42 U.S.C. § 19505: Innovation fund

Summary

HUD must set up a competitive grant program by July 11, 2027 to give money to cities, counties, local governments, and Indian tribes that have increased their local housing supply. HUD will publish how it decides who qualifies in the Federal Register and take public comment at least 90 days before offering the grants. HUD will post a list of eligible places on its website. The program ends July 11, 2033. Congress authorized $200,000,000 for each of fiscal years 2027 through 2031, adjusted for inflation by the CPI‑U. HUD must make at least 25 grants each year if money is available. Grants must be at least $250,000 and no more than $10,000,000. Places that show innovative policies and strong housing growth get priority. HUD cannot force local zoning changes, and this program does not change the rules in section 12705(c)(1). An eligible grantee can use funds for community development activities, for projects like those under the Local and Regional Project Assistance Program, or for actions that expand “attainable housing” and add to work they already do. “Attainable housing” means housing that serves households up to 120% of area median income if most units are affordable to households at 60% of area median income or below. Applications must explain how the money will be used, include data on housing supply changes over the past 3 years, show how the work fits the grantee’s housing plan, and describe initiatives already done or underway. Examples of qualifying actions include allowing more housing types (duplexes, triplexes, multifamily), cutting parking and lot-size rules, allowing denser building and mixed-income zoning, speeding permitting and code enforcement, allowing accessory units, using tax incentives or public financing, easing some environmental or manufactured‑housing rules, and other steps that lower construction costs. Projects in NAICS sector 23 will be treated like Community Development Block Grant projects.

Title 42, §19505

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Definitions

In this section: (1) Attainable housing

(2)Eligible entity

The term “eligible entity” means—

(A)a metropolitan city or urban county, as those terms are defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302), that has demonstrated an objective improvement in housing supply growth, as determined by the Secretary, whose methodology for determining such growth is published in the Federal Register to allow for public comment not less than 90 days before the date on which the notice of funding opportunity is made available; or

(B)a unit of general local government or an Indian tribe, as those terms are defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302), that has demonstrated an objective improvement in housing supply growth, as determined by the Secretary, whose methodology for determining such improvement is published in the Federal Register to allow for public comment not less than 90 days before the date on which the notice of funding opportunity is made available.

(3)Secretary

The term “Secretary” means the Secretary of Housing and Urban Development.

(b)Establishment of a grant program

(1)Establishment

Not later than 1 year after July 11, 2026, the Secretary shall establish a program to award grants on a competitive basis to eligible entities that have increased their local housing supply.

(2)List of eligible entities

The Secretary shall make a list of eligible entities publicly available on the website of the Department of Housing and Urban Development.

(3)Eligible purposes

An eligible entity receiving a grant under this section may use funds to—

(A)carry out any of the activities described in section 105 of the Housing and Community Development Act of 1974 (42 U.S.C. 5305);

(B)carry out any of the activities permitted under the Local and Regional Project Assistance Program established under section 6702 of title 49; and

(C)carry out initiatives of the eligible entity that facilitate the expansion of the supply of attainable housing and that supplement initiatives the eligible entity has carried out, or is in the process of carrying out, as specified in the application submitted under paragraph (4).

(4)Application

(A)In general

An eligible entity seeking a grant under this section shall submit to the Secretary an application that provides—

(i)a description of each purpose for which the eligible entity will use the grant, and an attestation that the grant will be used only for 1 or more eligible purposes described in paragraph (3);

(ii)data on characteristics of increased housing supply during the 3-year period ending on the date on which the application is submitted, which may include whether such housing—

(I)serves households at a range of income levels; and

(II)has improved the quality and affordability of housing in the jurisdiction of the eligible entity;

(iii)a description of how each eligible purpose described in clause (i) may address a community need or advance an objective, or an aspect of an objective, included in the comprehensive housing affordability strategy and community development plan of the eligible entity under part 91 of title 24, Code of Federal Regulations, or any successor regulation (commonly referred to as a “consolidated plan”); and

(iv)a description of how the eligible entity has carried out, or is in the process of carrying out, initiatives that facilitate the expansion of the supply of housing.

(B)Initiatives

Initiatives that meet the criteria described in paragraph (3)(C) include, but shall not be limited to—

(i)increasing by-right uses, including duplex, triplex, quadplex, and multifamily buildings, in areas of opportunity;

(ii)revising or eliminating off-street parking requirements to reduce the cost of housing production;

(iii)revising minimum lot size requirements, floor area ratio requirements, set-back requirements, building heights, and bans or limits on construction that allow for denser and more affordable development;

(iv)instituting incentives to promote dense development for communities where increased density is needed;

(v)passing zoning overlays or other ordinances that enable the development of mixed-income housing;

(vi)streamlining regulatory requirements and shortening processes, increasing code enforcement and permitting capacity, reforming zoning codes, or other initiatives that reduce barriers to increasing housing supply and affordability;

(vii)eliminating restrictions against accessory dwelling units and expanding their by-right use;

(viii)using local tax incentives or public financing to promote development of attainable housing;

(ix)streamlining environmental regulations;

(x)eliminating unnecessary manufactured-housing or cooperative housing regulations and restrictions;

(xi)minimizing the impact of overburdensome energy and water efficiency standards on housing costs; and

(xii)other activities that reduce the cost of construction, as determined by the Secretary.

(5)Grants

(A)In general

The Secretary shall make not fewer than 25 grants on an annual basis (unless amounts appropriated to provide grant amounts consistent with subsection (b) are insufficient, in which case fewer grants may be awarded), with strong consideration of different geographical areas and a relatively even spread of rural, suburban, and urban communities.

(B)Limitations on awards

No grant awarded under this paragraph may be—

(i)more than $10,000,000; or

(ii)less than $250,000.

(C)Priority

When awarding grants under this paragraph, the Secretary shall give priority to an eligible entity that has—

(i)demonstrated the use of innovative policies, interventions, or programs for increasing housing supply; and

(ii)demonstrated a marked improvement in housing supply growth, as needed.

(D)Grant administration and terms

Projects assisted under this section for activities described in sector 23 of the North American Industry Classification System shall be treated as projects assisted under the Community Development Block Grant program under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.).

(c)Rules of construction

Nothing in this section shall be construed—

(1)to authorize the Secretary to mandate, supersede, or preempt any local zoning or land use policy; or

(2)to affect the requirements of section 12705(c)(1) of this title.

(d)Sunset

The program established under this section shall terminate on the date that is 7 years after July 11, 2026.

(e)Authorization of appropriations

(1)In general

There is authorized to be appropriated to carry out this section $200,000,000 for each of fiscal years 2027 through 2031.

(2)Adjustment

The amount authorized to be appropriated under paragraph (1) shall be adjusted for inflation based on the Consumer Price Index for all Urban Customers published by the Bureau of Labor Statistics of the Department of Labor.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Housing and Community Development Act of 1974, referred to in subsec. (b)(5)(D), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. Title I of the Act is classified principally to chapter 69 (§ 5301 et seq.) of this title. For complete classification of this Act to the Code, see

Short Title

note set out under section 5301 of this title and Tables.

§19505 Innovation Fund