Housing for the 21st Century Act Signals Meaningful Federal Housing Reform

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On February 9th, the U.S. House of Representatives passed the Housing for the 21st Century Act with strong bipartisan support, marking one of the most significant federal housing policy advances in decades. As a companion to the Road to Housing Act approved by the Senate last year, the legislation now moves toward final reconciliation and is expected to be sent to the President for signature.

Highlights of the legislations, and who should benefit from them include:

• LIHTC Investors and Developers: Lifts the public welfare investment (PWI) cap for from 15 to 20 percent which means banks, who are subject to this cap, will have the ability to increase their investments in LIHTC properties.

• Owners Using Housing Choice Vouchers: Reduces delays in HUD inspections, including allowing units financed through certain federal housing programs-LIHTC, HOME, and Rural Development-to automatically meet Housing Choice Voucher program inspection requirements if they have passed an inspection within the past year.

• Builder/Developers using FHA loans: Requires the Federal Housing Administration (FHA) to adjust multifamily loan limits to better match housing market costs and enhance affordability. Also, indexes future increases to the Price Deflator Index of Multifamily Residential Units Under Construction.

• All Builder/Developers: Establishes a U.S. Department of Housing and Urban Development (HUD) pilot grant program to help communities create "pattern books" of pre-approved designs for missing middle and infill housing, particularly in rural and high-opportunity areas, to speed construction approvals and reduce housing costs.

• All Builder/Developers: Modernizes the National Environmental Policy Act (NEPA) review process by increasing capacity sharing between HUD and states and localities; gives HUD additional authority to delegate NEPA responsibilities to state, local, and tribal governments; and provides more flexibility to designate housing assistance as special project funds.

Together, these bills represent a meaningful step forward in addressing the nation's affordable housing shortage by expanding financing capacity, streamlining program requirements, and modernizing outdated regulatory processes.