One Big Beautiful Housing Supply Bill
Congress considers a consensus housing supply bill while the White House cracks down on the homeless.
Happy Tuesday, and welcome to another edition of Rent Free.
They say all politics is local, and that's particularly true of housing politics—where localities and (increasingly) states are the main policy-setting jurisdictions.
Nevertheless, the federal government does influence housing policy and housing outcomes through any number of regulatory and spending programs.
We got a reminder of that this past week with the release of two major federal housing initiatives.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
In Congress, the Sens. Tim Scott (R–S.C.) and Elizabeth Warren (D–Mass.) announced a surprise, and surprisingly bipartisan, blockbuster bill in the Senate Banking Committee. It includes a long list of tweaks and reforms aimed at boosting housing supply.
The same day that that bill was proposed, the White House issued a new executive order on homelessness that aims to shift federal policy and federal funding from a "housing first" approach toward one focused primarily on guaranteeing public order.
This week's newsletter takes a closer look at both proposals and what they might mean for housing costs and the number of people sleeping on the streets.
One Big Beautiful Housing Supply Bill
On Thursday night, Scott and Warren, respectively the chair and ranking member of the Senate Banking Committee, released the text of their ROAD to Housing Act of 2025, which includes a raft of new policies aimed at boosting housing supply.
Unlike past Democratic housing bills, including some authored by Warren, the legislation does not include billions of additional dollars for housing subsidies. It also excludes some controversial supply-side ideas favored by conservatives, like opening up federal lands for housing development.
Instead, the Scott-Warren bill is a 315-page amalgam of proposals from Democrats and Republicans on the Banking Committee that largely tweaks existing federal grant programs, loan programs, and regulations—with many of those changes aimed at increasing housing production.
Like an ensemble cast in a superhero movie, the bill includes a lot of familiar policy proposals that have been perennially proposed by housing supply boosters, plus a host of new ideas being audience-tested for the first time.
"Individually, some of these [policies] may seem very technical and narrowly scoped. Taken together, collectively in this package, they can make pretty meaningful progress on housing supply," says David Garcia, the policy director for Up For Growth.
More Housing Near Transit
One common theme in the bill is reforming federal transportation and housing grants to direct more money to jurisdictions that have more liberal zoning rules and are building more housing as a result.
The bill incorporates the Build More Housing Near Transit Act, which would prioritize transit funding for projects in jurisdictions that have adopted "pro-housing policies" along proposed transit routes.
The bill defines pro-housing policies as "any adopted State or local policy that will remove regulatory barriers to the construction or preservation of housing units, including affordable housing units."
It also lists a number of specific pro-housing policies that would make jurisdictions' transit grant applications more competitive, including the elimination of minimum parking requirements, the adoption of by-right approval of development (meaning local bureaucrats don't have discretion to condition or deny building permits), the reduction of minimum lot sizes, and the elimination or easing of height and density limits.
The bill was first introduced in 2019 by Rep. Scott Peters (D–Calif.). It was also introduced as a stand-alone bill this Congress by Sens. Brian Schatz (D–Hawaii) and Jim Banks (R–Ind.).
"Our bipartisan bill incentivizes cities and towns to build housing when they expand or redevelop their public transit systems. This will help put more families in homes, grow local economies, and cut carbon pollution," said Schatz in a press release announcing the stand-alone bill.
Salim Furth, a housing policy researcher at George Mason University's Mercatus Center, says that the bill rationalizes the award of federal transit dollars to projects in areas where local laws allow for more housing, and therefore where transit ridership will be higher.
While existing transit grant formulas do account for the influence of land use policy on ridership, land use regulation "wasn't given enough weight. There was a bunch of things but they're given the same weight," says Furth.
The Build More Housing Near Transit Act places a more appropriate weight on land use laws and awards jurisdictions for actually adopting "pro-housing" policies, not just planning on adopting those policies, he says.
Refocusing Community Development Block Grants on Growth
Also included in the bill is the Build Now Act, which would redistribute some Community Development Block Grant (CDBG) money from high-cost localities building less housing to those who are building more.
The CDBG program distributes roughly $3.5 billion each year to localities and states with the primary goal of boosting economic development in poorer communities.
The lack of strings attached to CDGB funds has long made it a target for conservatives and fiscal hawks who consider it a wasteful subsidy of purely local activities. The White House's latest budget request calls for eliminating the program.
More modest critics argue the program's funding formula—which factors in population, poverty rates, and the age of housing stock—is outdated and leads to poorly targeted grant awards.
