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21st Century ROAD to Housing Act
On Tuesday, June 23rd, the House of Representatives passed the 21st Century ROAD to Housing Act in a 358-32 vote. The Senate had approved the legislation the day before in an 85-5 vote. At 12:01am on July 11th, the bill automatically became law, without President Trump’s signature.
Full bill text can be found here.
The 21st Century ROAD to Housing Act is a landmark housing affordability bill that aims to boost housing supply while lowering costs. To accelerate the construction of affordable housing, the bill streamlines environmental review processes and eliminates costly requirements for manufactured housing. To support the development of new housing and improvements to existing properties, the bill creates new competitive grants and pilot programs while expanding existing ones. It also instructs the Department of Housing and Urban Development (HUD) to draft voluntary guidance on reforming outdated zoning policies and building codes.
To address the rising costs of housing, the bill expands access to small dollar mortgages and increases the Federal Housing Administration’s (FHA) maximum loan limit. It also places limits on the number of single-family homes that institutional investors can own.
Please note that this legislation is extensive. This memo serves to provide an overview. Please contact Summit should you have any questions about specific provisions or would like additional information.
NEXT STEPS
Now that the bill is law, federal agencies will begin to promulgate regulations implementing statutory programs. During the rulemaking process, the public will have the opportunity to review and comment on proposed rules.
KEY PROVISIONS
ENVIRONMENTAL REVIEW
The bill simplifies and streamlines the environmental review process under the National Environmental Policy Act (NEPA). HUD is also granted greater authority to delegate review responsibilities to states, local governments, and Tribes.
The bill expands the number of housing-related activities and federal assistance exempt from NEPA, either through categorical exclusions or designation as “special projects.” Further, the bill eliminates duplicative requirements for projects supported through the HOME Investment Partnerships program.
BUILD AMERICA, BUY AMERICA (BABA) REQUIREMENTS
The bill directs HUD to review implementation of BABA requirements and update its guidance to clarify how BABA applies to projects funded by the HOME Investment Partnerships program.
HOUSING SUPPLY FRAMEWORKS
The bill directs HUD to release technical guidance on best practices for state and local governments reforming permitting, zoning rules, building codes, and land-use policies. The bill also mandates HUD to form a task force to advise the agency on drafting the guidance. State and local compliance with the guidance is considered voluntary and not subject to HUD enforcement.
RENTAL ASSISTANCE DEMONSTRATION (RAD) PROGRAM REFORMS
The bill raises the program cap by 100,000 units and extends protections for tenants in RAD- covered housing.
MANUFACTURED HOUSING
The bill eliminates a rule requiring manufactured homes be built with a permanent steel chassis.
The bill also increases loan limits for manufactured housing loans insured by the FHA.
HUD is granted the primary authority to adopt and enforce energy efficiency standards for manufactured homes. Previously, that authority was legally vested in the Department of Energy.
GRANT PROGRAMS
The bill creates several new competitive grant programs:
• Point-access block residential buildings: This grant would award projects ensuring the safety, feasibility, or cost-effectiveness of buildings that share a single, centralized staircase and elevator.
• Affordable housing planning and implementation: This grant would support states, local governments, Tribes, and regional planning agencies with community development activities, including regulatory reform and transportation accessibility improvements. • Innovation Fund: This $200 million grant would be awarded annually to local governments and Tribes who demonstrate measurable increases in housing supply through innovative reforms. Such activities can include streamlining regulations, optimizing energy efficiency, reducing construction costs, and changing zoning rules. • Housing design and construction: This grant would be awarded to local governments and Tribes to implement pre-reviewed housing designs, with a set-aside of 10 percent for rural areas.
For all competitive grants relating to housing development or preservation, HUD is directed to prioritize projects located within or primarily serving areas designated as Opportunity Zones.
It also establishes pilot programs for:
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• Temperature sensors: This program would provide funds to public housing authorities and federally assisted rental housing to install temperature sensors. • Whole-home repairs: This program would support state, local, and Tribal programs that offer grants and forgivable loans to homeowners and landlords to make repairs and modifications aimed at improving accessibility, habitability, safety, energy efficiency, and weatherization.
• Residential conversions: This program would provide funds to local governments for projects converting commercial or industrial buildings into affordable housing. Priority would be given to areas designated as Opportunity Zones.
Existing grants that are reauthorized include:
• Preservation and Reinvestment for Community Enhancement (PRICE) grants (7- year extension)
• Community Development Block Grant Disaster Recovery (CDBG-DR) (3-year extension)
o The bill also creates a new office within HUD for coordination of disaster-related responsibilities, called the Office of Disaster Management and Resiliency. • HOME Investment Partnerships program
o The bill reforms the program by expanding income eligibility and covered uses, increasing minimum local allocations, and creating new categorical exclusions from NEPA.
Notably, no additional funds were authorized to implement these grants.
The bill makes significant changes to CDBG eligibility and formula funding. Funded activities are expanded to include new construction of affordable housing. Formula funding will be reallocated based on housing costs and vacancy rates.
The bill also incorporates the Build Now Act, which ties recipient’s CDBG funding to their “growth improvement rate” in comparison to housing production benchmarks set by HUD.
Recipients with low rates of housing production may see their funding reduced, while recipients with high rates of housing production are eligible for funding bonuses.
FHA FINANCING REFORMS
The bill expands access to FHA-insured small-dollar mortgages (i.e. mortgages under $100,000) and increases the FHA’s statutory maximum loan limits.
HOUSING TAX CREDITS
The bill does not directly impact the Low-Income Housing Tax Credit (LIHTC). However, there certain provisions could boost investment and streamline projects funded through LIHTC.
The bill lifts the public welfare investment (PWI) cap from 15 to 20 percent, allowing banks to increase investments in projects designed to promote public welfare. Many projects funded
through LIHTC qualify as public welfare investments and may see increased interest from investors.
The bill also streamlines inspections for housing units financed through federal programs such as LIHTC. Units that passed an inspection within the past year will automatically meet Housing Choice V oucher requirements, and new landlords will be able to request advance inspections before securing tenants. This addresses a persistent bottleneck faced when getting tenants into affordable housing units.
LARGE INVESTOR LIMITS
The bill caps institutional investment portfolios at 350 single-family homes. Build-to-rent properties are exempt from this restriction. The bill does not require large institutional investors (e.g. private equity firms) whose portfolios already exceed the 350-home limit to divest or sell off any property.
HUD is directed to create a renter outreach resource to assist renters living in properties owned by a large institutional investor and party to a landlord dispute.