S. 2051 — Choice Neighborhoods Initiative Act of 2025

This section defines terms used in the Act, including “affordable housing” (i.e., public housing, section 8 housing, section 202 elderly housing, Low-Income Housing Tax Credit properties, and other housing with long-term affordability restrictions of at least 30 years); “assisted housing” (i.e., rental housing under section 8 of the U.S. Housing Act of 1937, sections 221(d)(3) or 236 of the National Housing Act, section 202 of the Housing Act of 1959, or section 811 of the Cranston-Gonzalez National Affordable Housing Act); “extreme poverty” (i.e., neighborhoods with high poverty or extremely low-income rates, plus distress from elevated crime, vacancies, low-performing schools, or similar factors); “neighborhood” (i.e., an area with distinguishing characteristics representing targeted populations); and “severely distressed housing” (i.e., public or assisted housing projects certified as physically deteriorated and contributing to neighborhood decline via extreme poverty, or legally vacated projects of that type).

This section establishes eligibility criteria for grant applicants under the Act. Primary applicants are limited to local governments, public housing agencies, or nonprofits owning a major housing project proposed for assistance, either as sole applicants (nonprofits only with local government support) or co-applicants with entities specified in subsection (b). Co-applicants may include community development corporations (at the request of a primary applicant), for-profit entities owning a major housing project proposed for assistance in FY2022 or later with an established community presence, and—required for transformations of major public housing projects—the public housing agency with jurisdiction over the project. Applicants may partner with any entity to carry out grant activities.

This section authorizes grant funds exclusively for transformational housing and community development programs and activities pursuant to an approved transformation plan under section 7 and requires each such plan to include the following activities: (1) housing transformation via rehabilitation, preservation, demolition and replacement, or affordable housing expansion, potentially incorporating energy-efficient design; (2) one-for-one replacement of demolished or disposed public and assisted units per section 9; (3) promotion of resident and neighborhood economic self-sufficiency; (4) preservation of neighborhood affordable housing and resident access to transformation benefits; (5) ensuring displaced residents who wish to return receive a priority per section 8; (6) compliance with section 9 replacement requirements; (7) compliance with section 10 fair housing and accessibility requirements; (8) service coordination and supportive services; (9) resident involvement in planning and implementation per section 8, including for limited English proficient residents; (10) monitoring of relocated residents per section 8(g); (11) relocation assistance including section 8 tenant-based rental assistance, counseling, moving costs, and security deposits; (12) links to local education efforts per subsection (c)(3); and (13) compliance with Section 3 of the Housing and Urban Development Act of 1968 (i.e., requiring public housing agencies, contractors, and subcontractors to prioritize low- and very low-income persons—especially public and Indian housing residents—for training and employment opportunities generated by HUD assistance). It further identifies 10 eligible activities (e.g., affordable housing construction or rehabilitation with energy efficiency features, supportive services focused on self-sufficiency and family supports, job training partnerships, critical community improvements), requires an additional plan for extending certain benefits to non-grant housing residents, permits implementation via endowments, revolving loan funds, or land banking (prohibiting eminent domain), and limits funding by barring use for elementary, secondary, or higher education buildings except shared infrastructure.

This section establishes requirements for transformation plans that eligible entities must submit to the Secretary for grant eligibility under the Act, including demonstrations of how the plan will (1) achieve priority outcomes of transforming distressed neighborhoods of extreme poverty into mixed-income areas with high-quality, safe, affordable housing (including one-for-one replacement of demolished or disposed public or assisted units), economic opportunities, services, public assets, job access, public transportation, and effective education programs; (2) implement required activities under section 6(b), with details on housing transformation; (3) carry out supporting eligible activities under section 6(c); (4) define outcomes, resident benefits and challenges, and evidence-based strategies; (5) provide a long-term affordability plan developed with residents to maintain affordable housing for 50 years or longer (with updates every 5 years); and (6) include other information prescribed by regulation. The section further directs the Secretary to establish grant selection criteria—prioritizing applicant and neighborhood need per section 5—that evaluate the extent to which plans (1) further the Act's purposes; (2) reflect inclusive local planning; (3) coordinate funding sources; (4) show neighborhood need and benefit potential; (5) demonstrate applicant capability; (6) incorporate sustainable and energy-efficient design; (7) improve transportation access; (8) enhance educational opportunities; (9) provide sustainable supportive services for self-sufficiency and independence; (10) support displaced residents' relocation to low-poverty areas without increasing racial segregation; (11) ensure sufficient housing opportunities; (12) address special-needs households; (13) comply with one-for-one replacement under section 9; (14) use outcome indicators for measurement and management; (15) enable phased redevelopment to minimize disruptions; and (16) promote a diverse housing mix including market-rate and ownership units.

This section establishes requirements for applicants and grantees under the Act relating to resident preferences, involvement, right to return, and relocation for public and assisted housing subject to a transformation plan. Specifically, it (1) requires a community meeting at least 30 days before grant application to inform residents of the applicant's intent, their right to return, relocation options, and planned replacement housing, and to solicit resident preferences for returning on-site, moving elsewhere, or retaining a Section 8 voucher; (2) mandates active resident involvement (including all demographic segments) throughout planning and implementation, a public meeting at least 30 days before grant application, and consultation plus Secretary approval for any significant plan amendments following 10 days' written notice and a public meeting; (3) conditions plan approval on a right to return to on-site or off-site replacement housing for displaced residents who were lease-compliant at departure and remain eligible under displacement-era standards; and (4) applies the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (with greater protections prevailing in conflicts), requires a relocation plan estimating Section 8 voucher needs, identifying replacement units, and describing any temporary relocation, and mandates plain-language written notice to residents within a reasonable time after grant approval describing the relocation process.

