Key Housing Provisions of the American Recovery and Reinvestment Act - Federal Stimulus Package

Below is the initial description of the American Recovery and Reinvestment Act.  For the latest information on the implementation of these programs in North Carolina, click here.

March 2009

President Barack Obama signed the American Recovery and Reinvestment Act into law on February 17. The bill will provide more than $13.6 billion to HUD for public and assisted housing, homelessness prevention, jump-starting stalled low income housing tax credit projects, the Neighborhood Stabilization Program, Community Development Block Grants, lead-based paint hazard reduction and Native American Housing Block Grants. Additional funds were also provided for the Rural Housing Service’s single-family homeownership programs.

Some funds will be distributed by formula and others by national competition. Funds subject to formula distribution are $3 billion through the Public Housing Capital Fund, $255 million through the Native American Housing Block Grants; $1 billion through CDBG, $2 billion in HOME dollars for stalled LIHTC projects, and $1.5.billion in Emergency Shelter Grants for homelessness prevention only.

The statute prescribes in some detail the time frames in which HUD must disperse the funds, and recipients must obligate and expend the funds. For most programs, HUD is required to recapture unspent funds after three years. Rapid spend-out is a key objective of the stimulus bill.

How much each state or local government will receive from the formula-funded programs is “question-of- the-day.”  The Center for American Progress released a state-by-state estimate of all economic stimulus funds on February 13. Estimates for HUD programs can be found at http://www.nlihc.org/doc/ARRA-for-publication.pdf

The Center on Budget and Policy Priorities analyzed how much each state can expect to receive of the $1.5 billion Emergency Shelter Grant (ESG) funds, based on the way $160 million for ESG program was distributed to ESG grantees in FY08. The HUD Secretary will determine the minimum grant size. CBPP also estimates how many households could be assisted at the state level, assuming that the national average cost per household assisted would be $5,000 and weighting this estimate by the average HUD Fair Market Rent for each state.

View CBPP’s state ESG estimates at http://www.cbpp.org/1-22-09bud-es.pdf

Below is a quick break down of the housing-related provisions in the bill:

Tax Provisions

• $8,000 first-time home buyer, true tax credit (no repayment) for the purchase of a principle residence between January 1 and December 1, 2009.  Recaptured if home is sold within three years.  Removes the restriction on the use of tax credit proceeds with Housing Finance Agency-issued tax exempt mortgage revenue bonds.  
• Short-term gap financing for Low Income Housing Tax Credit (LIHTC) projects:
• Provision allowing states to turn in portion of 2009 LIHTC allocations for cash.
• Special appropriation of $2 billion in HOME funds.
• Up to a ten-year deferral of tax from business debt cancelled as part of a repurchase or restructuring.
• 5-year carryback of 2008 net operating losses for businesses with gross receipts of less than $15 million (three year average).
• Extension of enhanced bonus depreciation.
• Extension of increased small business expensing.
• Enhancements to the section 25C program for energy efficiency remodeling improvements to existing homes.
• One-year patch of the Alternative Minimum Tax.
• Increase New Markets Tax Credit allocating authority for 2008 and 2009.
• Delays for one year the start of 3% government contractor withholding requirement.

Appropriations Provisions

• $4 billion to repair existing public housing
• $2 billion for full year payments to owners of Section 8 project based rental assistance properties.
• $2.25 billion through HOME program and Low Income Housing Tax Credit program to fill financing gaps.
• $1 billion for CDBG.
• $2 billion for Neighborhood stabilization program.
• $1.5 billion for homelessness prevention activities (help with rents, etc).
• $250 million for energy retrofitting and green investments in HUD assisted projects.
• $1 billion for Section 502 direct loans under the Rural Housing Service. 
• $10.4 billion for Section 502 guaranteed loans under the Rural Housing Service. 
• $27.5 billion for highway spending.

Other Key Provision

• Increases in FHA, Fannie Mae and Freddie Mac loan limits to 2008 levels.