Capitol Correspondence - 06.25.24

Treasury Secretary Yellen Announces New Housing Initiatives to Lower Costs

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Yesterday, U.S. Treasury Secretary Janet L. Yellen announced new housing initiatives as part of the Biden Administration’s efforts to reduce housing costs. Speaking in Minneapolis, Yellen outlined several new funding sources and policy changes aimed at increasing the supply of affordable housing. These initiatives are particularly significant for nonprofit organizations and community developers engaged in housing projects.

One key effort is a new Treasury program administered by the Community Development Financial Institutions (CDFI) Fund, which will allocate an additional $100 million over the next three years to support the financing of affordable housing. This program aims to bolster the production of housing units that are affordable to low- and moderate-income households, providing essential resources for nonprofits working in the housing sector.

Secretary Yellen also announced efforts to provide greater interest rate predictability for state and local housing finance agencies borrowing from the Federal Financing Bank (FFB). This change is expected to enhance the financing of new housing developments, potentially leading to thousands of additional housing units. This predictability is crucial for nonprofit housing developers who rely on stable financing to plan and execute long-term projects.

Furthermore, Yellen called on the Federal Home Loan Banks (FHLBs) to increase their spending on housing programs. She urged the FHLBs to raise their commitment from 10% to 20% of their net income for housing programs, which would significantly boost funding available for new housing construction. This increase would provide nonprofits with greater access to funds necessary for building and maintaining affordable housing.

In addition to funding initiatives, the Treasury released an updated “How-To Guide” to assist state and local governments in using recovery funds to construct housing. This guide offers practical advice on leveraging State and Local Fiscal Recovery Funds (SLFRF) to support new housing projects, which is particularly beneficial for nonprofits navigating the complexities of funding and regulatory requirements.

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