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senate Bill S. 787

Should the Feds Spend $50 Billion Per Year to Subsidize Rental Construction & Land Use Reforms?

Argument in favor

America’s housing affordability crisis affects both renters and homebuyers. Creating a larger stock of housing, lowering the cost of new housing developments, requiring financial institutions to extend credit to low- and moderate-income households and addressing the legacies of discriminatory federal housing policies are all needed to fix this problem.

Argument opposed

This legislation is going to be extremely expensive and it’s not clear that it’ll work as intended. Using grants to incentivize zoning law changes, gentrification, and actually hurting the communities that this bill attempts to help. Some also argue it’s essentially reparations — which are incredibly divisive as an idea — without that label.

bill Progress

  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Finance
    IntroducedMarch 13th, 2019

What is Senate Bill S. 787?

This bill — the American Housing and Economic Mobility Act of 2019 — would spend an average of $50 billion a year in federal funding to build 3.2 million new rental units around the country, provide assistance to people who’ve been hurt by federal housing policy failures through two new targeted programs, create incentives for local governments to eliminate unnecessary land use restrictions, hold financial institutions accountable for providing access to credit for all Americans, and promote mobility by strengthening anti-discrimination laws and improving the housing voucher program. This bill’s key provisions are outlined below: 


Specifically, this section of the bill would: 

  • Invest $445 billion in the Housing Trust Fund (HTF; established by the 2008 Housing Economic and Recovery Act but only funded beginning a few years ago) to build, rehabilitate, and operate up to 2.1 million homes for low-income families, including in rural areas and in Indian country where housing quality is especially poor;
  • Invest $25 billion in the Capital Magnet Fund (CMF; which, like the HTF, was established by the 2008 Housing Economic and Recovery Act but only funded beginning a few years ago), which will be leveraged 10:1 with private capital, to build more than 835,000 new homes and develop vibrant communities for lower-income and middle-class families;
  • Invest $4 billion in a new Middle-Class Housing Emergency Fund, which supports construction of homes for middle-class buyers and renters where there’s a supply shortage and housing costs are rising faster than incomes;
  • Invest $523 million in rural housing programs to create 380,000 rentals and help 17,000 families buy homes.
  • Invest more than $2 billion to build or rehabilitate 200,000 homes for Native Americans and Native Hawaiians;
  • Invest more than $3 billion in the Public Housing Capital Fund to help maintain critical affordable units; and
  • Change the rules to stem the pipeline of government-owned or distressed homes to private equity firms.


This section would aim to provide financial assistance to disadvantaged groups through: 

  • Down payment assistance to communities historically denied mortgages by the government: The federal government denied black borrowers mortgage subsidies as late as the 1960s, stripping them of opportunities to build wealth. To address the resulting wealth gap between white and black families, the bill provides down payment grants to first-time homebuyers living in formerly redlined or officially segregated areas.
  • Support for families whose housing wealth was destroyed by the financial crisis: The bill would invest $2 billion to support borrowers with negative equity on their mortgages, predominantly in suburban and rural communities.


 This section would the bill would create incentives for local governments to eliminate unnecessary land use restrictions that increase costs. Currently, local land use rules can significantly increase construction costs, making it unattractive to build housing for anyone but the richest Americans. The bill puts $10 billion into a new competitive grant program that communities can use to build infrastructure, parks, roads, or schools. To be eligible, local governments would be required to reform land use rules that restrict production of new affordable housing.

This bill would expand the Community Reinvestment Act (CRA) to cover more non-bank mortgage companies, promote investment in activities that help poor and middle-class communities, and strengthen sanctions against institutions that fail to follow the rules.

The bill would expand the Fair Housing Act to ban housing discrimination based on sexual orientation, gender identity, marital status, veteran status and source of income. It would  make it easier to use housing vouchers in neighborhoods with good schools and good jobs and allows tribal housing authorities to administer their own voucher programs.


To fully offset its cost, this bill would restore the estate tax thresholds to their levels at the end of the Bush Administration and set more progressive rates above those thresholds — affecting 14,000 of the wealthiest families. Thus, were this bill to be enacted, the new estate tax thresholds would be as follows, based on the value of the estate: 

  • Estates valued under $13 million: 55% tax
  • Estates valued from $13 to $93 million: $7.15 million plus 60% of the excess of the amount over $13 million
  • Estates valued over $93 million: $55.15 million plus 65% of the excess over $93 million

The basic exclusion amount for estate taxes would be $3.5 million, and estates valued over $1 billion would be subject to an additional 10% tax. Additionally, this bill would create special rules for grantor trusts, eliminate the generation-skipping transfer tax exemption for certain trusts, and simplify the gift tax exclusion for annual gifts.

