Infrastructure Summer: A Surprisingly Radical Housing Bill

The Build Back Better Act, Democrats’ reconciliation bill featuring most of President Biden’s legislative priorities, is hard to sum up succinctly. It’s a climate bill, featuring a historic and sorely needed investment in the green transition; it’s a family care bill, featuring paid family leave, universal pre-K, and a home health care program; it’s a health care bill, with lowered prescription drug prices, Obamacare exchange subsidies, a solution for Medicaid recipients in non-expansion states, and dental care under Medicare. All of this still subject to negotiation by House Democrats and the Senate, of course, which will cause everyone watching to pull their hair out.

One of the few things the bill has not gotten much attention for is its housing program. But that’s not because the housing proposals are lacking. The bill features a substantial investment in a number of housing-related priorities that run the gamut from technocratic nudges favored by neoliberals to significant resources directed toward activist-favored solutions, including money for new public-housing developments and community land trusts.

Running through the housing provisions introduced for markup by the House Financial Services Committee, which wrapped up this week, shows an interesting all-of-the-above approach to one of the most vexing problems in the American economy, the soaring cost of housing. The bill features $327 billion in new spending on housing, with the bulk of that money going to public housing and housing vouchers, as well as some low-income development. All told, a best-case scenario could see the bill cutting homelessness in half within five years (though it features that new, favored Democratic construction, in that some of it expires in 2026 and will need to be made permanent by a future Congress).

Starting with the smaller stuff, the bill features money for reforming zoning codes, written to excite YIMBYs everywhere. It allocates $4.5 billion in grants, basically a bribe, to municipalities that change their land-use laws to encourage and streamline the building of duplexes and triplexes on single-family lots. This validates the theory that development, density, and supply are at least a part of the solution.

That dollar value pales in comparison to the money allocated for public housing. This $80 billion pot represents such a substantial investment that it could nearly, though not entirely, make up the funding deficit that has plagued the country’s major public-housing authorities for years. That $80 billion is allocated in an interesting and unusual way, with $66 billion of it under the direct discretion of Housing and Urban Development Secretary Marcia Fudge. As Paul Williams, a fellow at the Jain Family Institute, writes, the standard formula for allocating public funding money has sharply underserved public-housing authorities in major cities like New York, Chicago, and Philadelphia. Secretary Fudge will now have the opportunity to remedy the most acute shortfalls those cities are experiencing.

The structure of that system proves the importance of Secretary Fudge’s appointment for progressives. While Fudge herself wanted to head up Agriculture, not HUD, the appointment of a former Congressional Progressive Caucus member to a Cabinet position in the Biden administration now has a chance to pay huge dividends for housing advocates nationwide, who have an ally empowered with significant funding. For the New York City Housing Authority (NYCHA), for example, which sports a $40 billion shortfall in its funding, Secretary Fudge could nearly close the gap in one fell swoop.

Elsewhere, HUD’s two main rental assistance programs are getting $90 billion, with $75 billion for Section 8 housing vouchers over just five years, a substantial infusion of cash as well. Broken out annually, that would make for a roughly 50 percent increase in its annual budget. Currently, Section 8 has only enough funding to help 1 in 5 families with their housing needs. This proposal would step up aid to extremely low-income households and those at risk of homelessness or domestic violence. Like the public-housing program, it’s not enough to fully fund all of the expressed need, but it’s a big step in the right direction.

There’s also $72 billion for investments in affordable-housing production through the HOME investment program, in another nod to the need for more housing supply. That should boost projects for multifamily housing all over the country.

And there are smaller amounts of money, too, for things like community land trusts, a favored approach of activists, particularly in smaller American cities where land costs aren’t exorbitantly high. Community land trusts allow communities to purchase the land on which housing exists and maintain control over the housing stock, a shared-equity structure that prevents outside landlords from driving up prices and allows residents to benefit from rising property values. The bill allocates money to help community groups purchase housing to be managed in this way. It could be a big boost to groups in Santa Fe, New Mexico, that are attempting to create the largest community land trust in the country. While it may not be the most effective solution for expensive cities where purchasing land is cost-prohibitive, it shows an interesting willingness to entertain nontraditional solutions suggested by activists.

Plus, there are other, non-monetary commitments of note, as well. The bill exempts the appropriated funds from counting under the Faircloth Amendment, a 1998 provision that prohibits HUD from funding new public-housing development if it increases the number of units a public-housing authority owns. Most of the public-housing funds are intended to go toward the backlog of repairs, and so little new public housing is likely to be built. But getting rid of the Faircloth prohibition has been a priority for Reps. Alexandria Ocasio-Cortez (D-NY), Nydia Velázquez (D-NY), and Ilhan Omar (D-MN), and this stipulation signals a new attitude from Congress toward building new public housing, which has been impossible for decades. For the first time in a long time, public-housing authorities are being told they can build and expand.

The question, of course, is whether all of these provisions survive the deliberation process. Residents of public and subsidized housing are not the most powerful constituencies in Washington, which is currently teeming with lobbyists, as corporate interests try to hollow out the reconciliation bill. Despite the White House’s willingness to engage with housing activists and groups like the National Low Income Housing Coalition, it will be a battle to keep the interests of low-income residents and the precariously housed in place. If the size of the bill begins to shrink, the lack of publicity surrounding the housing commitments and the amount of money allocated to people who don’t tend to vote in outsized numbers will make it an easy target for cut-happy Democrats like Joe Manchin.

Manchin’s Democratic colleague Mark Warner has already signaled his issues with the housing package himself, not because of the low-income housing provisions, but because there’s not enough money for down payment assistance, in his estimation. Obviously, down payment assistance is a benefit for a much different class stratum, one more likely to make for regular voters (and donors), though there’s little reason to believe it’s a total solution to the sweeping affordability crisis that is the United States’ housing system.

Still, taking on housing costs is one of the most effective ways to combat inflation, which centrist Democrats claim to care so greatly about. Housing costs remain one of the most inflated aspects of American life, eating up a unique percentage of paychecks. Bringing down housing costs would be the most meaningful method of limiting living expenses for Americans, combating the "inflation tax" that Sen. Manchin opined about so nonsensically in The Wall Street Journal. If he was serious about that worry, he would be the housing proposals’ biggest advocate.