COVID-19 Federal Assistance e311


Fund Planning & Allocation, Infrastructure & Maintenance Investments, Program Administration

May a municipality use funds obtained through the ARP to close funding gaps for the construction of income-restricted housing?

The Coronavirus State and Local Fiscal Recovery Fund (“CSLFRF”) established by the American Rescue Plan Act of 2021(“ARP”) does not permit the use of its funds for “general infrastructure” programs. However, the ARP does authorize specific investments in infrastructure that address the negative economic impact resulting from the COVID-19 pandemic, such as affordable housing, at least where the housing project exists within a Qualified Census Tract (“QCT”).[1]

Congress designed the CSLFRF to provide flexibility for governments to meet local needs, including the provision of individual rental assistance, addressing the housing and health needs of persons experiencing homelessness, and building and preserving affordable housing in impacted communities. The CSLFRF provides opportunities for local governments to alleviate the immediate economic impacts of the COVID-19 pandemic on housing insecurity while addressing conditions that contributed to poor public health and economic outcomes during the pandemic; namely, concentrated areas with limited economic opportunity and inadequate or poor quality housing.[2] The U.S. Department of the Treasury’s (“Treasury”) Interim Final Rule (“the Rule”) lists several eligible services, including:

  • Services to address homelessness such as supportive housing, and to improve access to stable, affordable housing among unhoused individuals,
  • Affordable housing development to increase the supply of affordable and high-quality living units, and
  • Housing vouchers, residential counseling, or housing navigation assistance to facilitate household moves to neighborhoods with high levels of economic opportunity and mobility for low-income residents, to help residents increase their economic opportunity and reduce concentrated areas of low economic opportunity.[3]

Notably, the Rule restricts the presumption of eligibility for these projects to those occurring within QCTs, as designated by the United States Department of Housing and Urban Development (“HUD”). The Rule and Treasury’s Frequently Asked Questions (“FAQs”) do not further elaborate on whether the construction of affordable housing outside of a QCT would be considered an eligible use category for CSLFRF. Treasury’s Final Rule may provide additional guidance or considerations.

Last Revised: August 12, 2021

[1] U.S. Department of Housing and Urban Development, “Qualified Census Tracts and Difficult

Development Areas,” available at:

[2] U.S. Department of the Treasury, Reg. 35 CFR 31, at 39,

[3] Id (emphasis added).