This section prohibits HUD from approving a transformation plan for demolition or disposition of public and assisted housing dwelling units (and certain other units) unless the plan provides for 100% replacement with newly constructed, rehabilitated, or purchased public or assisted housing units or equivalent units (including via project-based vouchers exempt from specified Section 8 income-mixing and percentage limits). Replacement units must (1) be of comparable size and sufficient bedrooms for displaced families (unless market analysis shows otherwise); (2) include at least one-third as public or assisted housing on or near the original site (absent court orders or site safety issues); (3) for additional units, be located in the neighborhood or PHA jurisdiction to promote economic/educational opportunities, transit access, and comparable services (or, if infeasible, in the metropolitan area with agreement); and (4) for non-public housing replacements of public housing, be subject to specified public housing laws on sex offenders (42 U.S.C. 13663), drug offenders, resident management, management transfers, grievances, quality standards, and tenant participation. Tenants in replacement units retain rights from original housing. This section further authorizes HUD to waive the 100% requirement to not less than 90% if a court order prevents full compliance or if excess affordable housing exists with high voucher success rates (90% within 120 days) and geographic dispersion in low-poverty areas.

This section establishes requirements applicable to grants under the Act. Specifically, it (1) requires demolition, disposition, relocation, replacement, and re-occupancy of housing units to affirmatively further fair housing under section 808(e) of the Civil Rights Act of 1968 (42 U.S.C. 3608(e)) and mandates grantees to adopt affirmative marketing procedures targeted to those least likely to apply, regardless of race, color, national origin, religion, sex, disability, or familial status; (2) requires new construction and alterations to comply with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), which prohibits disability discrimination in federally assisted programs, HUD accessibility standards (24 C.F.R. part 40), the Fair Housing Act (42 U.S.C. 3601 et seq.), and other Secretary-determined requirements; (3) prohibits grant funds for housing unless the owner agrees to an affordability period of not less than the existing period or 30 years, whichever is longer; (4) directs the Secretary to establish cost limits sufficient for transformation programs; (5) subjects assistance and projects to environmental review as special projects under section 305(c) of the Multifamily Housing Property Disposition Reform Act of 1994 (42 U.S.C. 3547(c)); and (6) requires grantees to report sources and uses of funds and other transformation plan information for the Secretary's annual report to Congress.

This section exempts the demolition or disposition of severely distressed public housing pursuant to a transformation plan approved under this Act from section 18 of the U.S. Housing Act of 1937 (42 U.S.C. 1437p), which requires public housing agencies to obtain HUD approval via certifications that the housing is obsolete as to physical condition or location, or that retention is not in the best interests of residents or the agency. This section requires replacement public housing dwelling units provided under such a transformation plan—in accordance with the one-for-one replacement requirements of section 8 of this Act—to comply with section 18.

This section authorizes the Secretary to require a grantee under this Act to arrange for an entity other than the original grantee to carry out activities assisted under the grantee's transformation plan if (1) the grantee has failed to meet performance benchmarks relating to implementation of the plan and (2) the Secretary determines that the action will help effectuate the purposes of this Act.

This section authorizes the Secretary, if a grantee fails to implement its transformation plan within a reasonable timeframe or otherwise comply with the Act or grant agreement, to (1) withdraw any unobligated grant amounts under the Act; and (2) redistribute those amounts to other eligible entities capable of expeditiously carrying out the original plan (or a modified version approved by the Secretary) in the same locality, or if not feasible, to other applicants that have received assistance under the Act.

This section requires the Secretary of Housing and Urban Development to submit to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services, not less than 90 days before the end of each fiscal year, a report on the implementation and status of grants awarded under the Act that includes (1) the number, type, and cost of affordable housing units revitalized; (2) the amount and type of financial assistance provided under and in conjunction with the Act, including for educational opportunities, services, public assets, public transportation, and access to jobs; (3) the impact of the grants on original residents, target neighborhoods, and larger communities; (4) all grantee-submitted information under section 8(e)(1) and summaries of grantee compliance with sections 8(a) and 8(g); and (5) information on grantee implementation of section 9 (one-for-one replacement of public housing units) and the Secretary's coordination of funding under section 6(e)(3). The section also requires the Secretary to make publicly available on a Department of Housing and Urban Development website all program-related documents filed with the department (e.g., applications, grant agreements, plans, budgets, reports, and amendments), to the extent consistent with other laws, while protecting the privacy of residents and households displaced due to transformation plans.

This section authorizes appropriations of $1 billion for FY2026 and such sums as necessary for each subsequent fiscal year for grants under this Act, of which up to 10% may be used for planning grants, up to 5% for technical assistance and program evaluation, and not less than 80% for public housing units (or 80% of assisted housing units). It further authorizes such sums as necessary for FY2026 and subsequent years for tenant-based rental assistance under Section 8 of the United States Housing Act of 1937 (i.e., Housing Choice Voucher program) to provide relocation assistance and comply with section 8(c) of this Act, not to exceed the assistance level for units demolished or disposed of under section 8(c)(1).

This section directs the Secretary to issue regulations to implement specified provisions of the Act—including paragraphs (5), (7), (12), (13), and (15) of section 2; subsections (c) and (f) of section 6; and section 9(b)—not later than 180 days after enactment.