This bill wouldn’t change current law with regard to how the HTF and CMF operate. Under current law, at least 70% of CMF funds must be used to support affordable housing projects, and no more than 10% of an affordable housing project’s costs can come from the CMF.


Renters; homebuyers; low- and middle-income households; communities that have been historically disadvantaged by federal housing policy; families whose household wealth was destroyed by the housing crisis; anti-housing discrimination laws; Fair Housing Act; housing voucher program; HTF; CMF; financial instutitions; lenders to homebuyers; local governments; and local zoning laws.

Cost of Senate Bill S. 787

A CBO cost estimate is unavailable. However, as written, this bill seeks to be revenue-neutral through budgetary offsets.

More Information

In-DepthSen. Elizabeth Warren (D-MA), a candidate for the 2020 Democratic presidential nomination, reintroduced this bill from the 115th Congress to help bring down costs for renters and buyers, level the playing field so working families everywhere can find a decent place to live at a decent price, and take the first step to address decades of housing discrimination’s effects on communities of color

“The cost of housing is squeezing American families in communities all across the country — rural, suburban, urban — whether they're struggling to pay rent or trying to buy a home. The legacy of government discrimination and negligence means that communities of color have been hit the hardest. It's time to stop nibbling around the edges and, instead, pass this big, bold proposal to solve our housing crisis and take the first steps to address the legacy of housing discrimination head on."

Original cosponsor Sen. Kirsten Gillibrand (D-NY), also a candidate for the 2020 Democratic presidential nomination, adds

“It's unconscionable that so many families in our country struggle to put a roof over their head. As housing prices have skyrocketed, the lack of access to affordable housing has become a source of financial insecurity for too many families. The American Housing and Economic Mobility Act would help fix the unfair policies that drive up the cost of housing and would help make a real difference in the lives of people around the country."

The U.S. Conference of Mayors supports this bill. In a letter on behalf of the organization’s membership, Columbia, South Carolina Mayor Steve Benjamin, Atlanta Mayor Keisha Lance Bottoms and the organization’s CEO and Executive Director Tom Cochran wrote: 

“America’s cities are in the midst of an affordable housing crisis. Rents are skyrocketing, squeezing the budgets of too many families, pushing them to the brink… We write to support the American Housing and Economic Mobility Act. This bill will make housing more affordable in our cities and it will start to address the legacy of discrimination that has held back so many of our neighbors. Last year, rents in many of our cities hit record highs. Across the country, 38% of renters spent more than 30% of their income on rent. And while housing costs are the biggest expense for most citizens, those with the least suffer the most. According to the National Low Income Housing Coalition, every single county in the country has a shortage of housing affordable to extremely low-income renters. The American Housing and Economic Mobility Act makes a historic investment in affordable housing. According to an independent economic analysis, it will produce more than 3 million new units, create 1.5 million new jobs, and bring down rents by 10 percent over the next 10 years. We appreciate that the bill also includes dedicated funding for housing in rural and Native communities, where the need for affordable housing is just as great. Easing the burden of rent costs will help the families we serve but will also allow our cities to grow by ensuring our residents are able to invest in their own economic futures by going to school or starting a small business.” 

The Credit Union National Association (CUNA) — which opposed a section of this bill that would have expanded the Community Reinvestment Act (CRA) to cover credit unions in the 115th Congress — has endorsed this bill in the 116th Congress (the new version of the bill explicitly excludes credit unions from the CRA, as CUNA advocated for last Congress). In a letter to Sen. Warren, CUNA President and CEO Jim Nussle wrote:

“The American Housing and Economic Mobility Act of 2019 is an important effort to improve access to the housing market for members of all communities and, in the process, properly recognizes the distinctions that exist between credit unions and banks when meeting community needs. The legislation rejects a one-size- fits all approach by explicitly excluding credit unions from the Community Reinvestment Act and instead codifying the already existing community outreach, input, and oversight policies that credit unions have been abiding by for more than 20 years under National Credit Union Administration regulations… Though still a small percentage of the housing market overall, credit unions have come to play an increasingly larger role in meeting America’s mortgage credit needs. Recent CUNA research shows the result of those efforts: more than half of all credit union mortgages made across the United States went to households earning middle incomes or less. Credit unions are not only committed to serving individuals of modest means, we recognize that it is our mission… On behalf of America's credit unions, I want to thank you and your staff for not only listening and acknowledging our concerns about earlier versions of this legislation that applied the Community Reinvestment Act to credit unions, but also working with us to develop an approach that better serves the interests of communities.”

