The Senate Banking Committee and the House Financial Services Committee announced they have reached a bipartisan, bicameral agreement on the 21st Century ROAD to Housing Act — the comprehensive housing reform package Congress has been developing over the past year. The expansive bill restructures and simplifies numerous affordable housing programs and policies administered by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA), authorizes new pilot programs and extends others, and directs federal agencies to conduct new research and establish best practices to increase the affordable housing supply. Overall, the bill contains more than 50 provisions. Bill text and a section-by-section summary are available.
The Senate took procedural steps last night to begin considering the bill, and passage in that chamber is expected later this week. The House is likely to take up the measure early next week after Senate action, and then send it to the President for signature.
Key provisions of the bill include:
Public Welfare Investment Cap
The bill would increase the cap on public welfare investments — including Housing Credit investments — that banks may make from 15% to 20% of capital and surplus. This change would permit banks currently constrained by the limit to invest more in Housing Credit development.
HOME Program Reauthorization and Reforms
The final bill incorporates long-sought improvements to the HOME Investment Partnerships program, reflecting reforms pursued with HOME champions in Congress and allied affordable housing organizations. Changes include indefinite reauthorization, removal of obstacles to using HOME for homeownership activities, relief from Section 3 requirements for developments under 50 units receiving HOME funds from states and small local participating jurisdictions (PJs), simplified HOME property inspection rules for state participating jurisdictions (PJs), streamlined CHDO qualification standards, authority for HUD to forgive repayment when a property becomes financially unviable for reasons beyond a PJ’s or owner’s control, expanded HOME-eligible activities to include certain infrastructure work, and more.
Two additional HOME provisions from the House-passed bill that were not in prior Senate drafts are included in the final bill:
- A requirement that the HUD Secretary review the implementation of Build America, Buy America (BABA) requirements as they relate to HOME and update BABA guidance for the program. HUD would have up to 180 days for the review and up to 90 days afterward to publish updated guidance, and must report the findings and guidance update to the House Financial Services and Senate Banking Committees.
- Exemptions for certain HOME activities from environmental review requirements, specifically: new construction infill housing projects; acquisition of property for affordable housing; rehabilitation under section 212(a)(1); and new construction projects of 15 units or fewer. Additionally, HOME PJs would not be required to perform duplicative environmental reviews when federal funds are added, subtracted, or reallocated in a project’s capital stack if the project’s scope, scale, and location remain substantially the same or if a similar review has already been done under a different federal program.
Rural Housing Reforms
The bill makes changes to the USDA Rural Housing Service (RHS) to help preserve rural affordable housing and authorizes funding for technology upgrades and additional RHS staffing. Notably, it permanently authorizes a pilot that allows the USDA Secretary to decouple rental assistance from properties with expiring USDA multifamily mortgages, permitting rental assistance to continue for units where a USDA mortgage has been paid off. It also permanently authorizes the Multifamily Preservation and Revitalization program, previously a pilot to rehabilitate properties financed with Section 514, 515, or 516 loans. Earlier House versions omitted the rural housing decoupling provision but Senators and House supporters worked to secure its inclusion in the final bill.
Whole Home Repair Pilot Program
The bill authorizes HUD to create a five-year pilot providing grants to nonprofits, state and local governments, and American Indian tribes to offer grants and forgivable loans to low- and moderate-income homeowners and qualifying small landlords to address repair needs and health hazards in single-family homes occupied by households at or below 80% of area median income. State and local governments could only apply for funding in areas where a qualified nonprofit is not participating.
Manufactured and Modular Housing
Provisions aimed at expanding manufactured housing supply include updating federal definitions to permit units not built on a permanent chassis, authorizing research into barriers to FHA lending for modular housing, and revising FHA lending standards for manufactured homes. The final bill also includes a seven-year authorization for HUD’s Preservation and Reinvestment Initiative for Community Enhancement (PRICE) program, which had operated as a pilot and provides grants to communities to protect and stabilize manufactured housing and communities. PRICE was restored to the bill by the Senate after being absent from a prior House-passed version.
RAD
The bill increases the Rental Assistance Demonstration (RAD) program cap by 100,000 units and codifies certain tenant protections. The House initially left out a RAD expansion but agreed to include it in the final package following Senate insistence.
Disaster Recovery
The final bill authorizes the Community Development Block Grant Disaster Recovery program (CDBG-DR) for three years, after the Senate successfully pushed for its inclusion despite House resistance. It also creates a new Office of Disaster Management and Resiliency within HUD to oversee the program.
Prohibition on Institutional Investor Purchases of Single-Family Homes
The legislation adopts earlier House language limiting large institutional investors from competing with individual homebuyers for single-family homes. It does not require investors to sell “build-to-rent” or “build-to-renovate” properties within seven years, as prior Senate versions had. Violations by institutional investors would carry civil penalties of up to $1 million per violation or three times the purchase price of the property; penalty funds would be directed to the HOME program to support homeownership activities. The final language is not expected to harm single-family rental production using the Housing Credit or other affordable housing programs.
This package is arguably the most significant non-tax affordable housing legislation to advance through Congress since the early 1990s.