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COVID-19 Federal Assistance e311

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Housing & Rental Assistance

Can a municipality use American Rescue Plan (“ARP”) dollars to establish and fund a land bank program whose objective is to convert city-owned properties within a QCT into affordable housing?

Guidance issued by the U.S. Department of the Treasury (“Treasury”) indicates that affordable housing projects within the bounds of a Qualified Census Tract (“QCT”) likely qualify as an allowable use of ARP Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”). Municipalities have broader discretion as to how they employ CSLFRF for projects within the bounds of a QCT. Further, Treasury guidance indicates that each municipality may assess whether a land bank’s particular operations qualify as housing services that meet the eligibility requirements of the ARP.[1]

Treasury’s Final Rule released on January 6, 2022, specifies the following services for vacant or abandoned properties, which are eligible to address the public health and negative economic impacts of the pandemic on disproportionately impacted households or communities:

  • Rehabilitation, renovation, maintenance, or costs to secure vacant or abandoned properties to reduce their negative impact;
  • Costs associated with acquiring and securing legal title of vacant or abandoned properties and other costs to position the property for current or future productive use;
  • Removal and remediation of environmental contaminants or hazards from vacant or abandoned properties, when conducted in compliance with applicable environmental laws or regulations;
  • Demolition or deconstruction of vacant or abandoned buildings (including residential, commercial, or industrial buildings) paired with greening or other lot improvement as part of a strategy for neighborhood revitalization;
  • Greening or cleanup of vacant lots, as well as other efforts to make vacant lots safer for the surrounding community;
  • Conversion of vacant or abandoned properties to affordable housing; and
  • Inspection fees and other administrative costs incurred to ensure compliance with applicable environmental laws and regulations for demolition, greening, or other remediation activities.[2]                                                                

Further, the Final Rule also clarifies that grants to a revolving loan fund, an economic development corporation, a land bank, or a similar facility must be used for costs incurred for eligible purposes no later than December 31, 2024, consistent with standard accounting practices and the Uniform Guidance.[3]

Recipients considering using CSLFRF to fund a land bank program should review the guidance provided by Treasury in the Final Rule on Vacant or Abandoned Properties to help assess eligible activities and additional considerations.[4]

In addition, CSLFRF provides opportunities for local governments to alleviate the immediate economic impacts of the COVID-19 pandemic on housing insecurity in concentrated areas with limited economic opportunity and inadequate or poor-quality housing (such as a QCT).[5],[6] The Final Rule identifies a range of services and programs that are presumed to be eligible uses of ARP funds when provided within a QCT.[7] As a rationale for this approach, Treasury notes that “recipients can presume these uses are eligible when provided in a QCT,” and that QCTs are “a common readily-accessible and geographically granular method of identifying communities with a large proportion of low-income residents.”[8],[9]

Notably, the Final Rule states that “supportive housing and other services to improve access to stable, affordable housing among individuals who are homeless” are covered within QCTs.[10] Thus, a municipality seeking to fund a land bank with funds provided under the CSLFRF should consider structuring the land bank arrangement to support improving access to affordable housing for the homeless. 

A municipality planning to implement a land bank project should undertake a thorough review of the Final Rule, particularly the sections that discuss presumptively eligible applications of funds within a QCT and consider designing their land bank’s structure and operations to satisfy those descriptions. The Center for Community Progress analysis provides additional guidance and good practices to consider when applying CSLFRF funds to a land bank project.[11]

Last Revised: February 1, 2022

[1] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #2.11, at 7, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[2] Treas. Reg. 31 CFR 35 at 134, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[3] Id., at 367-368.

[4] Id., at 133.

[5] Id., at 104-105.

[7] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #2.11, at 7, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[8] Treas. Reg. 31 CFR 35 at 125, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[10] Id., at 142.

[11] Center for Community Progress, “Community Progress Weighs in on $350 Billion ARPA State and Local Recovery Fund,” available at: https://www.communityprogress.net/blog/community-progress-weighs-treasury-arpa-350-billion-state-local-fiscal-recovery-fund.