If you build a federal ROAD, will the local drivers use it? It’s the key question now that the bipartisan 21st Century ROAD to Housing Act has become law as the first comprehensive federal effort to promote housing supply in recent memory.
The Act doesn’t come with loads of new dollars or much in the way of mandates or directives. But it does offer a broad set of incentives and tools for local governments — and states, to a degree — to take their own route to putting more homes within reach of their constituents. (ROAD, by the way, stands for Renewing Opportunity in the American Dream.)
“We’re happy the bill recognizes that local governments have to be part of the solution, and not obstacles,” National League of Cities (NLC) legislative director Mike Wallace told an August American Planning Association webinar. “There’s no preemption [of local authority] or unfunded mandates. … But that means local governments have to deliver.”
The sprawling act cobbles together some 50 housing measures that had been shopped around Congress over the last few years and will require months, and even years, of rulemaking by federal agencies, primarily the U.S. Department of Housing and Urban Development (HUD), said Elayne Weiss, senior policy advisor on housing at the National Association of REALTORS®.
ROAD Moves Add Fuel to an Already-Kindled Local Fire
“The ROAD Act is great,” said Patrick Young, planning director in Raleigh, N.C. “It removes impediments and aligns with the things we’re already trying to do.” With the second-fastest growth rate among the nation’s large metropolitan areas, a tight and expensive housing market and a majority of the city zoned for one house per lot, Raleigh in 2021 launched just the sort of zoning reform called for in the ROAD Act.
“We started allowing any lot zoned for single-family to build a duplex plus an accessory dwelling unit (ADU), so that the base zoning went from 1 to 3 units in lower-density areas,” said Young. The city also reduced minimum lot sizes, allowed small apartments in some residential zones and upzoned near frequent transit. Since then, almost 5,000 units of missing middle housing — such as duplexes, triplexes and small apartment buildings — have been approved, including 1,000 that wouldn’t have been allowed before.
Indeed, Raleigh is one of the cities likely to inform a new national template for housing-friendly zoning to be developed under ROAD’s Zoning Frameworks Act, which instructs HUD to create a model code with involvement from local planners. The Act also promotes the creation of “pattern books” of preapproved designs of missing middle types that fit with local conditions — saving money, time and headaches in housing development. And it authorizes funds to help cash-strapped governments do so. Raleigh is already making use of a pattern book for ADUs, Young said, and “if we had the resources, we would love to expand that to other housing types.”
Using Community Development Block Grants to Promote Housing
Young also is a fan of changes to the federal Community Development Block Grant (CDBG) program, the annual allocation of funds aimed at community affordability and economic progress. For the first time, grants can be used not just to rehabilitate existing housing but to build new, affordable homes as well. New CDBG rules also require localities to maintain a database of publicly owned land that could be used for affordable housing. ROAD’s Build Now Act allows localities to earn a 10 percent boost for showing progress toward increased housing production, but warns of a possible reduction for failing to do so, with exceptions for recessions or natural disasters. “This is the one true stick for local communities,” said Weiss.
“Local planning and development officials should be thinking about how to use this money and review their processes to make it happen,” she added. In addition to CDBG, Weiss also was “excited about changes to the federal HOME Investment Partnerships program to promote homeownership.”
HOME is the largest federal block grant to state and local governments dedicated to affordable housing for low-income households. It can be used for rental or homeownership activities, but as Weiss pointed out, many communities use most of their HOME funds for gap financing for affordable rental housing. “This will help folks of modest means who could really benefit from homeownership.”
Legalizing Manufactured Homes as Permanent Housing
The Borough of State College, Pa., is a municipality of about 42,000 and the home of Pennsylvania State University. “We have a strong student housing market that drives much of what happens in real estate,” said Ed LeClear, director of planning and community development in State College. Because of that, “we have struggled for housing for long-term residents. We need more housing for the staff, teachers and service providers that would like to live in the borough but are priced out.”
Like Raleigh, State College is working on updating its 1959 zoning ordinance to allow many more types of housing within a borough that is “built out,” with only seven vacant lots, said LeClear. The borough also could make more use of low-cost manufactured homes, and the ROAD Act will help with that. Up to now, federal rules have required manufactured units to remain for all time on a steel chassis, as though they were intended to move — though the vast majority never do. The ROAD Act directs states to change their codes to allow much wider use of manufactured homes by removing that stricture. That, in turn, can allow more modular construction and potentially even 3D-printed homes and components. “It’s amazing the political difference between ‘mobile home’ and a manufactured home on a permanent foundation,” LeClear said.
Streamlining Federal Reviews to Make Affordable Projects — Affordable
Both LeClear and Young said localities like theirs will also benefit from ROAD’s regulatory streamlining. The Act reduces the need for environmental review under the federal National Environmental Policy Act (NEPA) for small-scale “infill” housing in already built-up areas and for rehabilitation projects. Those provisions “will help governments at all scales, especially rural and small” jurisdictions with limited resources for drawn-out processes, said NLC’s Wallace, and they remove a tool for opponents to obstruct affordable housing with endless environmental appeals. Large projects on undisturbed land will still undergo NEPA review.
Authorized But Unfunded Programs
The ROAD Act establishes — or authorizes, in congressional parlance — several new programs that are meant to be funded in later years. Local governments like Raleigh and State College are eager to compete for grants from the Innovation Fund, which would provide grants from $250,000 to $10 million to localities that can show progress toward enabling and creating new housing. The funds could go toward new housing construction and the transportation and other infrastructure to support it. A similar program would offer planning and implementation grants to help lay the groundwork for affordable housing by, say, updating zoning and development codes or upgrading planning and inspection capacity.
LeClear said he was particularly excited about the RESIDE program, a pilot competitive grant program for converting vacant commercial space into income-restricted housing, aimed at Opportunity Zones. “We have buildings that are retail on the ground floor with second-floor offices, and three or four stories of housing for students,” he said. “Coming out of COVID it has been difficult to fill those commercial floors, and we’d love help getting them converted to housing.”
For now, local officials can only look longingly at the authorized but unfunded programs. Regardless, they should position themselves now to compete for those dollars when they become available, said Emma Waters, senior policy analyst at the Bipartisan Policy Center, which has closely tracked the many bills that became ROAD. “The money is a very big outstanding question, and it will be needed for sure,” she said. “But you don’t need money to streamline regulations and remove artificial barriers.”
Can Local Governments Get Through ROAD-Blocks on Their Own?
In cities like Raleigh, code changes to promote missing middle housing types are actually a throwback to the early-20th-century housing mixes that exist in the city’s most cherished neighborhoods, Young said. But that doesn’t mean the changes came easily. “There has been political pushback. One council member got voted out for this, and others have moved on because of the backlash.” The new federal law won’t magically cure those challenges, but it helps establish a new climate, he added. “The ROAD Act sets up programs that create an incentive structure, and that’s really important given political pressures. And it helps on the systemic challenges that we can’t address on our own.”
Jason Jordan, principal for public affairs at the American Planning Association (APA), said he recognizes that political headwinds could stifle well-intentioned efforts and wonders whether local officials might need more political cover from federal requirements. “We don’t want to federalize local land use authority, but it remains to be seen if this goes far enough,” he said. “I definitely believe these new programs will encourage attention to affordable homes, but it’s mostly helpful for those that have already ‘gotten religion.’” Fortunately, he added, that appears to be true of the vast majority of “hot markets” with growing populations that have seen the greatest limits in housing supply and corresponding upward pressure on prices.
As implementation moves forward, local REALTOR® associations can help turn federal opportunities into homes by convening planners, builders, lenders and residents, supplying market data and advocating for practical zoning and permitting reforms.