State and local governments are increasingly interested in reforms to reduce regulatory barriers and make housing more affordable. Although state governments should be capable of developing real housing policy and regulatory reform capacity, they usually lack the capacity to reinvent policies and procedures based on local knowledge alone. The federal government has historically supported state oversight of local housing policy with model legislation, policy incentives, funding, and varying degrees of technical assistance. Unfortunately, these efforts have not been updated or corrected to reflect the nature, causes, and urgency of the widening national housing supply shortage. Newly proposed legislation would begin to change that.
The Reducing Regulatory Barriers to Housing Act (RRBHA), sponsored by Senator Fetterman (D-PA) and Representative Blunt Rochester (D-DE), would:
- direct the U.S. Department of Housing and Urban Development (HUD) to provide technical assistance to states and local governments,
- streamline housing-related federal permitting by cutting across agency environmental review silos,
- coordinate research efforts toward improving access to housing across geographies,
- build HUD’s capacity to evaluate the regulatory landscape around homebuilding,
- fund efforts to map and digitize land use and zoning,
- and fund pre-approved “model building plans” to be placed in the public domain to reduce both permitting costs and design soft costs.
As recent pro-housing discretionary grant submissions illustrate, many local governments–and well-intentioned communities–do not understand how land use regulations impact housing supply and their local economy. The current body of research around homebuilding largely agrees on the ways that regulations stop homebuilding, but there is less consensus around which regulatory changes will yield the most new units.
As part of the technical assistance to states, HUD would establish a task force to develop an updated version of the model Standard State Zoning Enabling Act (SZEA) that the federal government promulgated among the states a century ago. It would also increase HUD’s currently limited technical staff capacity to evaluate and execute congressionally directed grant competition programs to lift barriers to housing supply. To many, using the convening power and central resources of the federal government to change the way states and local governments look at homebuilding may seem novel. It is, however, an effort to correct the antigrowth mistakes of the federal government’s first foray into local zoning in the early 20th century.
The federal origins of local land use regulation
Land use and zoning in America is primarily a state and local responsibility. Nearly every acre of municipally incorporated land is zoned for a particular use or density. Contrary to folk wisdom, today’s zoning landscape did not emerge organically from local governments free of state oversight and federal technical assistance.
For local governments to directly regulate land use, they either need express authority from their state governments in Dillon Rule states, or must not be prohibited from regulating land use in Home Rule states. Generally, this is accomplished through a state zoning enabling law that grants local governments the power to regulate land use within their borders under certain conditions. However, states did not simultaneously arrive at nearly identical land use regulatory regimes on their own: They had help from the federal government.
As Commerce Secretary, Herbert Hoover sought to improve the living conditions for Americans at a time when U.S. incomes were much lower, public social insurance was minimal, and substandard housing and overcrowded tenements were common living arrangements. To accomplish this, Secretary Hoover appointed committees to draft model building and land use codes to be adopted by states.
A year later, the committee issued its final state-enabling law template. Anyone familiar with their local zoning code or local land use regulations generally will see familiar elements in the SZEA present in modern codes. These include: grant of zoning power, ability to divide territory into zones, statement of purpose, procedures to establish and amend zoning rules, a zoning commission to oversee amendments, a board of adjustment to grant relief from the rules in certain circumstances, enforcement, and conflicts with other laws.
In theory, the federal government provided states and local governments with neutral models for regulatory tools and further encouraged adoption of zoning and land use rules. In practice, these guidelines encouraged highly restrictive zoning laws. A large share of this encouragement came from what was then a new federal program of home loan insurance. Because long-term, fixed-rate home loans were considered to be inherently risky for lenders, regulators sought to mitigate this risk by tightly controlling what properties were eligible for mortgage insurance. A popular method was to require strict zoning rules (ex. Paragraph 980), like those outlined in the SZEA, that prevented single-family homes from being built near denser residential developments, or near commercial and industrial land uses. The federal government was providing incentives and tools–but those incentives and tools uniformly favored restrictive land use regulation.
