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Biden Proposes $5B To Bring Multifamily To Areas Zoned For Single-Family Housing

President Joe Biden, on the phone in the Oval Office of the White House in 2021.

Though it isn't remotely the top-line item, President Joe Biden's infrastructure bill includes a provision that encourages the use of zoning reform to aid housing affordability.

In Biden's proposed budget for fiscal year 2022, which assumes the passage of his twin trillion-dollar bills the American Jobs Plan and the American Families Plan, about $5B is set aside over the next 10 years to "incentivize zoning reform." The money would be put in a fund that would provide grants for municipalities to build and improve schools, roads and other infrastructure in exchange for loosening restrictive zoning codes, Reuters reports.

"This is a new approach that is purely carrot, no stick," a White House official told Reuters on condition of anonymity.

Since the city of Minneapolis passed a law increasing all single-family zoning to triplexes in 2019, the concept of upzoning to increase density as a method for preserving housing affordability has gained national traction. Oregon passed a statewide bill applying a similar policy on all urban areas in the state in the same year, Reuters reports.

The idea of incentivizing zoning reform through federal grant dollars has precedent in the last two presidential administrations, though proposals from President Barack Obama's office never made it very far, and the Department of Housing and Urban Development under Secretary Ben Carson never took any concrete steps beyond voicing support for the idea, while President Donald Trump criticized it in his campaign for re-election, Reuters reports.

The House of Representatives passed a bill in early March of last year, the aptly titled Yes In My Backyard Act, that would have attached federal grant money to reporting of affordable housing policies and allowed manufactured housing in areas zoned for single-family housing. Whether because of Senate opposition or the outbreak of the coronavirus pandemic days later, the bill never advanced in the upper chamber.

Though Biden's proposal drew praise from housing advocates, it also came with doubt that affluent communities would see potential grant funding as enough of an incentive to change their policies, Reuters reports. The $5B pool would start with a $30M allocation in 2022, rising to $330M in 2023 and nearly $1B in 2026 before tapering back down to $30M in 2031.

The incentive could seem insignificant in the face of the money that many states and cities would already be receiving if the American Jobs Plan passes in something close to its current form. The potential scope of the final version of the bill began to come into question after reports surfaced on Thursday that Biden is willing to concede on a corporate tax increase that was intended to fund a chunk of the planned spending.