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On July 11, 2026, the 21st Century ROAD to Housing Act (the Act) became law after President Trump declined to sign or veto the bill. The legislation is intended to increase the housing supply and improve housing affordability through a variety of reforms. Although the Act has many components, here are a few major changes that could affect the affordable housing and tax credit industry.
Changes to Environmental Review Requirements
The National Environmental Policy Act (NEPA) plays a significant role in the development of affordable housing, requiring an evaluation of the environmental impacts of proposed actions taken or assisted by the federal government. These requirements are especially important to developers who utilize Community Development Block Grant (CDBG) funds or HOME Investment Partnerships Program (HOME) funding.
Before the enactment of the Act, NEPA required certain projects, including most tax credit projects, to obtain a NEPA clearance letter prior to acquiring a property or taking other “choice-limiting actions.”
The Act contains several provisions intended to streamline environmental review requirements for affordable housing development.
Section 205 expands the U.S. Department of Housing and Urban Development’s (HUD’s) ability to delegate environmental review responsibilities under NEPA to state and local governments. The provision authorizes HUD to designate certain federally assisted activities as “special projects,” allowing eligible state and local governments to assume HUD’s environmental review responsibilities and make determinations directly.
Section 206 directs HUD to expand the use of exemptions and categorical exclusions for a range of housing-related activities. Affordable housing predevelopment work, rehabilitation of existing housing, scattered-site developments and certain infill housing projects may be subject to more streamlined review procedures. The provision is intended to allow affordable housing projects to proceed more quickly, thereby reducing administrative delays and costs.
Changes to CDBG Funding
Section 204 makes new construction an eligible activity for CDBG funding, provided the housing satisfies the affordability requirements under the HOME program. The provision limits a grantee’s use of CDBG funds for construction activities to 20 percent of its total CDBG allocation.
Changes for Planning Activities
Section 207 creates a new federal grant program for state and local governments to support the planning and implementation of affordable housing.
Changes to Section 3 (Procurement) Requirements
Finally, Section 501 exempts certain HOME-funded projects from the requirements of Section 3 of the Housing and Urban Development Act of 1968.
Changes Still Possible, Elusive for BABA
The applicability of the Build America, Buy America Act (BABA) to various affordable housing developments has been cited as highly problematic by the development community. In some cases, waivers are available but obtaining them can be time-consuming. The Act instructs a re-evaluation of whether additional exemptions ought to exist. The industry had hoped for more clear-throated support from Congress for exempting all affordable developments, but that did not happen.
If you have any questions regarding these changes or how they may affect your projects, please contact your Reinhart attorney. Special thanks to Reinhart Summer Associate David Engelking for his assistance with this alert.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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