The ROAD to Housing Act’s Moving to Work expansion still misses the bigger housing issue

The 21st Century ROAD to Housing Act is Congress’s most sweeping housing legislation in years. As I previously covered, the legislation deserves some credit for reducing a couple significant regulatory barriers to housing construction, but much of it remains focused on expanding federal housing programs. Although the legislation aims to address housing affordability, much of its approach raises a broader question about whether expanding federal programs can solve the underlying barriers that limit housing supply.

Section 505 of the bill exemplifies that broader tendency. It allows the Department of Housing and Urban Development (HUD) to add up to 25 additional public housing authorities (PHAs) to participate in its Moving to Work (MTW) demonstration program. These agencies are generally local housing authorities, although HUD can designate regional agencies in certain circumstances. Eligible PHAs must meet statutory requirements and are selected by HUD as opposed to being named in the legislation.

At first glance, expanding MTW seems like a modest administrative reform. But it reveals a deeper problem with how Congress approaches housing policy.

Federal statutes and HUD regulations impose numerous requirements on public housing authorities that administer federal housing assistance. MTW was created by Congress in 1996 in response to concerns that these requirements limited local flexibility and prevented housing authorities from developing approaches tailored to their communities.

Participating agencies can waive many of HUD’s standard rules and instead experiment with alternative rent policies, voucher administration, inspections, reporting requirements, and other program features. For example, the San Bernardino Housing Authority used MTW flexibility to test alternative rent policies that changed how tenant rent contributions were calculated.

The idea at the time was that local housing authorities might be better positioned than Washington to determine how best to meet their communities’ needs. There are good reasons to support that flexibility, such as reducing unnecessary federal micromanagement, allowing local experimentation, and giving housing authorities more discretion to find approaches that work best for their communities.

Yet MTW’s existence raises an obvious question. If housing authorities consistently need exemptions from HUD’s standard rules to operate more effectively, what does that say about the rules themselves or the federal grant programs to which they are attached?

While accountability for housing authorities spending taxpayer dollars is important, I would contend that many of HUD’s rules are too rigid. Additionally, the experience of MTW demonstrates the limits of relying on the distribution of federal funds to make housing more plentiful and affordable.

The evidence on MTW’s effectiveness is mixed. A HUD-sponsored longitudinal evaluation of the original demonstration agencies found they achieved no significant reduction in housing costs as compared with similar traditional public housing authorities.

A separate analysis from the Urban Institute identified some improvements in selected housing choice and self-sufficiency measures. These include a higher share of new households served and a possible increase in the share of households served whose incomes grew.

However, MTW was not associated with improvements across all measures examined. Most notably, it did not increase the share of voucher holders living in low-poverty neighborhoods, which is an indicator of whether households are gaining access to lower-poverty areas.

HUD’s more recent evaluation of the first expansion cohort, which consisted of smaller PHAs added to MTW in 2016, similarly found no statistically significant effects on cost-effectiveness, self-sufficiency, or housing choice during the early years of implementation.

The broader lesson is not that MTW’s flexibility has no value. Reducing unnecessary federal rules is almost always preferable to adding new ones. The lesson, rather, is that flexibility solves a narrower problem.

Distinguishing between administrative reform and housing reform is more than a matter of terminology. It reflects two fundamentally different approaches to affordability. Administrative reforms focus on how government programs can better serve households within the current system. Housing reforms turn their attention to what prevents the housing market from producing enough homes to meet demand.

The difference matters because federal housing assistance operates within a broader regulatory environment. Even the most efficiently administered programs must operate in a market where local housing regulations limit construction, increase costs, and restrict housing options. When the supply of housing is constrained, government programs are left addressing the consequences of scarcity instead of the root causes.

This is why reducing regulatory barriers must remain central to any serious affordability agenda. Minimum lot sizes are a costly regulation that prevents higher-density development. Parking mandates increase construction costs. Floor area ratio restrictions limit how efficiently land can be used. Permitting barriers delay projects and add uncertainty.

These are some of the major constraints that reduce supply and contribute to higher housing costs. Removing or lessening them allows markets to respond to demand by producing more homes. The goal of housing policy should ultimately be to create the conditions that allow housing to become more abundant.

In summation, MTW demonstrates both the potential and the limits of administrative reform. Greater flexibility can help housing authorities reduce administrative burdens and experiment with better approaches, but it does not address the underlying conditions that make housing unaffordable.

A more limited federal role in housing should focus not only on reducing unnecessary regulations, but also on avoiding the expansion of programs that fail to address the barriers preventing housing supply from meeting demand.

Congress should continue looking for ways to reduce unnecessary federal rules. But lasting affordability will depend largely on cutting the local regulations that restrict housing supply. MTW can change how housing assistance is administered, but better administration of a subsidy is not a substitute for abundant housing.