The Biden Administration released a Housing Supply Action Plan earlier this week, with the goal of easing the burden of housing costs over time by closing the supply shortage in 5 years.
Through the plan, the Administration seeks to produce and preserve affordable rental housing, while also boosting the supply of affordable for-sale homes available to prospective homebuyers. The effort represents the most comprehensive of all government endeavors to close the housing supply shortage in history.
Notably, the plan includes administrative actions that can be accomplished without Congress, as well as legislative actions that the President is calling on lawmakers to enact. Many of the legislative actions were previously proposed in the Build Back Better Act and the President’s FY2023 budget proposal.
The Administrative actions laid out in the plan include the following highlights:
- Providing incentives for land use and zoning reform by giving higher scores in certain federal grant processes (like transportation) to jurisdictions that have removed restrictive policies
- Deploying new financing mechanisms for manufactured housing, accessory dwelling units, and small-scale housing developments
- Streamlining federal financing and funding sources to help lower costs and speed development, including by expanding Construction to Permanent loans
- Encouraging localities to expand use of State and Local Fiscal Recovery Funds for affordable housing, including through the development of multifamily or single-family affordable housing, preservation of existing affordable housing, permanent supportive housing, support for home repairs, homeownership assistance, rental subsidies, etc.
- Finalizing the Low Income Housing Tax Credit “income averaging” proposed rule. The Plan pledges to finish the final rule by the end of September.
- Reauthorizing and strengthening guidance for the HOME Investment Partnerships Program (HOME)
- Using federal properties to create affordable housing for people experiencing homelessness
- Ensuring that more government-owned supply of homes go to owner occupants or mission-driven nonprofits who will rehab them instead of large investors
- Partnering with the private sector to address supply chain disruptions and delays
In addition to measures the Administration can implement independently, the President continues to call on Congress to fund the housing investments that were included in Build Back Better and his FY23 budget proposal. The plan also urges passage of critical housing legislation, such as:
- The Neighborhood Homes Investment Act, which would create a tax credit to build and rehabilitate houses for homebuyers with limited resources.
- Expansion of the Low Income Housing Tax Credit (LIHTC) that was included in the House-passed Build Back Better Act and the President’s FY2023 budget request:
- Increasing Housing Credit allocation by 10%
- Lowering the 50% bond-financing test to 25 percent
- Providing a 50% basis boost for housing that serves extremely low-income households
- Providing a state-determined basis boost for bond-financed Housing Credit properties that increase the supply of affordable homes
While the Administrative actions laid out in the President’s plan are historical, to significantly address the country’s housing shortage we also need the investments and policy proposals that can only be enacted by Congress. The prospects of these legislative measures advancing are unclear at this point, but there does seem to be an ongoing national focus on housing. Members of Congress must continue to hear from advocates about the importance of affordable housing. Now is the time to urge your Senators to enact a budget reconciliation bill with the targeted housing investments included in the Build Back Better Act, including the expansion of LIHTC and Neighborhood Homes.