As we enter an election year, we are likely to see legislation and federal-level budget changes that will impact the affordable housing sector. The composition of the current legislature and election-year dynamics make bipartisan agreement on federal housing policy uncertain; however, there are policies in the works and laws going into effect this month that are bringing the need for affordable housing to the forefront and proposing ways to meet this need, according to Kasey Burke, President of Meta Housing.
“National, state and local legislation and policies that boost the development of affordable housing are necessary to help combat the growing challenge of housing affordability in markets throughout the country,” says Burke. “We will continue to keep a close eye on these changes as we move through the new year.”
At the federal level, a set of policies that is friendly toward affordable housing development was announced by the Department of Housing and Urban Development (HUD) in March 2023. HUD released a 2024 fiscal year budget that addresses the ongoing nationwide shortfall of affordable housing, recognizing that this issue has been exacerbated by shifts in housing demand during the pandemic that have led to rent increases and recent increases in mortgage rates. The department is tackling these challenges with a 2024 budget that complements discretionary funding with a package of mandatory funding and tax expenditures to make safe, stable housing more affordable for millions of Americans.
The 2024 President’s Budget includes $100 billion in mandatory funding over 10 years for programs at HUD as well as tax credits to provide affordable housing. The funding includes a $15 billion Extremely Low-Income Housing Supply Subsidy (for both new project-based rental assistance contracts and the preservation of distressed public housing), $10 billion in grants to reduce barriers to affordable housing production, $22 billion in housing vouchers for vulnerable low-income populations including youth aging out of foster care and extremely low-income veterans, $10 billion in first-generation homebuyer down payment assistance, and $3 billion in sustainable eviction prevention reform. The package is expected to have a significantly positive impact on affordable housing development this year.
State-level policies and legislation are also needed to help alleviate the affordable housing crisis. In California, where Meta Housing focuses its affordable housing activity, lawmakers have passed several bills that aim to streamline housing construction for lower-income individuals and families beginning this year. SB 423 re-ups and expands a law that speeds up approval on apartment buildings, some of which include units for lower-income Californians, SB 4 has a similar impact on affordable housing on property owned by religious institutions and non-profit colleges, and AB 1287 gives developers permission to build denser, taller buildings if they set aside additional units for middle-income earners. In addition, several new laws will make it more difficult for opponents of proposed housing projects to use the California Environmental Quality Act (CEQA) to delay certain types of projects, and judges have been instructed not to consider the noise of future residents as a pollutant in need of environmental mitigation. Other state laws help courts stop frivolous environmental lawsuits, shield many affordable housing projects from environmental review, and force cities to either approve or deny a project’s environmental review within a set time limit.
With these policies and laws in place, 2024 is shaping up to be a year in which much-needed affordable housing units can be developed more easily, more quickly, and with fewer headwinds than in years past.