NLC provides guidance on how municipalities can use new federal housing plan

By KATE COIL

TT&C Assistant Editor

The most comprehensive federal housing plan in more than three decades, the 21st Century ROAD to Housing Act provides municipalities with new incentives, grants, and supports to reduce housing costs and expand supply.  

Officials with the National League of Cities (NLC) highlighted new programs put forth by the act as well as changes to existing programs – like Community Development Block Grants (CDBG) and HOME Investment Partnerships Program (HOME) - during a recent webinar. NLC Community and Economic Development Program Director Michael Wallace and Director of Housing and Community Development Lauren Lowery provided insight into what provisions are in the act and the timeline of when new tools will become available.  

NLC members and advocates worked with federal leadership on the law, which adds more flexibility for local governments in many areas. While many of these new tools will take time to implement, municipal leaders can plan ahead and prepare to take advantage of them.  

Wallace said one of the major goals of the bill is to incentivize collaboration so no municipality has to tackle housing issues alone.  

“There is a deficiency of 4 million housing units across the nation that is driving up housing costs and making housing unobtainable,” he said. “The main reason NLC has been such a stalwart on this issue is because for years now, local elected officials have been coming to our meetings and conferences and asking for better tools and partnerships to address their local housing needs. Partnership is really they key to this.” 

CHANGES AHEAD 

Wallace said the act makes numerous small changes that can have a big impact when working together. Most of the changes are policy-focused. While the act has put in place authorization for new competitive funding programs, Wallace said NLC and city officials still have work ahead to ensure the appropriations committee funds those programs.  

“It offers tools, resources, and funding incentives to help local governments address their own systems they use to permit housing. It modernizes federal grant programs. It helps cities reduce internal obstacles to permitting more housing and also help address issues of buyers entering the market and their ability to gain financing. Important to us, it preserves local decision-making authority. Nothing in the bill is going to require a city to change their budget, practices, or regulations if they don’t want to.” 

Other local tools strengthened by the bill include: 

• Allowing new housing construction through the CDBG program for the first time. 
• Expanded income eligibility and better support for workforce housing through the HOME program. 
• More flexibility for housing-related infrastructure through the HOME program and new Innovation Fund. 

A new requirement for using CDBG funds for housing means cities will have to create a publicly accessible database of available and developable public land in the city limits. NLC lobbied to allow a portion of CDBG funds to be set aside for this purpose. 

Additionally, cities that demonstrate strong housing growth are eligible for a 10% increase in their CDBG funds. However, cities that do not demonstrate growth may see a 10% reduction in their funds. The Department of Housing and Urban Development (HUD) may come out with more guidelines about using CDBG grants for housing in the future. 

Other new programs authorized by the bill include: 

• Regional Housing Planning Grants 
• Innovation Fund 
• Pattern Book Home Grants 
• Whole-Home Repair Program 
• Technical Assistance Resources 

Regulatory changes are also on the horizon. 

“The main standout that is really going to help all cities – small cities, mid-sized cities, and large cities –is it streamlines the federal environmental review process,” Wallace said. “If you are doing any project that requires federal, public dollars, you know you need to comply with NEPA [National Environmental Policy Act] and other protection acts to do a review study. Oftentimes, that is accompanied by state and local requirements, and these different studies are often duplicative of each other. The bill reduces the environmental study required for specific types of housing, specifically in-fill and rural development.” 

BUILDING A BIGGER TABLE 

Because the subprime mortgage crisis led to many community banks closing, Wallace said there are a number of community banking provisions in the bill. As local banks are often major financial stakeholders in communities, the bill aims to incentivize  localized financial institutes.  

It also improves pathways for manufactured and mobile housing. Wallace said another key provision of the bill is to encourage more public-private partnerships. 

“This is not a go-it-alone bill. The cities that will be able to bring their partners to the table and think about their long-term housing plans will have the most success,” he said. “No one city is going to be able to apply for every single grant opportunity in year one when they become available. We are advising cities to bring trusted community partners and leaders to the table, look at what is in the bill, decide what could work best for your community now and focus on that.” 

Even though collaboration is encouraged, there is nothing that requires cities to change current laws or practices. 

“We made an argument to Congress that cities are best positioned to be part of the solution when they get to use the authority they have to create more housing opportunities. We are going to be documenting what cities do. We expect to show Congress they made the right decision by giving cities new tools to make a dent in the housing supply.”  

While Wallace said the bill is “not a silver bullet,” it is a first step toward producing more obtainable housing in communities across the U.S. The next step for NLC will be to advocate for funding of these programs in Congress. 

PLANNING AHEAD 

To be ready for these programs when they come online, Lowery said city leaders need to follow the three P’s: plan, prepare, and partner. 

“These provisions will take between 12 and 24 months,” Lowery said. “For cities to be competitive for these resources, it is going to be important that each city or community has a local housing strategy. It is important that strategy communicates the housing needs but also opportunities, barriers, and how the city will be able to tackle those issues.” 

One helpful resource to making or updating such a plan is the Housing Supply Accelerator Playbook: Solutions, Systems, Partnerships released by NLC and the American Planning Association. Lowery said the guide walks leaders through a series of questions they need to answer as part of a housing strategy. 

As preparation for implementation, Lowery said NLC will be engaging in continued advocacy to make cities aware of new programs and engage in federal rulemaking opportunities as they develop. She einvites cities to reach out with any requests for content, resources, or tools they need to obtain new funds and flexibility. 

She also encouraged leaders to begin forging the partnerships they need to move forward. 

“Cities will need think about partnering or strengthening those relationships with lenders, builders, developers, chambers of commerce, state housing agencies, economic development agencies, and planning authorities,” she said. “We need to think together about how we can utilize the resources, grants, and opportunities in the act. Cities can also leverage the resources NLC has provided.”  

NLC is providing more information about the 21st Century Road to Housing Act and updates on its provision online. Local leaders can also utilize NLC’s Filling the Gap Tool, which helps municipalities explore what funds and opportunities are available to them for housing.