The federal government’s “baby YIMBY” grant program hasn’t even reached its first anniversary and is already under threat of early retirement.
In December 2022, Congress gave the U.S. Department of Housing and Urban Development (HUD) $85 million to establish the Pathways to Removal Obstacles to Housing (PRO Housing) program, which would reward cities and states for removing regulatory barriers for housing construction. .
“We must legalize housing and abandon the exclusionary zoning that emerged during Jim Crow and continues today. The government must change its mindset from deliberately restricting the supply of housing to encouraging it,” said Senator Brian Schatz (D- Hawaii), who secured funding for the program at the time.
Since then, applications have been pouring in. The Housing and Transportation Appropriations Act that the U.S. Senate passed yesterday includes $100 million for a new round of these YIMBY (“yes in my backyard”) subsidies for the next fiscal year.
The program could potentially be stalled by the Republican Party-controlled House’s competing housing and transportation funding bill. The legislation would eliminate the program entirely before it even receives its first awards.
The Biden administration — which has long supported the idea of using federal dollars to spur zoning reforms — has threatened to veto House Republicans’ spending bill, in part on the grounds that it would housing program would be destroyed.
Whether the program survives the first round of awards will now depend on budget disputes between chambers and between different departments.
Whether it deserves to survive is also a bit of an open question.
Libertarians can convincingly argue that the federal government should spend zero dollars on housing, and that therefore any proposal to abolish a HUD program (even one designed to encourage deregulation) should be supported.
Nevertheless, total abolition of HUD is not currently on the table. House Republicans’ more modest budget bill would still give the department $70 billion.
Free marketers in good standing can (and have) argued that the HUD budget, since it exists, should include money for YIMBY subsidies, which means that the repeal of harmful, restrictive zoning regulations will reduce housing production and increase housing costs. After all, it is better to spend money rewarding deregulation than subsidizing demand for a good with limited supply.
That said, the actual design of the PRO Housing program suggests that it won’t actually lead to much deregulation.
Both the legislation that created the program and the HUD regulations that implement it make it likely that much of the first round of YIMBY grants will pay for plans and studies that do nothing to actually address barriers to take away housing production.
Hopeful beneficiaries’ applications for PRO Housing funding continue to be more cause for pessimism.
Some cities are asking for money to pay for the implementation of reforms that have not yet been implemented (and may never be implemented). Others are asking for money to study whether very fundamental zoning reforms will improve housing affordability, when the entire premise of the PRO Housing program is that zoning reform will improve housing affordability.
Worse, the Senate bill attempts to prematurely expand the program’s funding before the first grants are awarded. Before that happens, we have no way of knowing how well the program is performing.
At the very least, Congress should consider ways to reform the PRO Housing program so that we get a lot of zoning reform for the money spent. That would mean rewarding jurisdictions for actual housing production, not just plans to research possible reforms that could boost housing production.
If it can’t get good YIMBY subsidies, we might as well save the money and not have YIMBY subsidies.