August 13, 2024

The Biden Administration announced $100 million in grants to state and local governments through the Department of Housing and Urban Development’s (HUD) Pathway to Removing Obstacles to Housing (PRO Housing) program to spur the construction of new housing. The PRO Housing Program provides grants to identify and remove barriers to affordable housing production and preservation. Grantees may use awards to further develop, evaluate, and implement housing policy plans, improve housing strategies, and facilitate affordable housing and preservation.

Additionally, HUD launched the “Legacy Challenge” which is intended to encourage communities that directly receive Community Development Block Grants to leverage low-cost, low-interest loans for housing investments. Up to $250 million in loan financing will be made available through the Section 108 Loan Guarantee Program for adaptive reuse, commercial-to-residential conversions, rehabilitation of existing housing, housing enabling infrastructure such as water and sewer line installation or upgrades, and revolving loan pools to support local development.

The Department of Transportation also announced new guidance to streamline and clarify requirements for closing DOT loans for residential development near transit, including commercial-to-residential conversions. The new guidance clarifies that Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) loans used for conversion projects may be eligible for a categorical exclusion under the National Environmental Policy Act (NEPA) that would exempt applicable projects from more detailed environmental analysis and save time and money, as long as those projects do not expand the footprint of the building being converted or modify other facilities. The guidance further clarifies that TIFIA loans can be used to refinance existing debt as part of building conversion or expansion projects and clarifies that TIFIA and RRIF loans can serve as permanent, take-out financing for construction loans consistent with statutory requirements, as long as federal requirements are met.

Finally, HUD and the Treasury Department are announcing improvements to the Federal Financing Bank (FFB) Multifamily Risk Sharing Program that would provide greater interest rate predictability for state and local housing agencies that finance housing projects through the FFB. This new action is intended to expand the reach of the Risk Sharing program, especially for new construction projects, by providing housing finance agencies with greater certainty about the interest rate they will face after the construction period ends, making more housing developments financially viable.

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