Government-Funding Bill Creates Vital New Affordable Housing Program

At the end of 2022, President Biden signed the FY2023 omnibus spending bill into law, which funds the government through September 2023.

This legislation created a new program to reward state and local governments, metropolitan planning organizations and multijurisdictional entities for eliminating local barriers to affordable housing supply.

The bill allocates $85 million to create a competitive Community Development Block Grants program called “Yes In My Backyard” to help local entities plan and implement policies that reduce zoning barriers and discriminatory land-use regulations that make it difficult to build new and dense housing.

Improved land use policies and streamlined zoning regulations may include increasing density, reducing minimum lot sizes, creating transit-oriented development zones and streamlining or shortening permitting processes and timelines.

These local reforms could allow mixed-use and multifamily development in retail, office and light manufacturing areas; allow accessory dwelling units on lots with single-family homes; eliminate or relax residential property height limitations; and allow donated vacant land for affordable housing development.

These new housing provisions are vital, given the National Association of REALTORS®’ recent research report identifying a nationwide housing supply deficit of up to 5 million new units.

At a time when states and localities are struggling with a lack of affordable housing, these resources from the federal government could speed up these proven beneficial changes.

Places like Minneapolis and the state of Oregon have taken action in recent years to reform single-family zoning laws. Single-family zoning often establishes minimum lot sizes and calls for one house per property. The practice has been criticized for driving up housing prices by stifling the construction of more homes and putting up barriers to low-income people and people of color moving into safer communities with benefits like better schools.

However, any federal effort to incentivize jurisdictions to engage in zoning reform should be designed carefully to ensure those reforms positively impact housing supply and affordability challenges. In addition, these reforms must also solicit robust community input, consider local housing market conditions and integrate strong protections for property rights.

Since zoning is regulated and implemented by states and localities, the federal government could play a vital new role with these incentives in easing regulatory impediments to housing production.

For more information, visit https://www.nar.realtor/.

Russell Riggs is the director of the Environmental and Sustainability Policy, Advocacy Group for the National Association of REALTORS®.