H.R. 5878 — HOME Reform Act of 2025

This section amends definitions in the Cranston-Gonzalez National Affordable Housing Act (i.e., authorizing the HOME Investment Partnerships program, which provides formula grants to states and localities for affordable rental housing and homeownership) by (1) striking "significant" from the representation requirement on community housing development organization (CHDO) governing boards (thus easing qualification for CHDOs, which receive a 15% set-aside of HOME funds); and (2) adding a definition of "infill housing project" as a residential project located within a municipality, adequately served by utilities and public services, on previously disturbed land of not more than 5 acres, and substantially surrounded by residential or commercial development. This section also revises Title II of the Act to expand income eligibility for assistance from low-income families (typically ≤80% of area median family income) to families or households with incomes not exceeding 100% of area median family income (with adjustments for family size), in (1) section 214(2); (2) section 215(b)(2) and (b)(3)(A)(ii) (for homebuyers); and (3) section 271(c)(1)(B) and (2)(A).

This section eliminates the requirement that participating jurisdictions give preference to rehabilitating substandard housing when using HOME Investment Partnerships Program (HOME) funds unless rehabilitation is not cost-effective or insufficient to meet needs. (As background, HOME provides formula block grants to states and localities for affordable housing development and tenant-based rental assistance.) It also prohibits the Secretary of Housing and Urban Development from restricting a jurisdiction's choice among eligible activities—rehabilitation, substantial rehabilitation, new construction, reconstruction, acquisition, or others—unless explicitly authorized under section 223(2) (from section 12753(2)). (Thus, jurisdictions gain greater flexibility in selecting housing production methods.)

This section authorizes participating jurisdictions to use funds under the HOME Investment Partnerships program (HOME)—which provides formula block grants to states and localities for affordable housing development—for infrastructure improvements (e.g., installation or repair of water and sewer lines, sidewalks, roads, and utility connections) in nonentitlement areas (i.e., jurisdictions not receiving Community Development Block Grant entitlement formula grants under title I of the Housing and Community Development Act of 1974), provided such improvements are directly related to and located within or immediately adjacent to housing assisted under HOME or the low-income housing tax credit (section 42 of the Internal Revenue Code). Such infrastructure uses are subject to regulations to be issued by the Secretary of Housing and Urban Development not later than one year after enactment and to Davis-Bacon prevailing wage requirements under section 110 of the Housing and Community Development Act of 1974. This section clarifies that infrastructure funded under this new authority does not subject benefiting housing to HOME program requirements unless the housing receives direct HOME assistance. This section strikes the second sentence of Section 212(e)(1) of the Cranston-Gonzalez National Affordable Housing Act, which specifies a minimum per-unit investment limit established by the Secretary.

This section establishes an exception to the rent limits in 42 U.S.C. 12745(a)(1)(A) for rental housing to qualify as affordable housing under the HOME Investment Partnerships Program. Specifically, a rental unit qualifies notwithstanding those limits if (1) it is occupied by a tenant receiving tenant-based Section 8 rental assistance under the United States Housing Act of 1937 (i.e., Housing Choice Voucher program); (2) the tenant's rent contribution does not exceed the amount permitted under that assistance; and (3) the total rent does not exceed the amount approved by the public housing agency administering the assistance. (Thus, units with contract rents above HOME limits may qualify if subsidized by vouchers.)

This section revises affordable homeownership housing qualification standards under the HOME Investment Partnerships Program by (1) increasing the maximum purchase price to 110 percent of the median area purchase price (from 95 percent); (2) expanding long-term affordability requirements to include shared equity models, community land trusts, limited equity cooperatives, community development corporations, or other Secretary-approved mechanisms that preserve affordability for future buyers (e.g., via purchase options or rights of first refusal); and (3) authorizing exceptions that (A) permit jurisdictions to suspend income eligibility requirements for active-duty military members subject to deployment or permanent change-of-station orders and (B) allow heirs or beneficiaries of deceased owners to continue qualifying the housing as affordable by assuming the prior owner's duties and obligations. (The HOME program provides formula grants to states and localities for developing and rehabilitating affordable rental and homeownership housing for low-income households.)

This section revises the recapture provision for uninvested community housing development organization (CHDO) set-aside funds under the HOME Investment Partnerships Program, which requires participating jurisdictions to reserve not less than 15% of HOME funds for 24 months for investment only in CHDO-developed, sponsored, or owned housing. If such funds remain uninvested after 24 months, the Secretary makes them available to the original participating jurisdiction for any eligible activities under title II (from prior recapture from the jurisdiction's line of credit and direct reallocation to other jurisdictions or nonprofit intermediaries for CHDO capacity-building or housing). (Thus, jurisdictions retain the funds for broader HOME-eligible uses without requiring CHDO participation.)

This section amends the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12838), which governs environmental review procedures for the HOME Investment Partnerships Program (i.e., formula grants to states and localities for affordable housing development and rehabilitation), to establish categorical exemptions from review under the National Environmental Policy Act of 1969 for (1) new construction infill housing projects, (2) acquisition of real property for affordable housing purposes, (3) rehabilitation projects carried out pursuant to section 212(a)(1), and (4) new construction projects of 15 units or less. The section further directs the Secretary, to the extent practicable, to (1) prevent duplicative environmental reviews for projects that add, substitute, or reallocate other federal assistance if project scope, scale, and location remain substantially unchanged; (2) issue regulations coordinating reviews with other federal agencies; and (3) exempt projects from review if a substantially similar review was previously completed by a responsible entity under the Housing and Community Development Act of 1974 or an equivalent authority. (Thus, these measures streamline environmental compliance for HOME projects.) The Secretary must issue implementing rules within one year of enactment.

This section adds §§291 and 292 to Title II of the Cranston-Gonzalez National Affordable Housing Act (i.e., HOME Investment Partnerships Program). Section 291 limits Build America, Buy America Act requirements (i.e., domestic content preferences for iron, steel, manufactured products, and construction materials) to infrastructure improvements under sec. 212(a)(4) using funds provided under subtitle A. Section 292 exempts housing rehabilitation, construction, or other development activities assisted under the title—from Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u; i.e., priority for low- and very low-income persons, especially public housing residents, in training and employment opportunities generated by HUD-assisted projects)—if the activity involves 50 or fewer dwelling units and assistance is provided to (1) a state recipient under sec. 216 or (2) a participating jurisdiction allocated less than $3 million in the most recent fiscal year under sec. 216. (Thus, such small projects face no Section 3 hiring mandates.)

This section makes technical amendments to the Cranston-Gonzalez National Affordable Housing Act by (1) replacing all references to the “Stewart B. McKinney Homeless Assistance Act” with “McKinney-Vento Homeless Assistance Act”; and (2) replacing all references to the “Committee on Banking, Finance and Urban Affairs” with “Committee on Financial Services”.