Lawmakers in the NC General Assembly released a draft budget agreement on Tuesday evening that addresses the challenges to using federal funds to fill construction gaps in past low income housing tax credit (LIHTC) projects, and provides the first increase to the state’s Housing Trust Fund since 2016. House and Senate Leaders expect the proposal to move quickly through both chambers, with votes anticipated on Friday and Saturday.
Budget Addresses LIHTC Gaps
This budget allocates $190M to the Workforce Housing Loan Program (WHLP), $20M of which is new funding. In the two-year budget enacted last Fall, the WHLP received $170M from North Carolina’s State and Local Fiscal Recovery Funds (SLFRF) through the American Rescue Plan to address funding gaps in the 2019 and 2020 LIHTC deals. However, U.S. Treasury guidance issued in January created a barrier to using these funds as allocated. You can read more about this here. In the absence of a federal fix, the NCGA chose to swap out the $170M in federal SLFRF funds for $170M in state general funds. This circumvents the challenges presented by the Treasury guidance, making this funding available to be quickly committed. The budget aso appropriates an additional $20M for the WHLP in FY22-23, which is $20M short of an estimated $40M that was needed.
The budget also removes the WHLP caps for this allocation. The WHLP is designed with caps on the amount of loans that can be made each cycle. Keeping these caps in place would have prevented the funds from reaching the developments with the greatest need.
Housing Trust Fund
The budget appropriates a $10M increase in the state’s Housing Trust Fund (HTF). This increases funding from $7.7M to $17.7M, which puts the HTF at its highest level since 2007 and represents the first increase in HTF funding since 2016, when appropriations were increased from $6.8M to $7.7M.
Other Housing-Related Items
Additional changes to housing-related programs include:
- $10M that was originally appropriated in FY21-22 to a multifamily affordable housing project in Robeson County will instead be used for a similar project that meets elevation requirements for construction in a floodplain in Lumberton.
- $14.8M is added to the Opioid Abatement Fund through DHHS. The previously enacted funding for this program, ($15.7M for FY21-22 and $812K for FY22-23) is still available for evidenced-based supportive housing (Housing First), move-in deposits/rent/utilities, training on tenant rights, landlord training and outdoor living supplies. However, the newly allocated $14.8M is largely reserved for non housing-related activities, with the exception of $1M for TROSA to provide housing support to individuals in recovery.
- $8.9M in federal funds is added to increase federal Low-Income Home Energy Assistance Program block grant (LIHEAP) funding for various programs, such as:
- $5.76M is added for the state’s Low-Income Energy Assistance Program (LIEAP), which provides one-time heating bill assistance to qualifying low-income disabled and elderly households.
- $1.8M is added to the Weatherization Assistance Program (WAP) and $628K is added to the Heating and Air Replacement and Repair Program (HARRP). These programs provide money to nonprofits for the purchase and installation of materials to help make homes more energy efficient.
- $1.3M is added for Carolina Maternity Home Association, Inc. to provide housing and services to single pregnant women and single mothers.
- $100K is added as a direct grant to Wilmington Area Rebuilding Ministry, Inc. (WARM), a nonprofit organization providing free home repairs to the elderly, people with disabilities, and veterans.
In addition to key housing allocations, the budget bill includes raises for state employees and teachers. However, it does not include any new reductions to tax rates or Medicaid expansion. This N&O article further details the top line priorities included in the proposal.