The President’s Housing Executive Orders – Part 2

Earlier this week, we discussed Executive Order (EO) 14393: Promoting Access to Mortgage Credit in this blog . Today we will take a closer look at the companion order, Executive Order (EO)  14394: Removing Regulatory Barriers to Affordable Home Construction . While the impact on credit union operations is not as direct, this EO may have long-term effects on housing availability, programs, and insurance. 

EO 14394: Removing Regulatory Barriers to Affordable Home Construction

Removing regulatory barriers to residential construction 

The EO requires the Assistant Secretary of the Army for Civil Works, and the Administrator of the Environmental Protection Agency (EPA) to review and revise rules related to stormwater, wetlands, lakes, rivers, and other bodies of water. The suggested changes include modifying permits for stormwater discharge, discharge of dredged and fill material, and certain standards under the Clean Water Act.

The EO asks the Secretary of Commerce, the Secretary of Housing and Urban Development (HUD), the Secretary of Transportation, and the Director of the Federal Housing Finance Agency (FHFA) to consider eliminating: 

1) The Economic Development Administration’s guidelines and investment priorities concerning development density; 

2) The Department of Transportation’s (DOT) Reconnecting Communities Pilot Program; 

3)  The HUD’s Pathways to Removing Obstacles to Housing Program; and 

4) The FHFA’s guidelines and regulations regarding chattel lending for manufactured housing and incentivizing low-balance home mortgages.

This section then asks the Secretary of Agriculture, the Secretary of HUD, the Secretary of Energy, and the Director of FHFA shall, within their respective authorities, take appropriate action to reform, revise, or eliminate: 

1) The Energy Conservation Program’s Energy Conservation Standards for Manufactured Housing; 

2) The Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Financed Housing; 

3) Residential building energy codes subject to review by the Secretary of Energy; and 

4) Water and energy efficiency improvement standards for FHFA’s duty to serve underserved market properties.

Streamline Federal Permitting Requirements

The Chairman of the Council on Environmental Quality and Chairman of the Advisory Council on Historic Preservation have been asked to provide guidance on implementing laws in a way that maximally exempts or reduces burdens on housing construction, preservation, adaptive re-use, and infrastructure that facilitates housing construction, such as roads, water, sewer, and other projects. 

Engaging State and Local Regulatory Best Practices 

The Secretary of HUD and the Assistant to the President for Domestic Policy are given 60 days to create a list of best practices for state and local government including: 

1)  Streamlining permitting processes for housing developments by, for example, capping permitting timelines and fees; allowing by-right development for single-family homes; limiting retroactive application of new or changed building codes; allowing third-party inspections and appropriate builder choice on certified entities for inspections and studies; and ensuring swift dispute resolution with government agencies and private parties regarding construction matters; 

2) Curtailing mandates that increase housing construction costs, such as green-energy building requirements or other energy-choice restrictions, non-evidence-based building codes, and unreasonable building-code-adoption timelines; 

3) Re-examining restrictions on the use of manufactured or modular housing on the basis of the construction method rather than objective standards for building and safety, aesthetic requirements, or prohibitions on construction when comparable site-built housing is permitted; and 

4) Removing arbitrary limitations on residential housing development beyond urban centers, such as urban growth boundaries, growth moratoria, and commuting penalties.

Facilitate New Construction in Opportunity Zones

The Secretary of the Treasury and the Secretary of HUD are directed to ensure programs and incentives are better matched with Opportunity Zone tax benefits, so that more money is invested in building single-family homes. They are to consider at ways to connect grants, financing, or other incentives with new investments in Qualified Opportunity Funds that focus on building and selling single-family homes.

The Secretary of the Treasury and the Secretary of HUD will also look for ways to combine Opportunity Zone tax benefits with the New Markets Tax Credit. The goal is to encourage the construction of single-family homes in areas that are both Opportunity Zones and low-income communities under the New Markets Tax Credit program.

What do you think of these proposed changes? Are they helpful to credit unions as lenders? Please send comments or questions to [email protected]