Moody’s Analytics researchers estimate that this bill would raise lower rents and house prices over the long term, lift employment and benefit low- and middle-income households:

“[O]ur model shows that affordable housing construction increases by close to 200,000 units in 2019, to almost 250,000 units in 2020, and to 300,000 units in 2021. Over the 10-year budget horizon through 2028, affordable housing production increases by about 300,000 units per annum. This is approximately equal to the current annual shortfall in housing supply. If this legislation is signed into law soon, it will at the very least ensure that the current crisis in affordable housing does not get worse. This will still leave a shortfall in affordable housing. But market forces should work to slowly and steadily increase supply. This is particularly true if the American Housing and Economic Mobility Act eases regulatory restrictions on affordable homebuilding as anticipated. By the end of the 10-year horizon, affordable housing supply should be approximately equal to demand. Since the legislation significantly increases housing supply, it will have the added benefit of improving housing affordability, particularly for affordable rental homes. Without the legislation, rents are expected to increase by more than 4% per annum. With the legislation, rent growth will be closer to 3% per annum. A decade from now, affordable rents will be approximately 10% lower than they are today, or about $100 per month in today’s dollars. House price growth also slows somewhat as a result of the increased supply, although not nearly as much as rent growth. More housing construction will increase the economy’s growth rate and the number of jobs as activity increases. In 2019, the increased housing construction will lift employment by 730,000 jobs and by as much 1.5 million jobs at the peak of the impact in the mid-2020s. Limiting the lift to employment in the near term is that the economy is already operating at full employment, and the increase in economic activity results in somewhat higher interest rates. There is very little impact on the economy and jobs from the scaling back of the estate tax exemptions and other reforms. The wealthy households that will pay more in estate taxes have substantial financial resources and will not significantly change their spending and saving behavior. Moreover, since the increased tax revenues pay for the expansion of the HTF and CMF and other programs, it ensures that the American Housing and Economic Mobility Act is deficit neutral, with no resulting material impact on interest rates. This simulation likely understates the economic benefit of the legislation, because it does not consider that the measure will facilitate the ability of low- and middle-income households to move closer to their employment or potential jobs. The housing shortage and erosion in affordability are constraining the ability of low-income households to take the record number of open job positions that are currently available in places where housing is simply too expen- sive. Affordability is also forcing low- and middle-income workers to live farther away from their work, requiring long and costly commutes, and reducing productivity.”

Jenny Schuetz, a fellow at the Brookings Institution, argues that this bill is close to reparations. She observes, “It sounds very close to reparations. It sounds as close as you can go to reparations without making this explicitly funding contingent on the race of the applicant.” Schuetz argues that this bill amounts to an attempt to target reparations to specific groups, which is difficult to achieve

“[Warren is] trying to target reparations to groups that have been harmed without writing them in such a way that they’re open to abuse or exploitation by people who moved into a neighborhood recently. Those are often hard policies to get right.”

Schuetz is also skeptical about how much effect this legislation would have on zoning laws. As many neighborhoods with the strictest zoning laws are wealthy enough to not need federal funding, she argues that they would have little incentive to participate in the grant program this bill proposes. However, Scheutz also expressed appreciation for this bill’s effort to add racial justice to the conversation around fair housing

“One of the things that I like about her bill is that she goes through and identifies places where past policies have created harm. The foreclosure crisis, redlining that limited access to capital, exclusion of minorities from the mortgage market—[she] essentially says, ‘We’ve created disparities with past policies. Here’s an attempt to try to fix that.’”

William Darity, director of the Samuel DuBois Cook Center on Social Equity at Duke University, criticizes this bill’s down-payment assistance for falling short of addressing historical reparations

“The project doesn’t actually target the people who have been subject to the victimization. By avoiding making it a program that’s directed specifically at the families that either were living in neighborhoods subject to redlining, or families that indirectly lost income as a consequence of the impact of redlining given the existence of segregated residential areas, the bill is not designed to provide resources specifically to those families that were victimized. It actually gives resources to current residents.”

Darity also says that families who don’t deserve compensation for historical structural discrimination could qualify for funds under this legislation, which could be counterproductive (as well as being what CityLab writer Kriston Capps calls a “truly noxious outcome”): 

“Under dint of gentrification, you may have a host of current residents who are first-time homebuyers whose income levels, because of their age, are low enough for them to meet the threshold. But they definitely were not from families who were victims of redlining.”

