credit agencies through the Tax Credit Assistance Program (TCAP) to complete construction of qualified housing developments. The TCAP program will ultimately provide affordable housing to an estimated 35,000 low-income households. “But like all government money, this too comes with its set of rules and regulations, which we are still trying to figure out. It is unclear for now, how the states will tailor the program,” concludes Greer.