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Biden’s Infrastructure Plan Earmarks $213 Billion for Housing. Here’s How He’d Spend It

Biden’s Infrastructure Plan Earmarks $213 Billion for Housing. Here’s How He’d Spend It

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Biden’s Infrastructure Plan Earmarks $213 Billion for Housing. Here’s How He’d Spend It

Affordable housing will take some of the $2.3 trillion pie President Joe Biden is serving up as part of his sweeping American Jobs Plan. The wall-to-wall infrastructure plan, announced Wednesday, allocates $213 billion for a wide variety of housing issues designed to help low-income households and home buyers on a tight budget.

In its briefing statement on the infrastructure package, the White House noted that millions of families spend more than half of their income each month on rent, while also struggling to pay for home energy costs. This makes it difficult for many families to transition from renting to purchase their first home, according to the White House fact sheet.

Biden’s plan takes aim at everything from the high cost of rent to exclusionary zoning laws, which contribute to the severe housing shortage in the U.S.

Although many policy experts laud Biden’s efforts to repair some of the problems with affordable housing, the need is larger and more immediate than what the bill proposes, they say.

“Anything that can help increase the number of housing units is a good thing. And the consideration of enhancing the affordable choices is vital,” says Tim Sullivan, senior managing principal at Zonda, a housing market research firm. “Is this sufficient? Probably not since we need the additional housing now, and given the speed at which the government moves, I think there will be a lag in bringing this product to market.”

The plan will rely on significant tax increases for funding, including raising the federal corporate tax rate from 21% to 28%; requiring a minimum 15% tax on corporate book income on profits for firms with revenue over $100 million and canceling some deductions and credits for the fossil fuel industry, among others. The plan also would use tax incentives to encourage states and municipalities to relax strict zoning laws.

Republicans have expressed no support for Biden’s plan, which means the bill needs all but three Democratic votes in the House and all of the Democratic votes in the Senate. If the bill does reach Biden’s desk, it might be a while before it gets there.

5 Key Elements of Biden’s Housing Agenda

Much of what’s included in The American Jobs Plan are ideas Biden proposed during his campaign. Certain components may be more easily achieved, like bankrolling massive rehabilitation and construction projects to increase the stock of affordable housing for renters and buyers. Other parts of the Biden plan rely on local government compliance, such as ousting exclusionary zoning laws.

1. Rehab, Retrofit and Build 1 Million Homes for Renters

Biden proposes to “produce, preserve, and retrofit more than a million affordable, resilient, accessible, energy-efficient and electrified housing units” through a variety of tax credits, formula funding, grants and project-based rental assistance. These units will be available to households in underserved areas, rural and tribal communities.

2. Build 500,000 Affordable Houses for Low- and Middle-income Buyers

The housing shortage has made headlines across the country, creating almost impossible homeownership barriers for many Americans. Biden proposes the construction and rehabilitation of more than 500,000 homes available to people in underserved communities and low- and middle-income earners.

However, adding these homes to existing stock might hinge on Congress passing the Neighborhood Homes Investment Act (NHIA), which lays out $20 billion worth of tax credits over the next five years. Biden is asking Congress to pass this bill.

“We strongly endorse the Neighborhood Homes Investment Act and the expansion of the Low Income Housing Tax Credit, both of which already have earned broad, bipartisan support and are in the president’s proposal,” says David M. Dworkin, president and CEO of the National Housing Conference. “These proposals would contribute to closing the nation’s housing affordability gap through the construction and rehabilitation of properties in lower-income communities.”

3. Eliminate Exclusionary Zoning Laws

Affordable housing advocates have long decried rigid zoning laws as unfairly benefitting existing homeowners. Zoning may artificially raise the value of their property while making it difficult, if not impossible, to build affordable housing in some of the most expensive areas in the country.

Biden is asking Congress to authorize a grant program that would provide funding to areas that eliminate exclusionary zoning laws.

Exclusionary zoning laws are those that include perimeters that limit the types of housing that can be built, including minimum lot sizes (blocking smaller, more affordable home construction), mandatory parking provisions and the banning of multifamily developments.

“Any proposal that works to reduce restrictive zoning and provides municipalities incentives to embrace affordable housing is a positive,” says Dudley Benoit, executive vice president of Alliant Capital, an affordable housing-focused tax credit syndication firm. “NIMBYism and restrictive zoning drive up the cost of affordable housing by limiting where affordable housing can be built.

“This also leads to excluding low-income renters from communities that may have better resources [like schools],” Benoit says. “It remains to be seen if locales that have fought for decades to prevent affordable housing can be incentivized to change their ways, but it is worth a try and could have a substantial impact if successful.”

4. Update and Upgrade Public Housing

Biden earmarked $40 billion to repair and update public housing. Biden points to safety hazards and years of neglect as to why these funds are critical. Part of the rehabilitation would include making energy-efficient upgrades that would cut down on operating costs.

“These improvements will disproportionately benefit women, people of color and people with disabilities,” according to the White House fact sheet.

5. Focus Clean Energy Investments on Disadvantaged Communities

Biden plans to leverage existing block grant programs and increase available tax credits as well as call on union trade workers to focus their efforts on upgrading homes to make them more energy efficient to save households money.

He also wants to create a $27 billion Clean Energy and Sustainability Accelerator “to mobilize private investment into distributed energy resources [electricity-producing resources such as rooftop solar panel units, natural gas turbines and wind turbines]; retrofits of residential, commercial and municipal buildings; and clean transportation in underserved communities that clean energy initiatives have not helped.

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