If the above mortgage-credit EO was an invitation to regulators to revisit the financing side of housing, this companion Order is its land-use-and-construction counterpart – an equally-broad federal salvo to make it easier, faster, and cheaper to build homes. The Order says housing affordability has been squeezed by “unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government,” and it directs those same prudential agencies to start reviewing the federal rules, programs, and practices that the White House believes are raising construction costs and suppressing supply.
The first major target is environmental and infrastructure-related regulation. The Order tells the Army Corps and EPA to review and revise requirements tied to stormwater, wetlands, waters of the United States, Clean Water Act section 404 permitting, Total Maximum Daily Loads, and MS4-related construction and post-construction requirements, all with an eye toward lowering construction and ownership costs, streamlining decisions, and even improving insurability.
It then widens the scope, telling Commerce, HUD, DOT, and FHFA to consider reforming programs and rules that allegedly constrain affordable single-family development — especially in suburban and exurban areas — including development-density priorities, DOT’s Reconnecting Communities Pilot Program, HUD’s Pathways to Removing Obstacles to Housing Program (PRO), and FHFA’s approach to chattel lending for manufactured housing and incentives for low-balance mortgages.
The Order also takes aim at what it essentially frames as cost-adding housing mandates. USDA, HUD, DOE, and FHFA are told to review and, where appropriate, eliminate energy-efficiency, water-use, and alternative-energy requirements affecting housing, including manufactured housing. That includes manufactured-housing energy standards, HUD- and USDA-financed new-construction efficiency standards, residential building energy codes reviewed by DOE, and FHFA-related water and energy efficiency standards for underserved-market properties. Even beyond a fundamental “reduce environmental harm” argument, critics may likely argue that stripping back energy- and water-efficiency requirements may indeed lower purchase prices at the front end, but would ultimately raise utility, maintenance, and operating costs over the life of the home.
To that end, the permitting piece seems especially ambitious. The Chairman of the Council on Environmental Quality (CEQ) is directed to issue National Environmental Policy Act (NEPA) guidance that “maximally exempts” or reduces burdens on housing construction, preservation, adaptive reuse, and supporting infrastructure, including through categorical exclusions. The Advisory Council on Historic Preservation is likewise told to develop guidance that reduces section 106 burdens under the National Historic Preservation Act for housing and related infrastructure. Meanwhile, HUD must, within 60 days, issue a set of regulatory “best practices” for states and localities, including faster permitting timelines, capped fees, more by-right single-family development, third-party inspections, fewer retroactive code changes, fewer “green” or energy-choice mandates, more openness to modular and manufactured housing, and fewer limits on development beyond urban cores such as growth boundaries and moratoria. Agencies are then told to revise their own regulations, grants, guidance, technical assistance, and related documents to advance those state and local best practices.
Finally, the Order tries to line up federal incentives with new construction. Treasury and HUD are directed to evaluate how “Opportunity Zone” incentives can be better aligned with single-family home construction, including possible linkages between grants, financing tools, and Qualified Opportunity Funds developing and selling single-family homes. They are also told to assess how those “Opportunity Zone” incentives might be coordinated with the New Markets Tax Credit in places that qualify for both.
As with the mortgage EO, the important caveat is that this Order does not itself repeal the rules it targets; much of it directs agencies to review, consider, revise, or develop guidance “consistent with applicable law.”
Written by:
Brett Goodnack, JD, CAMS
Compliance Advisor