This has left us with zoning and land use rules grounded in the economic thinking of the 1920s. In the intervening century, it has become clear that this style of regulation contributes to economic and racial segregation, erects barriers to opportunity in high-opportunity places, constrains the national economy, harms the natural environment, and makes homes increasingly unaffordable. This bill would begin to undo the harms caused by the original model legislation of the 1920s.
Some states like Montana and cities like Houston and Austin are already turning the corner on reversing these restraints, but the overall quantity of the national housing shortage needs a broader approach that encourages other states and regions to follow these leaders.
What the RRBHA will do
As a reorganizational tool, the bill replaces HUD’s current “Regulatory Barriers Clearinghouse” with an office whose role is first to assess the regulatory landscape facing homebuilding at all levels of government and the way different regulations have accreted over time. The office will then draw on leading policy research and experience to offer guidance and direct technical assistance to local governments seeking to boost homebuilding through regulatory reforms.
Under the RRBHA, HUD would solicit input from a variety of experts, stakeholders, and industry to shape its work. The agency’s primary task would be to outline and draft models for updated state zoning enabling acts that reflect a century of lessons learned in the land use field, and modern sensibilities about what effective housing policy should achieve.
Previous federal incursions into local homebuilding regulation focused on pushing home values upward beyond what they would be in a purely open market as a way to mitigate risk for mortgage lenders. Increasing living standards after 1945 enabled this policy choice, but persistent construction slowdowns after 2008 caused today’s national housing shortage.
Existing policies that seek to inflate home values exacerbate the shortage. RRBHA departs from the old strategy in two ways. First, its drafters recognize that the national housing shortage needs reforms at scale that will increase homebuilding enough to bring prices down to sustainable levels. Second, the national policy goal shifts away from price appreciation to growing supply.
RRBHA directs the HUD Secretary to break down permitting silos between agencies for efforts “relating to or impacting housing development.” Siloed policymaking has been a hallmark of housing regulation, and when regulations intersect, they create unintended consequences. It is refreshing to see a bill that seeks to address this.
The HUD Secretary will coordinate across several agencies to streamline federal environmental review to promote housing production and transit-oriented development. This could, for example, include expanded use of categorical exclusions from NEPA review for infill housing and public transit infrastructure in populated areas.
The bill directs HUD to directly fund the creation of pre-approved building plans to bring down soft costs, reduce uncertainty, and speed development timelines for infill development. In the past, Pre-approved plans have helped spur construction of smaller-scale projects like ADUs in Los Angeles along with complete homes and small multifamily buildings in South Bend, Indiana. They allow communities to encourage construction of the types of buildings they want without resorting to overly prescriptive zoning and building codes.
The bill includes some spending authorizations to operate the program, support the creation of a national zoning atlas, and support communities developing pre-approved building plans:
- $10 million in appropriations for a larger HUD technical staff to implement land use technical assistance to local governments;
- $3.5 million in appropriations for “national zoning mapping” efforts to digitize land use and zoning maps;
- $10 million in appropriations for reporting and follow-up on the outcomes of HUD’s new technical assistance;
- $10 million in appropriations for competitive grants to develop local pre-approved building plan programs.
The bill would benefit state and local governments who want to support their economic success by ensuring housing is more readily available. Providing policy guidance and direct technical assistance means local communities won’t have to reinvent the wheel to make pro-growth reforms. At the same time, supporting local reforms like pre-approved building plans allows communities to influence their architectural aesthetic without holding back overall growth.
Conclusion
Housing supply is no longer strictly a state and local concern. It is a drag on the national economy and Americans’ ability to live near family or advance their careers. It demands a national approach. The RRBHA is a step in the right direction toward encouraging, then supporting supply-boosting reforms at all levels of government. The bill’s focus on state zoning, enabling acts to help reverse the state-level supply constraints the federal government sought over 100 years ago, is particularly encouraging.
Using HUD’s convening power to build consensus around effective pro-growth policies, streamlining federal permitting processes, establishing a national zoning atlas, and encouraging wider use of pre-approved building plans should address many of the constraints holding back housing supply in America today.