Federal Housing Grants Now Require Local Governments to Report on Zoning Barriers Every Five Years

The new Identifying Regulatory Barriers to Housing Supply Act aims to tackle the national housing shortage by getting local governments to loosen up their zoning rules. The core idea is simple: if you want federal housing money—specifically the grants that fall under Section 106 of the Housing and Community Development Act (like certain CDBG funds)—you now have to talk about your land use policies. Starting one year after the Act becomes law, localities must submit a standardized report to the Department of Housing and Urban Development (HUD) every five years detailing how their current rules might be blocking new construction.

The Cost of Being Choosy

Congress is pretty clear about why this is needed, noting that the U.S. is short millions of homes, which drives up costs for everyone. They even put a price tag on the problem, estimating that the housing crunch costs the national economy about $2 trillion annually in lost productivity and opportunity. For the average person, this means that the reason your rent keeps climbing, or why you can’t afford a down payment, is often rooted in local rules—like strict single-family zoning—that prevent builders from creating more diverse, affordable housing options.

Zoning Report Card: What Localities Must Review

This new report isn’t just a quick check-in; it forces local governments to confront specific, well-known regulatory roadblocks. They have to report on whether they’ve adopted policies like allowing accessory dwelling units (ADUs or backyard cottages) on all single-family lots, reducing or eliminating minimum parking requirements for new buildings, and permitting multi-family housing (duplexes, triplexes) in areas currently reserved only for single-family homes. They must also detail plans for streamlining permitting processes, which is a big deal for developers who often get bogged down in years of bureaucratic red tape. The idea is to make them look in the mirror and explain how they plan to adopt these pro-housing policies and how those changes will benefit the community.

The Catch: All Talk, No Teeth?

Here’s where the policy gets interesting—and potentially frustrating. While local governments must submit this detailed report, the Act explicitly states that this submission is not a binding commitment on how they will spend the federal grant money. More importantly, the bill ties HUD’s hands: the information provided in this report cannot be used by the Secretary to take enforcement action against the recipient. Think of it like a five-year assignment that gets graded on completion, not content. A city could submit a report detailing all the ways their zoning is restrictive and promise to change, but if they never actually follow through, HUD can’t yank their funding based on that report alone. This lack of enforcement power is a major point of concern, as it might allow localities to meet the letter of the law (submitting the report) without meeting the spirit (actually reforming their zoning).

The Real-World Impact

For local government planning departments, this means a new administrative lift every five years to compile the required data and format it according to HUD’s standards. For residents hoping for change, the bill offers a mixed bag. On one hand, it shines a public light on local regulatory barriers, forcing the conversation about why housing is so expensive. If you live in an area where new construction is stifled, this report could become a valuable tool for local advocates pushing for reform. On the other hand, if a city decides to just pay lip service to the required reforms, the lack of federal enforcement means the local political fight to actually change the rules remains exactly where it was before—in city hall. Ultimately, this Act is a mandatory transparency measure designed to nudge, not compel, local governments toward building more homes.