Ottawa, Kent County Seeks to Maximize ARPA with Home Revolving Loan Fund

Both Ottawa and Kent counties are using federal stimulus funds to help stem local housing shortages by providing ongoing funding rather than funding individual projects. to create a revolving loan fund.

Both counties have screened funding proposals for hundreds of American Rescue Planning Act (ARPA) projects since the summer. Affordable housing and a desire to create a housing revolving loan fund that can support projects on an ongoing basis have been identified as his ARPA spending priorities in both counties.

Similarly, many local governments are considering using at least a portion of ARPA funds to create home revolving loan funds, said Ali Mooney. guide houseis a national consulting firm that assists cities and counties through the ARPA process.

“Creating a revolving housing fund is a long-term vision where funds are not just used for finite projects, but then run out,” Mooney said. “People can use these funds to continue supporting the production of affordable housing in the future, so this is a good use.”

Revolving mortgage funds can provide gap financing in the form of low-interest loans to affordable housing project developers. Such funds are typically maintained by repaying principal and augmented by interest payments.

A recent ARPA-backed Home Revolving Loan Fund proposal allows institutional and individual donors to contribute to the fund, and developers can request funds through the application process.

The Kent County Commissioner’s Board will vote on November 14 to select projects that will receive a portion of the county’s $127 million ARPA fund. The Ottawa County Finance and Control Board will review the project to share his $57 million in ARPA funds on Nov. 15.

“In general,[revolving loan funds]are a concept that has a lot of support, but the government can’t fund a home with general Michigan funds, so they don’t want special funds from somewhere else. It has to be ARPA money,” said Kent County Administrator Al Vanderberg.

In Kent County, several specific housing projects have submitted requests for a portion of the county’s federal stimulus funds. Vanderberg, who is taking a revolving his loan his fund approach, could support not only these projects, but many more in the future.

He added that county funding will begin the process of establishing it, but the county will not operate the revolving loan fund if it is created. Community Development Finance Institution (CDFI) receives public funding It’s possible, and some CDFIs could offer “substantial matching potential” to expand other financial contributions to the fund, Vanderberg said.

“CDFI partners will underwrite and manage loans and also support private investment,” said Vanderberg. “If this is the direction the board is heading, it will likely create a committee to advise on what it wants to do with the fund.”

Growing interest in housing

David Sernick, a managing consultant for state and local governments at Guidehouse, said many of his local government clients were already considering plans to create a home revolving loan fund before the ARPA process. I was. Housing, in general, is on the top of mind among his clients these days, he said.

“It’s very clear that housing is one of those things that seems to be inherently bipartisan at this point,” said Cernick, who has consulted with Kent County through the ARPA process. is what you have.”

Over the summer, the Ottawa County ARPA Task Force recommended using $8 million in ARPA funds to create a Home Revolving Loan Fund. The county board also said on Aug. 23 that he gave final approval to two affordable housing projects, responding to tight timelines from project developers, the county’s director of financial services. Karen Karasinski said.

Ottawa County Commission Approves $1.5 Million in ARPA Grants to Social Services Nonprofits samaritus To build 43 one-bedroom and 10 two-bedroom affordable homes in Spring Lake.Similarly, county commissions also approved non-profit developers residencerequested $2 million in ARPA grants for a 46-unit apartment project in downtown Holland.

Both ARPA grants are contingent on housing and samaritans receiving the state’s low-income housing tax credit in the April 2023 application cycle.

“Many lenses have been considered by[the Ottawa County ARPA Task Force]. Affordable housing is a cross-sectoral area,” said Karasinski, who is also a member of the ARPA Task Force. “This is important for companies and fits into many of our focus areas.”

It was also not always clear whether ARPA funds could be used to fund revolving home loans. In July 2022, the U.S. Treasury Department announced rule changes that would give local governments more flexibility in how funds are used for housing projects, Mooney said.

Using ARPA funds to make a mortgage requires, with a few exceptions, that the unit’s affordability period be set at least 20 years, or that the rental unit’s price be 65% of the average income in the area. There are some restrictions, such as it must be less than or equal to %. said Mooney.

Other ARPA-funded housing uses being considered by local governments include new construction of units or assistance with housing for homeless individuals, a down payment assistance program for new homeowners, and to maintain existing units. of home repair programs, Mooney said.

“We’ve noticed an openness to discussing long-term affordability and other possible ways to impact housing in general, which is great,” Mooney said. rice field. “Housing has probably been something that hasn’t received much attention in the past. Indeed, the pandemic has made it even more apparent that housing stock is extremely important, especially when it comes to where people need to stay safely. Talking about how to influence the larger community within a holistic nature is something that more communities are happy to discuss.”

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