Kamala Harris’s proposal for a $40 billion fund for local governments to explore “innovative” housing solutions will likely funnel money into projects burdened by self-defeating government-mandated affordability requirements, which HUD loves but markets abhor. By further empowering federal bureaucrats, it will do more harm than good.

The case in point is the Department of Housing and Urban Development’s (HUD) Pathways to Removing Obstacles to Housing (PRO Housing), which awarded nearly $85 million in funding in FY23 promoting policy failures. This program is tilted irretrievably towards “affordable housing,” which means by subsidy or cross-subsidy. 

Here are a few examples of cities that received grants in FY 2023:

• Seattle received $5 million for its Mandatory Housing Affordability (MHA) program, which created hundreds of affordable units. However, HUD overlooked the thousands of units not built due to the constraints on small-scale townhome developers imposed by MHA regulations. After the imposition of the MHA program, townhome permits declined 80% over subsequent months.

• Philadelphia was awarded $3.3 million for its $400 million bond program, the Neighborhood Preservation Initiative, despite the city reducing its successful tax abatement program that had revitalized the entire neighborhoods since 2000 without displacing residents. Instead of continuing this market-driven success, the city is now funding emergency repairs, down payment assistance, and security camera installations—drastically undermining the sustainable, long-term growth strategy that had proven effective for urban revitalization.
• Twin Cities received $4 million for several municipalities that removed barriers to building 2–4-unit homes in single-family zoned areas. Yet, Minneapolis failed to increase the allowable floor area ratio, resulting in hardly any new 2–4-unit homes being built despite the change in zoning.

These are just three cases where HUD willfully ignores research to push its agenda of more subsidized affordable housing production and preservation that invariably crowds out private developers.

For more, click here to read the last article in this series.