The affordable housing industry has spent years asking Congress for a federal response to the nation’s housing shortage. With the 21st Century ROAD to Housing Act having officially become law on July 11, industry groups are treating the legislation as a rare bipartisan win — not because it solves the crisis unilaterally but because it tackles several of the bottlenecks that have slowed development and preservation.
According to the National Low Income Housing Coalition, the nation is short 7.2 million affordable and available rental homes for extremely low-income households. The act aims to alleviate America’s housing shortage in three ways: by reducing unnecessary regulatory barriers to home construction, modernizing programs run by the Department of Housing and Urban Development (HUD), and allowing banks to more freely deploy funding.
For example, the law streamlines environmental reviews for certain smaller-scale and infill housing developments and, in some cases, allows state, local and tribal governments to assume environmental-review responsibilities for HUD-assisted projects.
The law loosens the Community Development Block Grant (CDBG) program by allowing CDBG funds to be directly used for affordable housing construction. Specifically, ROAD raises the cap on certain bank public-welfare investments from 15 to 20 percent, expanding banks’ capacity to invest in affordable housing and community development.
The law also changes the federal definition of manufactured housing to enable faster production. Previously, manufactured housing was built “on a permanent chassis.” The newly enacted legislation changes that definition to “with or without a permanent chassis.” In other words, factory-built housing would no longer have to keep a permanent trailer-like steel frame underneath it to qualify as manufactured housing.
ROAD expands the capacity of HUD’s Rental Assistance Demonstration (RAD) program by increasing the number of units eligible for RAD conversion. This gives more aging HUD-assisted properties a path to recapitalization without having to create a new construction subsidy. Some of the law’s provisions are immediate statutory changes, while others require HUD to first issue rules or studies.
The law has received a warm reception from the apartment industry. A coalition comprised of nine industry groups, including the National Multifamily Housing Council, the National Apartment Association and the Mortgage Bankers Association, issued the following statement:
“The most important housing legislation in a generation, this act will modernize federal housing programs, reduce barriers to development and encourage the production and preservation of more housing nationwide. The revised bill will help communities expand housing supply, improve affordability and create more pathways to both rental housing and homeownership.”
Enterprise Community Partners, a Columbia, Maryland-based nonprofit affordable housing developer, worked closely with Congress on some of the legislation’s components. Shaun Donovan, Enterprise’s CEO, had this to say:
“For the millions across the country struggling with rising rents and home prices, 21st Century ROAD to Housing creates a real opportunity to expand housing supply, lower costs and make it easier to find an affordable home. This legislation equips states, local leaders and housing experts with the tools needed to turn plans into homes.”
While the law is celebrated as an overall win for low-income renters and developers alike, some skepticism remains.
Sen. Tommy Tuberville (R-Alabama), who voted against the 21st Century ROAD to Housing Act, told Time magazine: “Giving the federal government more control over housing is not the answer. We should be focused on getting government out of the way and allowing the free market to drive down costs through competition and a booming economy. This bill expands the already bloated Department of Housing and Urban Development, which is the opposite of what we need to be doing.”
— Lynn Peisner