Background:
History: On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, including the appropriation of more than $130 billion to the Coronavirus Local Fiscal Recovery Fund, for making payments to metropolitan cities, counties, and other units of local government to mitigate the fiscal effects stemming from the public health emergency. Hennepin County expects to receive direct payments from the U.S. Treasury totaling more than $220 million and received the first half payment of $122.9 million in May of 2021.
The American Rescue Plan Act provides that money from the Coronavirus Local Fiscal Recovery Fund may only be used to cover certain costs, including costs to respond to the public health emergency or its negative economic impacts. The funds must be obligated by December 31, 2024 and expended to cover such obligations by December 31, 2026. Under the available Treasury guidance, this category of eligible costs can include assistance to households, small businesses and nonprofits, including loans, grants, in-kind assistance, technical assistance or other services that respond to the negative economic impacts of the pandemic.
Additional programs, services, or other assistance may be an eligible use of Federal Pandemic Funds where provided to households, businesses, or populations disproportionately impacted by the COVID-19 public health emergency, including programs or services that address housing insecurity, lack of affordable housing, or homelessness, including:
- Supportive housing or other programs or services to improve access to stable, affordable housing among individuals who are homeless;
- Development of affordable housing to increase supply of affordable and high-quality living units; and
- Housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity and to reduce concentrated areas of low economic opportunity.
The above examples center on building stronger communities through investments in housing and neighborhoods as a way to address the disproportionate negative economic effects of the public health emergency. In addition, for populations disproportionately impacted by the pandemic, funds can be used to facilitate access to health and social services, to address or mitigate impacts to education, or to address or mitigate impacts to childhood health or welfare.
Beyond the repercussions to the health and safety of county residents, the unprecedented economic environment created by the COVID-19 pandemic has resulted in massive business closings, income loss, and unemployment. For low-income Hennepin County residents, any break in income can have serious financial consequences, making it even harder to pay for already unaffordable housing costs. Ensuring stable housing is important for our individual and community health.
The economic impacts of COVID-19 were most heavily felt by people with low incomes, and Black, Indigenous, or People of Color (BIPOC). Of individuals requesting emergency rental assistance in Hennepin County, nearly 2/3 have incomes below 30% of the area median income (AMI), and 4/5 are BIPOC.
In 2020, Hennepin County deployed over $22 million in state and federal CARES Act funding towards emergency rental assistance, serving approximately 6,500 households.
Currently, the county is administering $56.7 million in Emergency Rental Assistance from the U.S. Department of Treasury (Resolution 21-0051 and Resolution 21-0188), expected to serve over 15,000 county households.
On May 11, 2021, the Hennepin County Board of Commissioners, acting as the Housing and Redevelopment Authority, approved $17.1 million to support 27 affordable housing and development projects—the largest amount of funding ever awarded by the board at once to support affordable housing. The historic action will help to create or maintain 2,270 units of housing, including 1,550 affordable units, of which 360 will be affordable to households with the lowest incomes earning less than 30% of the AMI, or about $31,450 for a four-person household.
Even with these actions, there will still be unmet needs in our community. These unmet needs will be greatest with lowest income households, and households not eligible for federal and state programs.
Staff has the following preliminary recommendations for the use of Federal Pandemic Funds for equitable housing recovery:
- Investments to immediately increase affordable multifamily housing production, such as:
- Gap funding for affordable housing projects serving populations disproportionately impacted by the COVID-19 public health emergency
- Investments to address a backlog of deferred rehab need in Naturally Occurring Affordable Housing (NOAH) properties (a primary source of housing for populations disproportionately impacted by the COVID-19 public health emergency) and support for additional non-profit preservation acquisition of at-risk NOAH properties
- Acquisition of properties supporting affordable housing along the housing continuum, especially single adults who were disproportionately impacted by the COVID-19 public health emergency and are now struggling with homelessness/housing instability
- Homeownership programs targeting populations disproportionately impacted by the COVID-19 public health emergency
Impact/Outcomes: Create or preserve approximately 2,000 units of affordable housing; and support more than 100 households in buying homes.