Transit Funding Tied to Zoning Reform: New Bill Incentivizes Cities to Scrap Parking Minimums and Build More Housing

The “Build More Housing Near Transit Act of 2025” is straightforward: it changes how federal money flows for major transit projects. If a state or local government wants to maximize its chances of getting a huge federal capital investment grant for a new rail line or bus rapid transit system, they now need to prove they are actively tearing down local zoning rules that restrict housing construction near the proposed transit stops.

The Transit-Housing Swap: A New Federal Lever

Under this bill, the Department of Transportation (DOT) can grant an extra point during the evaluation process for transit funding applications (specifically, grants under Section 5309). That extra point is only available if the applicant can show they have adopted “pro-housing policies” within walking distance of the new transit stops. This is the federal government using its checkbook to force local land use reform—something usually handled exclusively by city councils and county boards. The goal is to ensure that when we build expensive transit infrastructure, there are enough people living nearby to actually use it.

What Counts as “Pro-Housing”?

This is where the rubber meets the road. The bill clearly defines what these pro-housing policies are, and they target the kind of red tape that drives up housing costs. To get that extra point, a city could:

• Eliminate Parking Minimums: Scrap the requirement that developers must build a certain number of parking spaces for every unit. This is huge, as building underground or structured parking can add tens of thousands of dollars to the cost of each apartment.
• Approve Housing “By-Right”: Instead of forcing developers through months or years of subjective public hearings and discretionary approvals, this means if a multi-family housing plan meets clear, objective rules (like height and setback), it gets automatic approval. This cuts down on the time and risk of development.
• Reduce Lot Sizes or Height Limits: Allow more units to be built on smaller parcels of land or allow buildings to go higher, increasing density.

If you live in a city where housing costs are skyrocketing, these changes could mean more apartments get built, faster, and potentially cheaper, especially near a new train station you might use for your commute. For a construction worker, this means more projects in the pipeline; for an office worker, it means more options for a shorter commute.

Measuring the Impact and the Catch

To ensure these policies aren't just symbolic, the DOT Secretary must work with the Department of Housing and Urban Development (HUD) to create a measurable way to track how many new housing units, particularly affordable ones, are expected to be built because of these zoning changes. If a city claims the extra point, they are then required to report back on the actual number of units that result from their policy changes. This is the accountability mechanism.

However, this new leverage raises some eyebrows. While the goal of increasing housing supply near transit is sound, the bill gives the Secretary the power to add other qualifying policies beyond the list after consulting with HUD. This means the federal government’s definition of “pro-housing” could change over time, potentially introducing new requirements that local governments didn't anticipate. For residents concerned about rapid changes to their neighborhoods—like increased traffic or strain on local schools—this bill provides a strong incentive for their local government to push through density reforms, regardless of local resistance, simply to secure essential transit funding.