On May 26, the Biden Administration released its full plans for a surge in new housing spending as part of the American Jobs Plan. The proposal would invest $318 billion, including $105 billion in newly proposed tax credits. The goal is to expand the supply of safe, affordable housing in all 50 states and territories, in turn creating thousands of jobs.
According to the White House, the Jobs Plan will create more than 2 million affordable housing units, making it the most aggressive affordable housing plan in the nation’s history.
While the overall plan will be hard-fought in Congress, there is broad bipartisan support for the elements that comprise the housing portion of the legislation, creating the possibility that even if the entire plan is not passed into law, some of the affordable housing components could be passed as stand-alone legislation.
There are currently 11 million households in the United States that pay more than 50% of their income toward rent and millions of children live with exposure to lead paint in substandard housing.
The main element of the housing portion of the Plan is $213 billion in spending for a variety of HUD programs, including (1) $45 billion for the Housing Trust Fund, which represents a huge expansion of a program that serves persons whose incomes do not exceed 30% of the area median income; (2) $35 billion for the HOME program, which is often used in conjunction with Low-Income Housing Tax Credits (LIHTC); and (3) $2 billion each into the Section 202 program for the elderly and project-based rental assistance. If approved, the new project-based rental assistance agreements will be the first in more than 20 years.
In addition to the increased funding for HUD programs, the plan provides $105 billion in new and expanded tax credits, including $55 billion for the LIHTC program. Between the LIHTC and similar programs, the Jobs Plan aims to spur the construction of 500,000 to 600,000 affordable apartments over a five-year period.
Included in this $105 billion tranche is a brand new tax credit based on the Neighborhoods Home Investment Act. This $20 billion program is modeled after the LIHTC program and would cover the cost of purchasing and rehabilitating homes in areas where the cost of building new housing is higher than the actual value of the homes. About 22% of metro areas nationwide and 25% of non-metro areas would qualify for these investments.
The housing component of the Jobs Plan provides funds for rural housing also, with plans that would complement current Department of Agriculture housing programs.
One of the most intriguing (and sure to be controversial) parts of the plan is a $5 billion zoning reform program that would be used for local housing policy grants for cities and counties that agree to ease restrictive or exclusionary zoning. Exclusionary zoning is one of the key contributors to the lack of affordable housing in many areas and leads to segregation and concentrated poverty.
We will be following the progress of the American Jobs Plan as it works its way through Congress and will provide regular updates on its progress.