Today President Biden will announce a comprehensive national strategy to help close the growing gap in housing affordable to most Americans. The Housing Supply Action Plan includes important changes to regulatory policies that are essential to maximizing the impact of every federal dollar spent on housing. It also seeks enactment of important bipartisan legislation that would create hundreds of thousands new units of affordable housing for rent and homeownership. In February, I asked if housing was still a priority for the Biden Administration. Today the answer is clearly, yes.
The 11-page plan says it “will help reduce price pressures in the economy, as housing costs make up about one-third of the market basket for inflation, as measured by the Consumer Price Index.” The impact of the housing supply shortage and inflation is a subject NHC has stressed in numerous Member Notes and media interviews. This plan is an ambitious but realistic agenda, featuring proposals that have broad bipartisan support and been advocated by NHC and our members over the past four years.
The Housing Supply Action Plan’s major elements include:
- Expanding and improving federal financing for affordable multifamily development and preservation, including working with Fannie Mae to invest in Construction to Permanent loans; promoting the use of state, local, and Tribal government COVID-19 recovery funds to expand affordable housing supply; and reforms to the Low-Income Housing Tax Credit (LIHTC) and the HOME Investment Partnerships Program (HOME).
- Ensuring that more government-owned foreclosed homes go to owner-occupants or non-profits who will rehab them – rather than large institutional investors.
- Rewarding jurisdictions that have reformed zoning and land-use policies with higher scores in certain federal grant processes, for the first time at scale.
- Expanding federal financing of manufactured housing (including chattel loans), accessory dwelling units (ADUs), 2-4 unit properties, and smaller multifamily buildings.
The Biden administration has also committed to continue to address the supply chain crisis. The plan commits HUD Secretary Marcia Fudge, Commerce Secretary Gina Raimondo, and other Administration leaders to meet with representatives from the building industry to explore additional actions that the federal government and the private sector can take in partnership to help turn the record number of homes under construction into completed homes where Americans can live.
The Biden Administration has reiterated its support for the expansion of LIHTC and the Neighborhood Homes Investment Act, which have received strong bipartisan support. NHC has pressed the White House and Congressional leaders to consider these bills on their own, as part of a bipartisan housing supply bill that can help address inflation as well as the housing affordability crisis.
One of the most interesting and potentially impactful components of the plan is the administration’s commitment to adding meaningful incentives to deal with exclusionary zoning by giving additional points to competitive applications for federal transportation and community development funding at the Department of Transportation (DOT) and the Department of Commerce. I expressed my frustration with the carrot only approach to the need for a carrot-only approach a year ago in the Wall Street Journal. “There’s no carrot if you don’t eat carrots,” I said. “We need to go further if it’s going to have a material impact.” This approach clearly goes much further. While adding points to an application may technically be a carrot, not getting an application approved because someone else got those points is a very real stick.
The plan notes that earlier this year, DOT released three funding applications for competitive grant programs totaling nearly $6 billion in funding that reward jurisdictions that have put in place land-use policies to promote density and rural main street revitalization with higher scores in the grant process. The Administration will announce that DOT will continue to include language encouraging locally driven land use reform, density, rural main street revitalization, and transit-oriented development in Bipartisan Infrastructure Bill and other transportation discretionary grant programs.
The Commerce Department will also include land use within the Economic Development Administration’s (EDA) investment priorities. EDA evaluates all project applications for its competitive grants to determine the extent to which they align with EDA’s investment priorities. Before its next round of grants, EDA will add language to its investment priorities to encourage economic development projects that enhance density in the vicinity of the development.
The administration has also committed to finalizing the income averaging rule for LIHTC developers. Income averaging allows a developer to meet the same affordability goals by taking the average of the income for some households who are in the property as opposed to requiring all to meet the same threshold. It helps create more financially stable, mixed-income developments and makes LIHTC-supported housing more feasible in rural areas.
Taken together, these and many other initiatives represent the most comprehensive national housing policy we have seen in a generation. NHC and its members look forward to working closely with the administration to help promote and implement these significant policy advancements.