Congress nears final passage on major housing reform bill
Author
Jared Grigas
Kevin Moore
Upcoming Events
Related News
Key Takeaways
On June 16, the U.S. Senate introduced a strike-all amendment to the 21st Century ROAD to Housing Act (H.R. 6644). The final language was agreed to by both House and Senate leadership, resulting in a bipartisan, bicameral product following nearly a year of negotiation.
The bill reflects priorities NACo has long championed – including safeguards for critical community development funding and an expedited process for allocating disaster recovery funds – and NACo urges county leaders to contact their members of Congress in support.
What’s in the Bill
Streamlined access to critical disaster recovery funding
The bill authorizes the Community Development Block Grant – Disaster Recovery (CDBG-DR) program for three years, providing timelier access to disaster recovery funding. Under current law, CDBG-DR does not have standing authorization or an annual budget and is, instead, appropriated on a case-by-case basis following qualifying disaster events. This often results in funding delays of a year or more, as Congress evaluates impacts and negotiates funding levels.
CDBG-DR funds are particularly important for long-term housing recovery, infrastructure restoration and economic revitalization, complementing the more immediate recovery objectives of the Federal Emergency Management Agency’s core programs. With standing authorization for three years, impacted counties will be able to access funds and begin the process of rebuilding and restoring economic activity much sooner.
Common-sense exemptions under “Build Now”
A provision carried over from earlier Senate versions of the legislation, known as the Build Now Act, ties Community Development Block Grant (CDBG) funding to local housing production. Under the framework, a portion of funding from CDBG recipients that don’t meet certain housing performance thresholds would be redirected to “higher-performing” communities.
Counties have expressed concerns that unpredictable funding shifts could undermine long-term community development planning and make it more difficult to leverage CDBG investments for multi-year housing, infrastructure and economic development projects.
The final bill includes a number of exemptions that are expected to significantly narrow the pool of CDBG recipients affected by the Build Now Act.
An expanded emergency lookback, exempting any community that has been subject to a major disaster or emergency declaration in the preceding three years
Supply and demand exemptions, for communities that fall below specified housing or rental cost thresholds, or exceed the national median vacancy rate
Zoning exemptions for grantees with limited legal authority to influence zoning or land use in their community
The language also includes a three-year glide path (meaning this provision would not take effect until 2029) and a requirement that the U.S. Department of Housing and Urban Development annually notify CDBG grantees of their eligibility and funding status.
Expanded uses and versatility for the Home Investment Partnerships (HOME) program
The bill raises the income eligibility for HOME projects, allowing counties to better address gaps in workforce-level housing. To reduce administrative barriers and streamline construction, it also exempts certain low-impact rehabilitation and infill projects from full National Environmental Policy Act (NEPA) environmental impact reviews. Lastly, it allows grantees that do not also receive CDBG entitlement funds to use HOME funds for housing-adjacent infrastructure.
Compromise language on institutional investors
The bill addresses large institutional investor activity in the housing market, striking a compromise between the two chambers’ prior provisions. “Large institutional investors” would be precluded from owning or exercising financial or fiduciary control over more than 350 single-family homes.
A prior version of the language would have exempted dedicated “built-to-rent” (BTR) properties from the 350-unit cap; however, investors would be required to divest from any BTR properties within seven years of acquisition (plus a possible three-year tenant opt-in). Counties expressed concern that this may unintentionally discourage large-scale rental projects that would expand housing supply in local communities. Additionally, the forced sale of BTR properties may result in displacement of rental households who are unable to afford to purchase their unit. This provision was ultimately removed following broad stakeholder pushback.
Unlocks financing tools for affordable housing and community development
The bill raises banks’ public welfare investment cap (PWI) from 15 percent to 20 percent of their total capital. The PWI cap restricts the amount a bank can invest in certain projects supporting low-income communities, to ensure banks remain solvent. However, many banks are approaching their 15 percent cap, limiting access to key housing finance tools such as Low-Income Housing Tax Credit (LIHTC). Raising the cap would free up new private investment for affordable housing and community development projects.
What’s Next
The Senate is expected to formally pass the bill as soon as this week, with the House expected to follow suit in the coming weeks. The White House has expressed its support for a bicameral housing product and the President is expected to sign the bill once passed.
While congressional leaders are aligned on the latest version of the bill, NACo encourages county leaders to reach out to members of their delegation to voice support as we approach final passage of this legislation.
Related News
Reimbursement policy prolongs disaster recovery for counties
Counties that suffer major damage during natural disasters would benefit dramatically from a FEMA Act proposal to do away with reimbursement and instead offer counties recovery grants up front.
FEMA at a crossroads: What county officials need to know about reform efforts
Two overlapping disaster recovery efforts are now unfolding in Washington: a sweeping executive-branch review of FEMA and a bipartisan legislative push to reform the agency through Congress. County officials should understand both tracks, what they could mean for local governments and where each stands today.
Counties regroup after FEMA’s resiliency grant program resumes
As FEMA resumes and restructures its Building Resilient Infrastructure and Communities grant program, counties are reassessing projects that were put in limbo during its cancellation and creating new hazard mitigation gameplans ahead of its upcoming funding cycle.