Providing attainable housing options for residents continues to be a priority for communities and has become even more urgent as a result of the pandemic. COVID-19 has escalated the housing affordability issues that were already challenging most communities. Many renters and homeowners are unable to make their monthly rent and mortgage payments due to loss of income. Homelessness is on the rise, putting pressure on communities to provide safe and sanitary housing options, both short- and long-term. Constructing new housing units, especially at manageable rates, has become difficult to make financially feasible due to lack of land availability as well as increasing construction costs and market support/demand.
Municipalities have taken varied positions on financing for housing. Some have established programs that facilitate the construction and ownership of housing to meet community needs not met by the market. Those that do not physically own or construct housing properties offer funding sources that can provide gap financing. Some tools that are available to municipalities include:
Communities have also started looking beyond local financing tools and programs as a result of continued pressure on local units to provide attainable housing. We are seeing a trend in providing loans as opposed to grants as well as leveraging additional resources from the regional, state and federal government levels, subject to the type of development. Municipalities are considering investing public funds only after other resources have been exhausted. Many are exploring opportunities to use American Rescue Plan Act of 2021 (ARPA) Fiscal Recovery Funds (FRF) and ARPA economic development grants along with several other relief funding programs to provide support for affordable housing development.
ARPA provides funds to deliver more aid directly to those struggling to pay their rent or mortgage or are homeless. It includes a number of provisions to deliver immediate and direct relief to support people across America with the goal of helping individuals remain stably housed during the pandemic. Specifically, ARPA provides funding to mitigate housing-related hardships for those that have been disproportionately negatively impacted by the pandemic that includes:
Communities have access to a variety of financing tools, strategies, programs and funding sources to help address the affordable housing shortage. Some municipalities are using ARPA funds to purchase and redevelop properties with land write-downs and down-payments subsidized through the ARPA funding to address the need. It’s an advantageous time to tap into one-time sources to make a difference in your community.
For more information, or to learn how Baker Tilly’s housing specialists can help your community, contact our team.