New Act Forces Local Governments to Report on Zoning Barriers Every 5 Years to Keep Federal Housing Grants

The Identifying Regulatory Barriers to Housing Supply Act aims to tackle the national housing shortage by forcing local governments to take a hard look at their own zoning rules. Essentially, if a city or county wants to keep receiving specific federal housing and community development grants—like those under the Community Development Block Grant (CDBG) program—they now have a new piece of homework.

The New Homework Assignment: Zoning Audits

Starting one year after this Act becomes law, any local entity receiving these federal funds must submit a standardized report to the Department of Housing and Urban Development (HUD) at least once every five years (SEC. 4). This isn't just a quick check-the-box exercise. The report demands that localities detail their current land use policies and, more importantly, state whether they plan to adopt specific reforms designed to increase housing supply.

The list of policies they must report on reads like a density advocate's wish list. We're talking about allowing duplexes and fourplexes in neighborhoods currently zoned only for single-family homes, reducing minimum lot sizes, permitting manufactured homes, and eliminating requirements for off-street parking (SEC. 4). They must also explain how adopting these pro-housing policies would benefit their community. For example, a city would have to map out how allowing Accessory Dwelling Units (ADUs), or 'granny flats,' on every single-family lot might increase affordable housing options for young professionals or seniors.

Who Pays the Price for Local Control?

The intent here is clear: Congress believes overly restrictive local zoning is driving up the cost of housing for everyone (SEC. 3). By tying federal funding to this mandatory reporting, the Act puts pressure on local governments to loosen their grip on land use. This could be a huge win for renters and first-time homebuyers, as increasing supply generally lowers prices. The bill itself estimates that the housing shortage costs the U.S. economy a staggering $2 trillion annually.

However, this introduces a new administrative burden. Local governments, already stretched thin, now have a significant, detailed reporting requirement imposed by the federal government every five years. While the goal of more affordable housing is laudable, the immediate impact on city planning departments is more paperwork and less time focused on actual development projects. This is a classic example of the federal government using the power of the purse to influence decisions traditionally reserved for local city councils.

The Catch: Reporting Doesn't Mean Doing

Here’s where the policy gets interesting—and potentially frustrating for those hoping for immediate change. While local governments must submit the detailed plan, the Act explicitly states that submitting the report doesn't legally bind them to actually implement any of the policies described, nor does it force them to spend their grant money in a specific way (SEC. 4). Furthermore, any information provided in the report cannot be used by the federal government later to start an enforcement action against the locality.

Think of it this way: a city can report that they plan to allow multi-family housing near transit stops because it would benefit the community, satisfy the reporting requirement, and still decide not to move forward with the policy change next year. This creates a potential loophole where localities could submit superficial reports to keep the federal dollars flowing without making the tough political decisions required to truly increase housing density. The bill forces the conversation and the analysis, but not the action. The real-world impact will depend entirely on whether local political will follows the federal nudge.