The focus on old housing in particular can mean that high-cost, wealthy jurisdictions that approve little new housing can get subsidies that are intended for poor communities.
The Build Now Act, which is co-sponsored by Warren and Sen. John Kennedy (R–La.), wouldn't throw out the existing formula.
It would instead create an additional formula whereby jurisdictions with above-median housing costs and below-median housing growth rates would forfeit 10 percent of their CDGB funds. That money would then be redistributed to jurisdictions with above-median housing costs and above-median rates of growth.
The basic idea of amending the program to reward jurisdictions that permit a lot of housing is not new.
The first Trump administration's proposed rewrite of the Affirmatively Furthering Fair Housing (AFFH) rule similarly would have had CDGB recipients report on their housing market outcomes, with the potential for low-growth jurisdictions to lose grant money and high-growth jurisdictions to receive additional subsidies.
(The Trump administration eventually tore up its first AFFH rewrite in favor of a far more minimal rule that did not require CDGB recipients to report on housing supply at all.)
To keep the focus on places that are and are not approving new housing, the Build Now Act's formula would exclude low-cost jurisdictions, jurisdictions with high vacancy rates, recipient jurisdictions that don't control their own zoning, and jurisdictions that were recently affected by a natural disaster.
Kennedy and Warren both describe the bill as creating an added incentive for localities to change their own policies to encourage more housing construction.
"The Federal government should use the tools at our disposal to reward communities that are taking bold action to build more housing and reduce families' biggest monthly expense," said Warren.
"I'm proud to introduce the Build Now Act to discourage pointless roadblocks and incentivize cities to help make the American Dream possible again," said Kennedy.
A Better 'YIMBY Grant' Program?
Additionally, the Senate bill would create a standalone housing "Innovation Fund" to reward jurisdictions that are presiding over expanding housing supply.
The proposal would authorize a five-year, $1 billion* grant program, to be awarded on a competitive basis, to localities that have "demonstrated an objective improvement in housing supply growth."
Localities that have improved their housing supply the most, as determined by the Department of Housing and Urban Development, could qualify for grants of up to $10 million that could be used to pay for local services, clean water projects, or liberalizing local land use reforms like shrinking minimum lot sizes, eliminating parking minimums, allowing more "middle housing," or creating "density bonus" programs.
This Innovation Fund would appear to be an attempt to improve the Pathways to Removing Obstacles (PRO) Housing grant program created back in 2022—colloquially referred to as a "YIMBY grant" program.
The PRO Housing program was pitched as a way of encouraging localities to liberalize their zoning laws. Grantees would report to HUD on housing supply initiatives they'd adopted. They could then receive money for land use planning activities.
Critics argued that the PRO Housing program was overly broad, both in the types of jurisdictions that could qualify for grants and the kinds of policies they could adopt that might see them get federal money.
As a result, jurisdictions (like states) that don't directly issue building permits received money via the program. Localities that didn't build a lot of housing received grants, as did localities that adopted policies that arguably made housing production harder.
For example, Philadelphia and New York City received a PRO Grant for adopting expensive affordable housing mandates on new housing construction.
The Innovation Fund would improve on this program by directing money to localities that have more of a role in setting land use regulations and that are actually building new housing. It's also much more specific (and much more thoughtful) about the kinds of land use planning activities it would reward with federal dollars.
Model Codes
The Senate bill also includes the Housing Supply Frameworks Act, which would direct HUD to produce model legislation that states and localities could adopt to improve housing production.
The bill would give HUD three years to publish "best practices" plans for state and local zoning reforms. These would include recommendations for increasing allowable residential density, removing parking minimums, allowing by-right production of duplexes, triplexes, etc., and reducing impact fees.
The original version of this bill was introduced back in 2024 by Sen. John Fetterman (D–Pa.) and Rep. Lisa Blunt Rochester (D–Del.). A new, stand-alone, stripped-down version of the bill was reintroduced in April by a bipartisan collection of lawmakers.
Its sponsors pitch the bill as a way of making up for the federal government's initial foray into zoning in the 1920s, when it encouraged states to adopt model zoning–enabling laws that planted the seeds of today's restrictive zoning codes.
"This is the first time Congress is writing down 'zoning is one of the bad things,'" says Alex Armlovich, a housing policy expert at the Niskanen Center.
Manufactured Housing and Environmental Review
While traditional site-built housing is regulated by states and localities, HUD sets building code regulations for manufactured housing that's built off-site and shipped to its final location.
