The blog of the Urban Institute
November 15, 2021

How Are Cities Planning to Use State and Local Fiscal Recovery Funds for Their Housing Needs?

The American Rescue Plan Act (ARPA) allocated an unprecedented $350 billion in Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to states, counties, tribal governments, and cities to address the pandemic’s disproportionate public health and economic impacts on communities and households.

These funds can be used to address housing-related needs, from assisting households with rent, mortgage, utility, and relocation costs to supporting affordable housing development in areas most affected by the pandemic.

Given housing market challenges leading up to and during the pandemic—particularly for households of color, who are more likely to be cost burdened, face worst-case housing needs, and endure the disproportionate threat of eviction or foreclosure—these funds could make a big difference in recovery for these households.

To assess whether SLFRF allocations have empowered cities to develop new solutions to persistent housing challenges, we examined publicly available recovery plans for cities with populations of 250,000 or greater and with four or more census tracts with a rental assistance priority index score in the 99th percentile in the city or county, which indicates neighborhoods where low-income renters face greater risks of housing instability and homelessness. This resulted in a review of 29 cities across the US (file).

Based on the “allowable uses” in the US Department of the Treasury’s guidance (PDF), we categorized “housing uses” by the following:

  • emergency rental or utility assistance
  • eviction prevention and diversion programs, including legal services
  • emergency mortgage assistance and foreclosure prevention programs
  • housing vouchers
  • residential counseling or housing navigation assistance
  • affordable housing development, preservation, and rehabilitation
  • homelessness prevention services
  • other housing-related uses and supports

How are cities using SLFRF to address housing needs?

Housing is a leading priority for many places across the country.

Only four of the cities’ recovery plans included no housing-related uses.

Many cities are using the funds for either homelessness services or affordable housing construction and preservation.

More than half (57 percent) plan to use recovery funds to expand or rehabilitate affordable housing stock. The second-most-common planned use was homelessness prevention and alleviation (53 percent), providing people experiencing homelessness access to food, water, shelter, and sanitation to help mitigate their risk of COVID-19 exposure.

For example, Portland, Oregon planned to spend more than $16 million on the city’s Safe Rest Villages project, six outdoor shelters designed to provide safe, clean, and secure access to food and shelter for people experiencing homelessness.

Although affordable housing production and homelessness services commonly appeared in city plans, we identified a range of other housing-related uses, including rental assistance, navigational support, foreclosure relief, and more.

As our data show, cities plan to use the funds for a variety of housing uses. Some places, such as Milwaukee, Wisconsin, are embracing a broad and multitiered approach to housing support through its Recovery and Resiliency Plan.

The plan outlines several innovative housing priorities (PDF) to meet residents’ needs, including supporting improvements in the built environment by supplementing the Choice Neighborhood Initiative Westlawn revitalization project, eviction prevention activities like the newly launched Milwaukee Rental Housing Resource Center, and reducing energy use through rehab loans in the Climate, Energy, and Equity Upgrade Program.

Other places, such as Atlanta, Georgia, proposed using funds to support innovative programs. Atlanta plans to use the funds to support WeatheRISE, a program offering energy-efficiency education (PDF) to those facing high energy costs and living in owner-occupied single-family homes in low-income census tracts.

Despite several federal agencies and the White House urging state and local governments to use ARPA funds to set up eviction prevention and diversion programs (PDF) and provide legal services to tenants facing eviction, few cities we reviewed plan to use funds this way.

Fewer than a quarter of cities plan to use the funds on eviction prevention or diversion services, including legal services for tenants facing eviction.

What are the implications of our review?

Cities’ diverse and creative plans reveal the scope of housing needs and local urgency to find funding for solutions.

Our findings suggest federal financial support enhances local leaders’ ability to address their communities’ housing needs. SLFRF, while unprecedented in scale, are not a long-term solution; states and localities must obligate funds by December 2024. Increased federal funding for housing through existing and new programs, such as those the White House recently proposed through its Build Back Better framework, could help sustain progress by providing investments to increase the supply of affordable housing, preserve deeply affordable housing communities already have, and support cost-burdened households with rental assistance through expanded housing vouchers.

And few places plan to use SLFRF for eviction prevention activities despite the expiration of the national and many local eviction moratoria. As of the end of September, only 37.5 percent of renter households lived in areas with some form of moratorium (PDF) or a delay in eviction proceedings for those with pending rental assistance applications. It’s possible cities are covering these activities with other funding sources, such as federal emergency rental assistance or local sources, but it warrants further study.

Overall, it seems many places plan to use SLFRF allocations to address immediate and longer-term housing needs. And if the trend of increased housing investment continues, as proposed in the Build Back Better framework, SLFRF spending could be just the first step toward alleviating a range of local housing issues.


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(Jerry Trudell the Skys the Limit/Getty Images)

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