The New Federal Grants to Help Cities Ditch 'NIMBY'-backed Zoning

In 2019, Washington state began giving 65 of its cities a combined $4.7 million in grants to examine how their zoning policies were restricting the supply of housing, as a shortage of homes contributed to sharply rising real estate prices. 

Three years later, some larger cities like Tacoma, but also smaller ones like Walla Walla, have begun allowing duplexes, triplexes, and so-called mother-in-law suites, in neighborhoods where they’d only allowed single-family houses previously.

Changes like this to zoning codes are significant not only because they allow for more housing, but also because, according to some critics, local regulations around what can be built in different neighborhoods have led to a modern-day form of segregation in which minorities and lower-income people are kept from living in certain parts of towns. 

The Biden administration is among those who have highlighted this concern with policies the president has put forward.

Now, a bipartisan group of congressional lawmakers is hoping to bring about a rethinking of single-family zoning restrictions around the country that is similar to the Washington state program.

Included in the $1.7 trillion “omnibus” government funding package Congress passed before the holidays, and that President Biden signed last week, are $85 million in new Housing and Urban Development grants for cities aimed at the “identification and removal of barriers to affordable housing production and preservation.”

The “Yes In My Backyard” grants are designed to help counter “NIMBY” or “Not in My Backyard” opposition to allowing a broader range of housing in neighborhoods around the country.

The grants, according to the law, are intended to encourage cities to pass policies like “increasing density, reducing minimum lot sizes, creating transit-oriented development zones, streamlining or shortening permitting processes” and expanding areas where multifamily housing is allowed.

The move is the latest attempt during the Biden administration to encourage the end of “exclusionary zoning” that the president’s economic advisors have said “discriminated against Black families.”  

Many of those policies can be traced back decades to when city planners applied indirect methods of segregation after the U.S. Supreme Court in 1917 banned the use of explicit race-based zoning in Buchanan v. Warley, the economic advisors wrote in a blog post last year.

Biden in his initial infrastructure proposal in 2021–which Congress later split into the bipartisan infrastructure law and the Inflation Reduction Act–called for creating federal grants to cities if they eliminated restrictive zoning laws, saying they prevent minorities and low-income people from living in areas that tend to have better schools and fewer social ills.

The proposal was not included in the infrastructure law or the Inflation Reduction Act. However, Biden in his budget request last March called for the creation of a $10 billion state and local grant program to encourage and support zoning changes that would allow more kinds of housing to go up in what are often largely white and wealthier neighborhoods.

The Biden administration the same month announced that the Transportation Department would give extra points for funding to states and localities that allow more multifamily housing in areas reserved for single-family homes.

In addition to addressing disparities, encouraging cities to lift limits on how much housing can be built in some areas is also meant to help solve what the Biden administration considers a main driver of rising housing costs: a lack of homes.

Jared Bernstein, a member of the White House Council of Economic Advisers, and other experts wrote in a separate policy blog released by the White House last year, that Freddie Mac researchers found that a slowdown with housing construction since the 1970s has led to a shortage of nearly 3.8 million homes.

“Housing availability is a challenge that is affecting the nation, coast to coast in all regions of the country, urban, rural communities and anywhere in between,” Mike Kingsella, chief executive officer for Up for Growth, said in an interview.

“This is not simply a market failure. This is a failure of policy. This is a result of exclusionary policies working perfectly as intended,” said Kingsella, whose group has advocated for rolling back restrictive zoning rules.

According to the omnibus, HUD will award grants to cities that demonstrate “a commitment to overcoming local barriers to facilitate the increase in affordable housing production and preservation.” Cities with “an acute demand” for housing affordable to households below the median income in their area will also get preference for the grants.

The push to reasses zoning laws around the country has received bipartisan support in Congress.

“We need to legalize housing, and abandon the exclusionary zoning that originated during Jim Crow and continues today. Government needs to change its mentality from intentionally constraining the supply of housing to incentivizing it,” Sen. Brian Schatz, a Hawaii Democrat and chairman of the Senate Appropriation’s housing subcommittee, said in a press release about the inclusion of the grants in the omnibus last week.

Schatz co-sponsored an earlier Yes In My Backyard bill with Sen. Todd Young, an Indiana Republican. It would have taken a more aggressive approach than offering the grants, requiring any local government that accepts federal Community Development Block Grants to justify in detail why they are leaving in place exclusionary zoning laws. 

Illustrating how the push to change zoning around the country crosses the ideological spectrum, Schatz and Young’s proposal was supported by Americans for Prosperity, the conservative think tank funded heavily by Charles and David Koch, which sees the laws limiting what can be built in some neighborhoods as government overregulation.

Similar to the compromise made in Congress, Washington state Rep. Joe Fitzgibbon, a Democrat who sponsored the bill that created the state’s grant program, noted in an interview that he initially proposed requiring cities to increase the amount of housing that can be built under their zoning laws.

“We just weren't able to get something mandatory through,” he said, noting that this was in part because cities objected. 

“But what we kept hearing is that there are cities that would like to take some of these actions but they just are stretched too thin in terms of their staff resources,” Fitzgibbon added. “They just didn't have what they needed to adopt new codes or to authorize more flexible rules for accessory dwelling units, or things like that.” 

Creating the grants allowed smaller cities in particular to examine how their zoning laws affect housing prices, Carl Schroeder, deputy director of government relations for the Association of Washington Cities, said in an interview.

“If you look at some of the smaller cities like Aberdeen or Buckley, those are cities that just don't have the resources to take on much beyond the basics,” he said. “Having the state offer a hand up really did help them move much faster.”

Kingsella said the new federal initiative could have a similar effect in communities across the country.

“I think this is a really exciting program. I think this is a long-needed program,” he said. “There’s a lot of communities that have the massive political will to implement some of these zoning reforms that are starting to percolate in a handful of communities around the country. But they just don't have the resources to fund the work necessary.” 

As a result of the grants in Washington, some cities have moved to allow more types of housing in areas traditionally limited to single-family homes by creating new zoning categories like “low density residential,” said Anne Aurelia Fritzel, housing programs manager for the state’s Department of Commerce. Cities have also relaxed parking requirements for multi-family housing to lower construction costs and they have pushed to increase density near transit, she said.

Tacoma, which received a grant to develop a housing plan, effectively did away with single-family zoning under a measure the City Council there approved in 2021. But the city is making the change in a “gentle way,” said Jacques Colon, strategic manager for an initiative to shape the city’s future.

The city will allow slightly larger types of housing like duplexes and triplexes in new “low-scale residential” areas that had been zoned for only single-family homes, and slightly larger apartment buildings in new “medium-scale residential” areas.

“We need every response possible to the housing crisis and the affordability crisis,” Colon said. “One of the solutions that we have to address is the unnecessary barrier that's currently up in many neighborhoods, which is low-density, single-family-only designations. For a city like Tacoma, we don't have more space to continue to develop outwards."

Spokane’s City Council in July also unanimously approved allowing multi-family homes on lots previously zoned for single-family residences.

Fritzel, though, acknowledged that even with the grants it can take time to rally support to revise zoning laws, especially when residents feel that the changes could alter the character of their neighborhoods. 

“If you upzone and allow all this extra property development in your neighborhood, there's a lot of concern,” she said. “Some communities needed time to understand what the housing needs were. But they've made some big changes.”

Fitzgibbon agreed. “Not every city council is going to choose to resist that kind of pressure,” he said. “But I think having these resources available nationally will tip the scales for a lot of city councils. For a lot of jurisdictions that are struggling with the housing shortage, this might be just the thing to help them take that step.”