A residential duplex set for construction in Chicago. The 21st Century Road to Housing Act is being hailed for allowing municipalities to do more, such as construct affordable housing, with federal grant money. (Photo by Robbie Sequeira/Stateline)
The 21st Century ROAD to Housing Act, one of the most impactful bipartisan housing laws in decades, introduces sweeping changes to federal housing policy. This newly enacted law features provisions restricting some institutional investors from purchasing homes, easing regulations for manufactured housing, and expanding veteran assistance. Key elements provide local governments with increased flexibility in using federal grants, introducing financial incentives and penalties linked to housing production.
States and cities, not the federal government, control most housing decisions through zoning and land-use regulations. The law attempts to guide cities towards more housing by allowing certain federal block-grant funding for new affordable housing construction, previously prohibited. For the first time, it offers cities incentives and penalties to accelerate building processes.
Ben Harrold from the National Apartment Association states, “The federal government is going to give you a whole lot of carrots, a whole lot of support, and just a couple sticks, in order to encourage these communities to start building more housing.” The measure’s passage through a divided Congress was partly due to its lack of new funding, according to Andy Winkler of the Bipartisan Policy Center. He notes the law comprises many small provisions that could collectively impact housing dynamics.
Mark Kudlowitz from the Local Initiatives Support Corporation comments that the law allows localities to decide how to use existing federal dollars to boost housing supply, preparing for potential funds from new incentive-laden programs. Kudlowitz asserts, “When we make it easier for the jurisdictions to deploy the funding, it’s doing everyone a favor, from the jurisdictions that have to manage these dollars to the federal government and then the developers that are ultimately receiving it.”
Hartford Mayor Arunan Arulampalam praises the $200 million annual competitive grant program for municipalities that increase housing supply, even as he wishes for more funding. The Innovation Fund will reward communities increasing housing supply with competitive grants from fiscal 2027 to 2031 by easing regulations like reducing parking requirements and revising zoning laws.
Block Grant Changes
The law revises the Community Development Block Grant (CDBG) program, facilitating its use for affordable housing. The CDBG program finances housing, infrastructure, and economic development for low and moderate-income residents. Grants can now fund construction, reducing allocations for cities not meeting construction thresholds. Jenna Pomponi of the Council of State Community Development Agencies highlights that small communities rely on state agencies for compliance work.
The law’s Build Now provision bases funding on housing growth rates, providing bonuses for growth and penalties for stagnation. Exemptions exist for areas meeting specific criteria, such as impacted by recent disasters. David Garcia from UC Berkeley’s Terner Center for Housing Innovation notes, “This is the first time to my knowledge that the federal government will condition resources on the actual construction of new homes.”
‘Next Battle’
Federal funding cuts for the U.S. Department of Housing and Urban Development (HUD) staffing pose challenges in implementing the new law, which assigns HUD to manage numerous new or updated programs. Andy Winkler from the Bipartisan Policy Center refers to the swift implementation of the ROAD Act as the “next battle.”
Arulampalam indicates Hartford will pursue options like office conversions and vacant lot development, awaiting Congressional funding for the new programs. “We are coming up with as many creative solutions as we can to solving the housing crisis,” he states.
