The 21st Century ROAD to Housing Act became law without a presidential signature and could provide transformational change to municipalities who embrace new ways of boosting affordable housing development.
"What I see coming down is a concerted effort to pressure localities to take the teeth out of NIMBY power," said Tom Heinemann, principal of MH Advisors, a firm that works in the manufactured housing industry.
"I think the most important thing that comes out of the federal and state level activity is that it pushes down a lot of these incentives for best practices leveraged with Community Development Block Grant dollars, incredibly important zoning changes, encouraging the use of pre-approved designs."
The comments came today during a panel discussion held in conjunction with the 15th Annual Brookings Municipal Finance Conference in Washington D.C.
The ROAD act is the first major bipartisan housing bill passed by Congress in 30 years and enjoys wide support from homebuilders, real estate developers, housing advocates, and the financial community.
The bill changes the rules on CDBG funding and raises the cap on public welfare investments which limits how much banks can invest in community development projects.
The higher cap is expected to pull more private investment into the affordable housing sector which relies on bond financing.
Municipalities interested in maximizing housing affordability may want to take a close look at the Build Now Act which is included in the ROAD bill.
"The Build Now Act says for those communities that are kind of expensive but not building, we're going to take away 10% of the funding," said Aaron Hedlund, chief economist for domestic policy at the Council of Economic Advisers.
"For communities that build a lot, we're going to allocate that pool to them in proportion to how they're increasing their supply."
ROAD also leans into local policy decisions that would loosen zoning regulations and encourage transit-oriented development.
"In D.C. and Seattle, policymakers have been more open to transit-oriented development relative to those in the other superstar cities," said Emily Hamilton, a senior research fellow and director of the Urbanity Project at the Mercatus Center at George Mason University.
"We can see this in new neighborhoods in D.C. like Navy Yard or Noma, and this has made a big difference in housing supply and rents."
Hamilton also cites building apartments in commercial areas and zoning smaller lot sizes into local building codes as positive steps.
When considering property tax impacts, municipalities might be wise to build more condos and apartments while looking at numbers from Arlington, Va.
"Local policymakers looked at the contribution of multifamily housing to their tax base relative to single-family housing, and they found that multifamily housing was more than paying its own way," said Hedlund.
"Single-family housing requires a cross subsidy from commercial and multifamily development."
Removing the chassis requirement for manufactured homes, which is also contained in the ROAD Act, may prove to be sleeping giant that changes the way municipalities implement zoning and building code regulations.
"Manufactured homes should be allowed into your residential zones by right," said Heinemann.
"I think those in the long run will have a positive impact. All the other things that are in the bill is going to take time. The message is clear and the message needs to filter down through all the layers of government to hit the local side."
