Maine estimates that this fix to the American Rescue Plan would allow the state to build twice as many affordable housing units
Washington, D.C. – Amidst the housing crisis facing our nation, U.S. Senators Susan Collins (R-ME), Patrick Leahy (D-VT), and Ron Wyden (D-OR) introduced the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act (LIFELINE) Act. The bipartisan bill would improve the use of State and Local Fiscal Recovery Plan Funds with the nation’s largest affordable housing funding mechanism, the Low-Income Housing Tax Credit (LIHTC).
“A lack of affordable housing in many communities in Maine and across the country is causing significant hardships for countless families. Low Income Housing Tax Credits can be an important part of the solution by leveraging private investments to significantly expand the supply of affordable rental units,” said Senator Collins, Ranking Member of the Housing Appropriations Subcommittee. “Our bill would remove red tape created by the American Rescue Plan to allow state and local governments to tap into the potential of this tax credit and help more families find safe, affordable housing.”
“In response to a request for an amendment to the American Rescue Plan Act (ARPA) necessary to maximize the development of affordable housing in Maine, Sen. Collins wasted no time responding,” said Catherine Conlow, Executive Director, Maine Municipal Association. “Within days of the request, she agreed to lead the effort in the Senate via the LIFELINE Act. If successful, the measure will allow communities, counties, and states to produce more affordable housing units by using ARPA funding to leverage low-income housing tax credits. State and municipal officials greatly appreciate Sen. Collins’ swift response to this important issue.”
Our nation is facing a dire shortage of affordable housing, and the COVID-19 pandemic has only worsened the problem. An estimated 46 percent of renters in the United States are cost-burdened.
Across the country, $8 billion of State and Local Fiscal Recovery Funds have been designated to increase the supply of affordable housing. Maine had planned to use $50 million of State and Local Fiscal Recovery Funds for affordable housing, and using the LIHTC would allow the state to stretch those dollars further to build twice the number of affordable housing units. Under the American Rescue Plan, however, the LIHTC is not an eligible use for State and Local Fiscal Recovery Funds.
Federal grants used to fill gaps in LIHTC-funded construction are almost always provided as long-term loans. However, State and Local Fiscal Recovery Funds must be obligated by 2024 and spent by 2026 and therefore cannot be loaned. The LIFELINE Act would solve this problem by allowing states and localities to loan State and Local Fiscal Recovery Funds to LIHTC projects.
The LIFELINE Act was drafted in consultation with the Treasury Department, the authorizing committees for the State and Local Fiscal Recovery Fund, and housing and tax credit stakeholders. It has been endorsed by nearly 100 state and national organizations.