COVID-19 Federal Assistance e311


Fund Planning & Allocation, Housing & Rental Assistance

Funding Source

American Rescue Plan Act, CSLFRF

Can a reserve of operating funds for affordable housing be used past December 31, 2026?

Currently, there is no consideration in the American Rescue Plan Act (“ARPA”) to extend the use of funds passed the stated deadline of December 31, 2026 to cover eligible affordable housing operating costs. The U.S. Department of the Treasury (“Treasury”) states in its Final Rule on Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) that “[CSLFRF] funds must be obligated by December 31, 2024, and expended by December 31, 2026.”[1] Award recipients may expend funds after 2024 so long as the payment for the eligible cost occurs before December 31, 2026. Regardless of the intended use of funds, Treasury states that recipients “must return any funds not obligated by December 31, 2024. A recipient must also return funds obligated by December 31, 2024, but not expended by December 31, 2026.”[2]

While Treasury has explicitly stated that the deadline to expend all CSLFRF awards is December 31, 2026, it has also included language confirming the eligibility of using funds to cover operating costs of affordable housing developments. Treasury utilized the public comment process to develop the Final Rule to improve eligible uses of CSLFRF funds in line with recipients’ needs. With respect to operating costs for affordable housing, Treasury responded to public comments on the Final Rule, stating that:

Public Comment: Operating Expenses: Commenters specifically asked that Treasury allow the use of [C]SLFRF funds for operating expenses of affordable housing units, as operating subsidies are typically required to reach extremely low-income households, whose affordable rents may be lower than the ongoing cost of operating their unit.

Treasury Response: Operating expenses for eligible affordable housing were an eligible use of funds under the interim final rule and the final rule maintains this treatment. This may include capitalized operating reserves. Rehabilitation and repair of public housing will also be considered an eligible use of [C]SLFRF funds.[3]

Municipalities concerned with the long-term financial sustainability of proposed or in-progress affordable housing developments may consider leveraging alternative sources of funds, including Low-Income Housing Tax Credits (“LIHTC”),[4] Community Development Block Grants (“CDBG”),[5] Home Investment Partnerships Program (“HOME”),[6] or other eligible Housing and Urban Development (“HUD”) monies.

If a municipality decides to utilize multiple sources of funding to carry out an affordable housing project, federal requirements for “braided” funding would apply to the entirety of that project. Treasury explicitly states, “[C]SLFRF funds may not be used to fund an activity that is not, in its entirety, an eligible use under the [C]SLFRF program.”[7] Similarly, if a project is partially funded by CDBG funds and includes other sources of federal funding, the project must comply with all related federal regulatory requirements and policies.[8]

Although operating costs for affordable housing are an explicitly contemplated eligible use under CSLFRF, such use of funds must still adhere to the obligation deadline of December 31, 2024, and expenditure deadline of December 31, 2026.

Last Updated: February 14, 2023

[1] Treas. Reg. 31 CFR 35 at 194, available at:

[2] Id., at 414.

[3] Id., at 108.

[4] U.S. Department of Housing and Urban Development, “Low-income Housing Tax Credit (LIHTC),” available at:

[5] U.S. Department of Housing and Urban Development, “COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM,” available at:

[6] U.S. Department of Housing and Urban Development, “THE HOME PROGRAM: HOME INVESTMENT PARTNERSHIPS,” available at:

[7] Treas. Reg. 31 CFR 35 at 360, available at:

[8] Id.