New Housing Bill Allows Local Governments to Set Housing Aid Eligibility by ZIP Code

The newly proposed Affordability and Fairness for Mountain Communities Act of 2025 is trying to tackle the affordable housing crisis in high-cost areas, specifically mountain towns, by giving local governments a massive amount of flexibility in how they calculate who qualifies for federal housing assistance. This bill doesn’t just tweak the rules; it fundamentally changes the geographic scale used for determining eligibility.

The AMI Game Changer: Localizing the Income Limit

Right now, federal housing programs—like Section 8 vouchers, public housing, and the HOME Investment Partnerships—use the Area Median Income (AMI) to determine who qualifies. AMI is usually based on a large area, like an entire county or metropolitan region. The problem is that in places like high-end mountain counties, a wealthy resort town can artificially inflate the AMI, making it look like the whole county is rich. This means low-income residents living just down the road often get priced out of federal aid because the county-wide AMI is too high.

Section 2 of this bill attempts to fix that by creating the Area Median Income Localization Waiver. If a county government applies for this waiver, the Secretary of Housing and Urban Development (HUD) must grant it. Once approved, the local government can choose to calculate the AMI for these federal programs using a much smaller area: either a single ZIP Code or a group of neighboring counties. For someone working as a seasonal employee or in the service industry in a mountain town, this could be huge. If their specific ZIP Code has a much lower median income than the county average, more people might qualify for aid they desperately need.

The Double-Edged Sword of Hyper-Local AMI

While the intent is to make aid more accessible, this hyper-localization is a bit of a gamble. If a local government uses the ZIP Code option, the AMI in that specific area will likely drop significantly. This could mean more people qualify, which is good. But it could also have unintended consequences. If the income limits drop too low, it could squeeze out people who only slightly exceed the new, lower threshold. Furthermore, AMI is also used to calculate the maximum rents allowed for tax-subsidized housing units. If the localized AMI drops, the maximum allowable rent developers can charge also drops, potentially making it less financially viable to build affordable housing in that ZIP Code in the first place.

The Mandated Deep Dive into Mountain Housing Costs

Beyond the immediate waiver program, Section 3 requires HUD to conduct a comprehensive study on optimizing AMI calculations for mountain communities within two years. This study is specifically tasked with looking at how the current AMI system impacts seasonal workers and whether including roommates in income calculations changes their eligibility. Crucially, the report must assess whether HUD should change or completely get rid of using AMI as the standard for determining affordability in these high-cost mountain towns. This suggests that the authors recognize that the AMI system, even with the new ZIP Code flexibility, might be fundamentally flawed for these unique economies. The findings of this two-year study could lead to major shifts in how federal housing assistance operates, not just in mountain regions, but potentially nationwide, if HUD decides to adopt a completely new metric.