On May 11, Senate legislation was introduced to allow the use of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to make long-term loans to Housing Credit developments. The LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act, or LIFELINE Act, sponsored by Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) builds on the bipartisan legislation introduced in the House in March by Representatives Adams (D-NC) and Rouzer (R-NC), H.R. 7078.
SLFRF resources were authorized under the American Rescue Plan Act in March of 2021, providing $350 billion to state, local and Tribal governments to support their response to and recovery from Covid-19, including through affordable housing. Unfortunately, the law’s language and the subsequent final rule issued by Treasury make it difficult to use the funds with the Housing Credit, as it requires all SLFRF dollars to be obligated by December 31, 2024 and expended by December 31, 2026. Further, use of the funds as a grant can result in a basis reduction for developers and disincentivize construction.
Expanding on the House language, new provisions in the Senate bill include:
- Clarifying that only Housing Credit properties placed in service after the date of enactment of the bill are eligible for a SLFRF loan;
- Requiring project sponsors to waive the right to request a qualified contract (QC) as a condition of receiving a SLFRF loan;
- Requiring project sponsors to agree to repay SLFRF loaned funds to the entity that originated the loan if a project becomes non-compliant to the extent that it ceases to qualify as low-income housing/fails to comply with the extended use commitment; and
- Requiring Treasury to provide annual reports to several congressional committees on SLFRF obligations to Housing Credit projects and on the status of any repayments on the SLFRF loans.
To learn more about the legislation, check out a recent blogpost from ACTION co-chair, Jennifer Schwartz at NCSHA.
