© Reuters. FILE PHOTO: U.S. Deputy Treasury Secretary Wally Adeyemo speaks during a joint news conference with EU Commissioner McGuinness (not pictured) in Brussels, Belgium March 29, 2022. REUTERS/Johanna Geron/Pool
By David Lawder
WASHINGTON (Reuters) – Deputy U.S. Treasury Secretary Wally Adeyemo on Monday called on state, local and tribal governments to use more of their shares of a $350 billion COVID-19 relief fund to address a severe shortage of affordable housing.
Adeyemo was pressing his case during a visit to Los Angeles to highlight California officials’ plans to use $7.4 billion of the state’s $27 billion allotment from the State and Local Fiscal Recovery Funds to address housing needs.
That represents the lion’s share of the $11.7 billion budgeted for housing so far by 570 state and local governments from their recovery funds, which were approved last year as part of President Joe Biden’s $1.9 trillion American Rescue Plan Act.
Adeyemo told Reuters that addressing a lack of affordable housing has emerged as a top long-term priority for many cities and counties as they emerge from the COVID-19 pandemic.
“We just need more housing in this country – both multi-family and single-family – and we think using the ARP dollars to do that makes a lot of sense,” Adeyemo said in an interview.
He is due to visit a community housing organization in Compton, California, where he said he will call on other state and local governments to follow California’s lead in dedicating more of their ARP funds to housing.
California is investing $1.75 billion in development capital for “shovel-ready” housing developments and preservation of existing affordable housing in need of significant repairs or at risk of conversion to market-rate housing, the Treasury said. The state, the country’s most populous, also plans to rehabilitate vacant hotels, apartment buildings and other structures specifically for individuals facing homelessness.
The $350 billion in state and local recovery funds administered by Treasury has given many communities an unprecedented influx of funds, and is emerging as the Biden administration’s premier social policy tool as a much larger social and climate spending plan languishes in Congress.
Research by mortgage finance giant Freddie Mac (OTC:) showed that the shortage of U.S. housing hit 3.8 million units in 2020, up 52% from 2018. It cited slow construction of entry-level homes since the 2008-2009 financial crisis coupled with increasing demand from the large millennial generation, now entering its peak first-time homebuying years.
Adeyemo said that he is meeting with local officials in Los Angeles County to better understand their needs so that Treasury can provide maximum flexibility in uses of the funds to promote housing development.
The ARP funds can help provide the “last dollar” of investments needed to finance many projects, combined with private-sector funds, bank loans, housing tax credits and local incentives, he said.