By: Lucia Chiocchio & Allison Fausner
The housing market in the United States has long faced a crisis on two fronts, affordability and availability. Outdated zoning constraints are one of the factors contributing to this crisis. To combat this dual challenge, Congress has recently passed bipartisan legislation that includes reforms designed to modernize zoning practices and eliminate zoning constraints. These reforms could have a significant impact on the local entitlement process.
The 21st Century ROAD to Housing Act became law on July 11, 2026. This sweeping bill aims to promote the growth of and accessibility of housing supply throughout the United States by removing or easing regulatory burdens, modernizing Department of Housing and Urban Development (HUD) programs, streamlining discretionary environmental review on the Federal level, strengthening community banks, expanding local lending, and restricting institutional investor home purchases, among other measures. The Act attempts to ease state and local regulatory burdens by mandating the establishment of guidelines, best practices, and grant programs that facilitate less restrictive zoning requirements and procedures for residential development.
The Act directs the HUD to promulgate land use and zoning guidelines and best practices for state and local governments to support the production of housing across all income levels. HUD will work with a task force comprised of urban planners and architects, housing developers, community engagement experts, housing agencies and transit authorities, members of local zoning and planning boards, state housing and land use officials, academics, and home builders across the nation towards this end.
These guidelines and practices will include general recommendations that focus on reducing or eliminating dimensional restrictions, broadening the type of residential use permitted as-of-right, streamlining review procedures, and standardizing, reducing or eliminating impact fees.
Municipal-specific recommendations will aim to standardize zoning codes and establish maximum review periods, while state-specific recommendations will relate to model codes for zoning reforms, options for streamlining environmental review, and procedures whereby developers or builders that are denied a variance, conditional use, special use, zoning map amendment or other similar discretionary permit may appeal to a state agency for review.
The Act also establishes several grant programs focused on rewarding municipalities that have increased housing supply and facilitating municipal reform of discretionary review procedures for certain residential developments.
The Innovation Fund will provide grants to localities that have demonstrated improvement in housing supply growth based on criteria to be established by HUD. The grant monies awarded under this program may be used for public improvements and construction of housing, as well as carrying out zoning initiatives that can reduce dimensional requirements, broaden permitted uses, establish density bonuses, and streamline review procedures. Congress has appropriated $ 200 million annually for this program.
The Accelerating Home Building program will provide grants to localities to select pre-approved construction designs for mixed income low- to mid-rise residential buildings. This is aimed at streamlining discretionary review procedures so housing supply can be more readily built.
While the intent of the 21st Century ROAD to Housing Act is laudable, it remains to be seen whether any of the zoning provisions will move the needle towards more housing in a municipal home-rule state like New York, where municipalities have broad legislative authority over local zoning and land use laws. The only incentive to adopt the recommendations are the grant programs. State and local municipalities who have no interest in incorporating any of the recommendations can simply choose not to.
For those municipalities interested in solving the housing crisis, the Innovation Fund is set to begin issuing grants next year. However, it will be several years before the HUD issues final land use and zoning recommendations to both state and local governments in the nation, and it will take several more years for those governments to codify any of those recommendations.
