HUD’s $85M competitive grant program incentivizes changes to restrictive land use policies, promotes affordable housing

The Biden Administration is trying to help communities in this endeavor through a number of actions aimed at removing bureaucratic barriers, spurring investments in affordable and energy resilient housing, and supporting commercial-to-residential conversion projects.
Among those actions is an initiative from the Department of Housing and Urban Development that makes available $85 million in competitive grants to help communities overcome legislative hurdles like restrictive land use and zoning policies.

“Local land use laws and zoning regulations limit where, and how densely, housing can be built. This constrains housing supply, perpetuates historical patterns of segregation, prevents workers from accessing jobs, and increases energy costs and climate risk,” reads a brief from the White House about the initiative, noting that housing and rent prices increase in correlation to limited housing production. To that end, the “first-of-its-kind” Pathways to Removing Obstacles to Housing program “will provide communities with funding to identify and remove barriers to affordable housing production and preservation. HUD will award grants of up to $10 million to jurisdictions that have an acute demand for affordable housing and are working to identify, address, or remove barriers to housing production and preservation.”

Among approved uses, communities can use the funding to plan and enact policies that allow for higher-density rezoning to accomidate multifamily and mixed-use housing. Funding can also be used to streamline the development of affordable housing, and to reduce parking and other restrictive land use requirements such as increasing residential height limitations and allowing accessory dwelling units, among other things.

An estimated 20 projects will receive between $1 million and $10 million. The application deadline is Oct. 30. Local governments, states, metropolitan planning organizations and multijurisdictional entities are eligible. Broadly, the initiative is intended to elevate effective practices, facilitate collaboration “and harness innovative approaches from jurisdictions, researchers, advocates, and stakeholders to further the national conversation on affordable housing,” the report says.

Other intiatives taken by the Biden Administration to improve housing supply, as noted in the White House brief, include the Department of Transportation’s $3.16 billion Reconnecting Communities and Neighborhoods program, and $27 billion from the Environmental Protection Agency to finance clean energy projecst, including retrofits of existing buildings and homes, and new energy efficient construction. 

“Today, we are acting to increase the supply of affordable housing, which is crucial to lowering housing costs. We look forward to continuing this work in partnership with local communities,” said Marcia Fudge, secretary of the Department of Housing and Urban Development in a statement about the competitive grant initiative in a statement. “HUD recognizes that communities have unique housing challenges and that’s why the resources announced today are not one size fits all.”

Additionally, Fudge’s department is s providing flexibility for public housing authorities and multifamily house owners participating in the Rental Assistance Demonstration, enhancing support of repairs and promoting water- and energy-efficient investments. The department is also increasing the borrowing threshold at which a multifamily loan is considered ‘large,’ from $75 million to $120 million. The change will make it easier for people with FHA-insured mortgages to borrow money by removing red tape. The FHA has also proposed updates that would make it easier to finance accessory dwelling units. Finally, the White House will lead a new interagency working group that will develop funding opportunities to support residential conversion of commercial properties.

“As part of this initiative, the General Services Administration (GSA) will launch an effort to identify and market surplus federal properties that represent the best opportunities for commercial-to-residential conversions,” the brief says. “Ongoing conversion projects from GSA dispositions are already producing over 1,000 new housing units. The initiative will continue to convene developers, municipalities, and other stakeholders to learn about opportunities and challenges.”