Cities Channel 11% Of Rescue Plan's Funds Into Projects Valued At $6.7 Billion

As of the end of last year, large U.S. cities and counties had committed 11% of the funding they received under the American Rescue Plan Act to housing projects.

According to a recent report from Brookings, they have used the State and Local Fiscal Recovery Funds (SLFRF) program, part of the Rescue Plan Act, to invest $6.7 billion of the $58.8 billion appropriated to date in housing projects. About two-thirds of the investments focus on homelessness services and affordable housing developments.

The direct investments in housing have been supplemented by complementary programs addressing mental health and substance abuse crises, neighborhood and downtown revitalization efforts and infrastructure projects such as replacing lead pipes and remediating residential blight.

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Direct and supportive housing investments include Cook County, Illinois' investment in behavioral health support for people living in affordable housing properties managed by the housing authority; Louisville, Kentucky's down payment assistance program for households earning less than 80% of the area median income; and Travis County, Texas' collaboration with local nonprofits on a supportive housing initiative to build new housing for people experiencing homelessness.

"These appropriations represent a significant local commitment to addressing housing-related distress," the Brookings report states. "However, funding committed for affordable housing development has been comparatively slow to reach the communities such projects are designed to help."

Although local governments have made progress in choosing contractors and service providers to deploy the committed funds, expenditures have lagged. At the end of 2023, just one-third of all funds committed to housing projects had been spent on affordable housing.

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In some cases, delays are occurring where commitments to developing affordable housing have been strongest. In Madison, Wisconsin, where home values increased 14% between 2022 and 2023, the city has committed 66% of its SLFRF investments toward affordable housing. However, by the end of 2023, none of the appropriated money had been spent.

Affordable housing accounts for one-fifth of SLFRF appropriations in Cumberland County, North Carolina. The county saw a spike in homelessness resulting from evictions near Fayetteville, but none of the funding has been spent.

The report says local governments aren't necessarily to blame for project delays.

"These delays are not necessarily a reflection of public sector commitment or capacity. Capital-intensive investments in new housing have much longer time horizons than other housing-related projects, such as those that invest in services for unhoused populations," the report states.

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