Key facts
- The ROAD Act, the most comprehensive federal housing legislation in decades, aims to boost housing supply and create new programs.
- Implementation and funding approval for new programs could extend until 2028.
- The House FY 2027 appropriations bill does not fund the ROAD Act provisions.
- HUD accounts for 70% of the 125 identified federal actions and must develop nine new rulemakings.
- A new rule will remove the permanent chassis requirement from HUD's manufactured housing definition, allowing for greater design flexibility.
- Decoupling USDA Section 515 rental assistance from Section 515 mortgages requires formal rulemaking and has been slowed by a lack of released technical assistance funds.
The implementation of the federal ROAD Act, a landmark piece of housing legislation, faces significant hurdles related to funding and regulatory processes, potentially delaying its impact until 2028 or later. While the bill aims to boost housing supply and affordability, securing congressional appropriations for its numerous new programs and finalizing rulemakings by agencies like the Department of Housing and Urban Development (HUD) are critical steps that could take considerable time.
A session hosted by the Bipartisan Policy Center and the National Association of Affordable Housing Lenders (NAAHL) highlighted these challenges. Many of the ROAD Act's provisions require funding approval from Congress, a process that is often slow and contentious. The House's FY 2027 appropriations bill, passed before the ROAD Act became law, does not include funding for its provisions, and the Senate's bill is still pending.
Kristen Klurfield, associate director at the Bipartisan Policy Center, noted that funding for many new programs may not materialize until fiscal year 2028 at the earliest. Aaron Shroyer, Director of Policy and Advocacy at NAAHL, emphasized that without funding, these programs "really only exist on paper."
Beyond funding, federal agencies, particularly HUD, must undertake substantial administrative work, including issuing guidance and establishing new programs. HUD is responsible for about 70% of the 125 identified federal actions and must complete nine new rulemakings. Given that HUD rules typically take 18 to 24 months to finalize, and considering potential impacts from a 34% decrease in HUD staffing since fiscal year 2024, the timeline for these rules could extend further. Shroyer pointed out the challenge of prioritizing these new rulemakings against existing agency workloads.
One significant change involves removing the permanent chassis requirement from HUD's manufactured housing definition. This aims to give manufacturers more design flexibility, enabling vertical construction and integration into urban areas. However, manufacturers cannot implement these innovations until HUD drafts new standards for chassis-free homes, a process involving an advisory committee, public comment, and final rulemaking. Lesli Gooch, CEO of the Manufactured Housing Institute, stated that manufacturers are ready to adapt but are dependent on the speed of the regulatory process. Additionally, state and local zoning laws must be updated to permit manufactured housing more broadly.
For rural America, the ROAD Act includes provisions for affordable housing, such as making the Multifamily Preservation and Revitalization (MPR) program permanent and expanding access to capital for smaller rural developers. A key change involves the U.S. Department of Agriculture's (USDA) Section 515 program, which provides low-interest loans for rural multifamily housing. The act allows USDA to decouple Section 521 Rental Assistance from Section 515 loans, enabling properties to retain rental assistance after the mortgage matures. Jonathan Harwitz, Director of Public Policy at the Housing Assistance Council, highlighted the critical importance of this for small communities where losing an affordable project can severely impact residents. However, this decoupling requires formal rulemaking by the Rural Housing Service (RHS) and is further slowed by the pending release of appropriated technical assistance funds.