Lisa Rice, president and CEO of the National Fair Housing Alliance, adds that this legislation could even harm its intended beneficiaries because it doesn’t include protections to keep African-Americans and other minority residents from being displaced through gentrification: 

“A lot of African Americans and Latinos who live in areas that were previously redlined or are currently redlined are not in a category of a first-time homebuyer. They have owned a home. They are current homeowners. They may have been a victim of the predatory lending crisis. They may have owned a home and experienced foreclosure. That foreclosure may have occurred within the past three years. These are things that need to be addressed and fixed in the bill.”

Joel Griffith, a research fellow in financial regulations at the Heritage Foundation, says this bill is overly intrusive in its attempt to use grants to incentivize local communities to change their zoning laws: 

“We do not believe it is the federal government’s role to be jumping in there and trying to, in effect, almost bribe these local governments into changing the laws by pouring money into their infrastructure.”

As an alternative to this legislation, Griffith believes that voters should bring zoning issues up with local officials. He also strongly opposes raising the estate tax would have a negative impact on job growth and be unfair to Americans who have paid taxes their entire lives.

Edward Pinto, a co-director of the American Enterprise Institute’s Center on Housing Markets and Finance, doubts that subsidizing housing developments would actually lower housing prices. He says that subsidies have been proven ineffective. In an August 2018 op-ed in the Wall Street Journal, Pinto argued for rolling back zoning laws in order to make development cheaper as an alternative to subsidies (however, it’s worth noting the circularity of this argument — without some form of government intervention, it’s unlikely that many municipalities would roll back zoning laws, which are generally local-level laws, in order to lower development costs).

This legislation has two Democratic Senate cosponsors. Its House version, sponsored by Rep. Cedric Richmond (D-LA), has 16 Democratic House cosponsors. Neither bill has received a committee vote. This legislation has been endorsed by a range of local government organizations and mayors, including the U.S. Conference of Mayors leadership, over a dozen Massachusetts mayors, New Orleans Mayor LaToya Cantrell, and Baton Rouge Mayor-President Sharon Weston Broome. Over twenty civil rights groups and housing advocates, including the Leadership Conference on Civil and Human Rights, National Low Income Housing Coalition, the National Community Reinvestment Coalition, the National Alliance to End Homelessness, the National Rural Housing Coalition, have also endorsed it.

CityLab writer Kriston Capps observes that this legislation has “virtually no chance of passing Congress while Republicans control the Senate.” However, Philip Tegeler, executive director of the Poverty and Race Research Action Council, argues that some form of legislation on housing will be passed in the near term, as “housing is on the front burner for most Democrats and many Republicans, and it’s not going away.”

Of NoteIn 2018, the National Low Income Housing Coalition reported that was a 7.2 million housing unit shortage for America’s 11.2 million extremely low-income families (who account for 25.7% of all renter households and 9.5% of all households in the country). For every 100 low-income renter households, only 37 affordable and available rental homes existed.

Additionally, the NLIHC reported that 71% of extremely low income renter households are “severely cost-burdened,” defined as spending over half their incomes on rent and utilities. It reported that 32% of very low income, 8% of low income and 2.3% of middle income renter households are also severely cost-burdened

Moody’s Analytics reports that although homebuilders have steadily increased production of new housing since the housing crisis of a decade ago, much of the increase in homebuilding today is at the high end of the housing market. This is for two reasons: 1) demand by higher-income households recovered more quickly from the recession and 2) higher house prices and rents incentivize homebuilders to build at the higher end of the market. Thus, the construction of affordable housing units has been slow to recover. 

Because lower- and middle-income households have had more difficulty recovering from the recession and the prices and rents builders can earn on affordable housing units are too low to incentivize them to build more units, construction of affordable housing has been slow. However, this has also begun changing recently, as lower- and middle-income households are doing better financially and house prices and rents have increased.

However, Moody’s observes, there are still significant barriers to building affordable housing units. Construction workers are in very short supply, particularly in the South and West, where affordable housing demand is especially strong — which makes it difficult to find needed workers and is driving up labor costs. Additionally, labor shortages in other sectors (specifically transportation, distribution, and manufacturing) and rising raw materials costs (such as lumber and gypsum) are also making homebuilding more costly and difficult. President Trump’s trade war and the resulting higher tariffs on imported steel, aluminum, and other building materials and equipment are also pushing costs up.

At the local government level, stiff zoning restrictions, higher permitting costs, and other regulations are also driving building costs up, particularly in urban areas where the shortage of affordable housing is especially acute. Government-imposed costs have risen substantially since the recession, since local governments increased permitting fees to compensate for the loss of property tax revenues when house prices collapsed.


Summary by Lorelei Yang

(Photo Credit: / Art Wager)


American Housing and Economic Mobility Act of 2019

Official Title

A bill to make housing more affordable, and for other purposes.

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