Supply-side reformers have long complained about a provision in HUD's regulations that requires manufactured housing to permanently sit on a steel chassis. Critics argue this needlessly drives up the cost of inherently lower-cost manufactured housing.
The Senate bill would do away with the chassis requirement.
The bill would also exempt federally subsidized urban infill development from the environmental review requirements of the National Environmental Policy Act (NEPA).
NEPA environmental reviews take a lot of time and cost a lot of money to produce. Third parties can sue to delay projects on the argument that the federal government did not produce a thorough-enough NEPA review.
By exempting federal housing subsidies from NEPA, the hope is that this will expedite federally subsidized projects and make federal housing dollars go further.
Libertarians would argue against federal housing subsidies, period. Proponents of NEPA reform say that so long as those subsidies are provided, they should be administered efficiently.
"If Congress is going to appropriate money, they shouldn't waste it. They owe us that," says Armlovich.
What About Federalism?
Land use regulation has long been the domain of state and local governments. Under our federalist constitution, that's how it's supposed to work.
The Senate bill is an interesting animal in that many of its provisions would expand the federal government's influence over state and local housing regulations while trying to expand housing supply and encourage local land use liberalization.
One could well argue that this isn't a particularly appropriate role for the federal government to play, nor one it's particularly well-suited for.
Nevertheless, the federal government already influences housing market outcomes through its vast array of subsidies, loan programs, and regulations. Housing in America is also more expensive than it would be, thanks to local and state regulations.
Within its existing outsized role, there are a number of smaller levers the federal government can pull to shift local and state policy in a more pro-supply direction.
The Senate bill attempts to do just that. The legislation notably does not include more ambitious federal proposals to directly preempt local land use regulations or create vast new affordable housing subsidy programs.
The Senate bill shows that "Congress is capable of thinking big about housing without proposing something so large that it would dominate this space," says Furth.
The Nail in the Coffin of 'Housing First'
While the Senate bill attempts to take a bipartisan, consensus approach to housing supply policy, the White House has proposed a more divisive update to federal homelessness policy.
The Trump administration's new "Ending Crime and Disorder on America's Streets" order calls for increasing the use of civil commitment for mentally ill people living on the streets and shifting federal dollars toward local governments that prioritize encampment clearances and enforcement of vagrancy laws.
"Shifting homeless individuals into long-term institutional settings for humane treatment through the appropriate use of civil commitment will restore public order. Surrendering our cities and citizens to disorder and fear is neither compassionate to the homeless nor other citizens," reads the order.
This is a marked break with the "Housing First" approach to homelessness officially pursued by the Biden administration and many state and local governments that deemphasized encampment clearances in favor of providing permanent, supportive housing to the homeless.
Proponents of the Housing First approach argue it is unfair and unjust to penalize people with nowhere to go for sleeping outside or gathering in encampments. It's easier to address people's mental illness and drug addiction when they have a roof over their heads.
Homeless advocates have been unsparingly critical of the Trump administration's new order.
"It moves federal policy many steps backward," says Jesse Rabinowitz, communications and campaign director for the National Homelessness Law Center. "It's going to make it easier to throw people behind bars who are homeless, who are sick, who are disabled. It's going to make it a lot harder to solve homelessness."
As street homelessness has steadily increased in recent years, however, local governments led by both Republicans and Democrats have shifted toward a more enforcement-heavy approach geared to improving public order and cracking down on vagrancy.
The U.S. Supreme Court's 2024 Grants Pass decision has given them more flexibility to do just that.
The Trump administration's latest executive order can be seen as a lagging indicator of this trending change in approaches to homelessness.
"Even Gavin Newsom and more moderate and progressive Democrats say, 'Well, of course [encampment] clearances have to be part of the solution,'" says Judge Glock, a senior fellow at the Manhattan Institute. "The solution can't be waiting for 15, 20, 25 years for housing prices to come down or for enough permanent supportive housing to go up."
Quick Links
- The Texas Tribune's Joshua Fetcher has a lengthy new piece detailing how a bipartisan coalition in the Texas Legislature came together to pass this year's housing reforms.
- Zoning is no laughing matter. Philadelphia's zoning board rejects a proposal for a basement comedy club.
- Is it time for a YIMBY Party?
- A new paper finds major benefits of upzoning in New York City.
- Yet another new paper finds that zoning reform in Minneapolis led to falling home prices.
- A federal judge sides with Michigan wineries challenging zoning restrictions on their hosting of live events.
CORRECTION: The original version of this article misstated the size of the Innovation Fund.
