HR-6363-119
Referred to the Committee on Financial Services, and in addition to the Committee on Oversight and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Lisa McClain (R-MI)
What it does
This bill would change how HUD allocates Community Development Block Grant (CDBG) funds to metropolitan cities and urban counties. Cities and counties that improve their housing unit growth rate compared to a prior period, relative to other eligible recipients, would receive a bonus above their normal allocation, while those with below-median improvement would see a 10% reduction, with certain jurisdictions (high-cost/high-vacancy areas, disaster-affected areas, or those lacking zoning authority) exempted from the penalty. The changes would take effect three fiscal years after enactment and remain in place through fiscal year 2043.
Who benefits
Metropolitan cities and urban counties that increase housing construction rates, along with developers and residents in those jurisdictions who may see more housing supply; jurisdictions already building rapidly ("extremely high-growth recipients") who qualify automatically for bonus funds; renters in growing markets who may benefit from increased housing supply over time.
Who is hurt
Cities and counties whose housing growth rate improvement falls below the median would lose 10% of their CDBG allocation, which could reduce funding for low-income housing rehabilitation, public services, and community facilities in those areas; low-income residents in slower-growing or supply-constrained jurisdictions (due to geography, local zoning politics, or market conditions beyond city control) who rely on CDBG-funded services; local governments with limited zoning authority over their own boundaries (partially addressed by an exemption) may still face difficulty influencing the metric used to judge them.
Supporters argue
Supporters argue that CDBG funds have historically been distributed without regard to whether recipient jurisdictions are actually building housing to meet demand, and that tying a portion of funding to measurable housing growth improvement creates a financial incentive for local governments to reduce zoning and permitting barriers. They contend this approach, unlike direct federal zoning mandates, respects local control by rewarding rather than commanding specific land-use outcomes, addressing the national housing shortage through incentives.
Opponents argue
Opponents argue that housing growth rates depend heavily on factors local governments cannot fully control, such as geography, existing density, market demand, and state-level zoning preemption, meaning some jurisdictions could lose CDBG funding through no fault of their own. They contend that a 10% cut in CDBG funds would fall hardest on lower-income residents who depend on CDBG-funded services like housing rehabilitation and community facilities, penalizing communities for outcomes shaped by broader economic and structural forces rather than policy choices.
Constitutional context
Congress has broad authority under the Spending Clause (Article I, Section 8) to attach conditions to federal grants like CDBG funds, and this bill operates as a funding formula adjustment rather than a direct land-use mandate, so it does not implicate the Takings Clause or Tenth Amendment concerns that arise when the federal government compels specific zoning changes. South Dakota v. Dole (1987) governs the outer limits of conditional spending, though this formula reallocation among grant recipients is a more modest exercise of that power than the conditions at issue in Dole.
Checks and balances
Congress establishes the formula in statute, but HUD's Secretary retains significant discretion in calculating growth rates, adjusting measurement periods, and determining eligibility exemptions, with limited direct judicial or congressional check beyond the required annual public reporting.
Historical precedent
Congress has periodically revised CDBG allocation formulas since the program's creation in 1974, though tying allocations specifically to housing construction growth rates as an incentive mechanism is a novel approach not clearly analogous to prior formula changes.