Highway Land to Housing: New Bill Mandates 40% Affordable Units on Surplus Federal Property for 30 Years

This legislation, dubbed the Empty Lots to Housing Act, is a major change to how the government deals with real estate purchased using federal highway funds that is no longer needed. Essentially, it allows the agency that bought the land to transfer it for free—no repayment necessary—if the land is going to be used for housing, provided the recipient agrees to strict, long-term affordability rules.

The Land Giveaway: Trading Cash for Housing

Currently, if a state or local agency buys property using federal highway dollars and later decides they don’t need it, they usually have to sell it and pay the federal government back. This bill changes that process (SEC. 2). Now, they can simply transfer the property without owing Uncle Sam anything, as long as it goes to a local government or a nonprofit organization. This is a clear trade-off: the government foregoes the revenue from selling the land on the open market in exchange for guaranteed affordable housing.

This could be huge for local housing authorities who have been eyeing unused parcels of land that have sat vacant since highway projects were completed decades ago. For the average taxpayer, the immediate hit is that the U.S. Treasury won't see that revenue, but the long-term benefit is the creation of desperately needed lower-cost housing in their community.

The 30-Year Affordability Mandate

Here’s the core of the deal: any entity receiving this land must promise that for the next 30 years, at least 40% of all housing units built on that site will be affordable (SEC. 2. Long-Term Housing Requirements). Specifically, these units must be reserved for families earning 60% or less of the Area Median Income (AMI), and the rent charged can't exceed 30% of that family's adjusted income.

But the bill goes deeper: 20% of those affordable units—meaning 8% of the total project—must be set aside for families at 30% AMI or less. This is called 'deep affordability,' and it targets the lowest-income populations, like seniors on fixed incomes or working families struggling with minimum wage jobs. For a developer, this is a significant, long-term restriction that defines the project’s financial structure for three decades.

The Private Developer Loophole: Proceed with Caution

The bill also opens the door for private third-party companies to receive this land, but with more hurdles (SEC. 2. Conditions for Transferring to a Third Party). A private developer can only get the land if two things happen. First, a local government or nonprofit must have been unable to take the property. Second, the Secretary of Transportation must approve the transfer, deciding that giving it away benefits the government more than selling it for cash—a subjective standard that requires careful oversight.

Crucially, the private company must also show they have “successfully built or managed affordable housing before.” This provision is designed to ensure the land goes to experienced hands, but the definition of “successful” is vague and could potentially be manipulated. For a private developer, getting free land is a massive subsidy, but they still have to meet the same 30-year affordability requirements, making this a high-stakes, long-term commitment. This process bypasses the standard competitive bidding process, which means the public needs assurances that the Secretary’s decision truly maximizes public benefit rather than simply fast-tracking a transfer.