The $1.6B Federal Plan to Spur Local Zoning Reforms

It’s hard to find affordable housing in the U.S. for many reasons. Building costs, the gulf between wages and rents for many Americans and government assistance programs that fall well short of need, to name a few. But another reason why affordable housing can be scarce, and one that generates a lot of controversy, is the exclusivity of local zoning codes. 

In the last few years, there’s been a small movement among some cities to rewrite zoning laws in ways that would let more residents find homes in neighborhoods where the rules have previously made it tougher to expand affordable housing. Notably, Minneapolis “ended” single-family zoning in 2019 when it approved a plan to allow additional units on single-family lots. And Oregon passed similar rules applying to all but the smallest cities the same year. 

Now, the Biden administration wants to accelerate the trend. As part of the Build Back Better legislation, the fate of which is increasingly uncertain as it has stalled in Congress, the administration has proposed creating a $1.6 billion program called Unlocking Possibilities. 

If the program is adopted, the Department of Housing and Urban Development will issue competitive grants to cities that want to update their zoning codes and housing action plans. Essentially the program would help cities pay for new policy documents that will guide their future development to promote new housing supply and more diverse neighborhoods.

Cities use zoning laws to determine what kinds of housing, and how much, can be built in different neighborhoods. The default in many suburbs and city neighborhoods is single-family zoning, which often establishes minimum lot sizes and calls for just one house on each property. Many of these laws have racist origins, as cities used them as a way to create and preserve exclusively white neighborhoods.

As the White House Council of Economic Advisers wrote in a blog post earlier this year, the goal of the newly proposed federal program focused on zoning reform is to “address persistent inequities in the American housing market.” 

“The benefits could be substantial—increased access to affordable housing so that previously excluded Americans can move to areas with greater opportunity, and increased opportunities for Black families to build wealth via home ownership,” the council wrote. 

Program Limitations 

The idea for the federal program goes back to an Obama administration initiative in 2016 encouraging cities to update their zoning rules to permit more housing. 

Then, earlier this year, Democratic Sens. Tim Kaine of Virginia and Amy Klobuchar of Minnesota, and Rob Portman, an Ohio Republican, introduced a bill called the Housing Supply and Affordability Act, aiming to create a grant program that would incentivize cities to rewrite zoning policies. That bill became part of the broader Build Back Better legislation. 

Many zoning-reform advocates support the program, saying it will give some much-needed federal support to communities that don’t have the resources to prioritize overhauling their zoning codes. But others have noted that the program is not detailed enough to ensure that the policies it helps create are actually focused on creating new housing. 

And because it’s a voluntary grant program rather than a rule with an enforcement mechanism, some have pointed out that it’s not likely to inspire the wealthiest, most exclusive communities to adopt more inclusive rules. 

“I do not think it would hugely change the atmosphere around exclusionary zoning in most of the country,” said Yonah Freemark, a senior research associate at the Urban Institute. 

“The reality is unfortunately that incentives from the federal government can only do so much. They’re limited in their ability to really impact changes,” he added. “It’s a program designed to encourage cities that are already interested in improving outcomes. It’s not really about creating a requirement for communities to create change.” 

Mike Kingsella, the CEO of Up For Growth Action, a federal legislative advocacy group focused on increasing the housing supply, noted that the Unlocking Possibilities program is the only part of the Biden agenda that’s focused on exclusionary zoning. 

The structure of the program, he said, may keep it from making an impact in some of the wealthiest places, but there are many municipal governments that want to change their old zoning codes, but don’t have the staff to do it. 

“The program isn’t going to change the mind of dyed-in-the-wool neighborhood defenders, but it is going to provide resources for forward-thinking communities,” Kingsella said. 

Kingsella, whose group is also advocating for other federal initiatives, like the Build More Housing Near Transit Act and the Yes In My Backyard (YIMBY) Act, also said the Unlocking Possibilities program could help with building up data about how cities can improve their zoning policies and housing plans, and how those policies affect the cost and availability of housing.

Others say that the Biden administration and lawmakers could go further to push local governments towards reforming their zoning rules. Zoning codes are political documents that, to some degree, reflect the desires of the communities that produce them, or at least the most powerful people in those communities. For that reason, it’s hard for the federal government to change zoning rules without creating enforceable mandates.

Jenny Schuetz, a senior fellow at Brookings Metro, described the incentive program as a “carrot,” and said it could be more effective to create “sticks,” like withholding transportation funding from high-priced communities that don’t make room for new housing. That, however, would be a much tougher sell in Congress. 

In the absence of real enforcement, Schuetz said that HUD will need to take steps like developing clear criteria for evaluating applications and identifying places that would benefit most from the grants, as well as holding grantees accountable for carrying out their plans. 

“That’s going to take some careful thinking,” Schuetz said in an email.

Other Challenges

Zoning is also only one factor when it comes to growing the nation’s supply of affordable housing. 

For example, building costs for the average new single-family home are $300,000, according to the National Association of Home Builders. More and more renters are spending a greater share of their incomes on housing. And the federal Housing Choice Voucher program, which subsidizes rents, only serves about a quarter of those who earn little enough to qualify.

There’s no clear consensus on how much zoning reform can really accomplish for housing affordability in the short term. But Sara Bronin, founder and lead organizer with  the group Desegregate CT, which has advocated for zoning changes in Connecticut, said she’s encouraged to see the federal government pushing cities to be more inclusive. 

“I’ve been really heartened at the amount of public discourse,” Bronin said. “Zoning has had perhaps unintended effects on the way we live and the choices we can make, and the more we can dig into zoning, the better off I think we will be as a country.”