Innovation Fund Act

Bill Number: H.R. 5938
Origin Chamber: House
Congress: 119th Congress, Session 1
Policy Area: Housing and Community Development
Status: Introduced
Latest Action: 2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committees on Transportation and Infrastructure, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Last Updated: 2025-12-05T22:08:56Z

AI-Generated Summary

Purpose of the Legislation

The Innovation Fund Act (H.R. 5938) aims to create a federal grant program administered by the Department of Housing and Urban Development (HUD) to reward and support local governments that have successfully increased their housing supply. The goal is to encourage more affordable housing development, particularly for low- and moderate-income households, by providing funding for related community initiatives.

Key Provisions

Definitions:
Attainable housing: Housing that primarily serves households earning up to 80% or 100% of the area's median income (AMI), or up to 60% or 120% of AMI in certain cases. AMI is a measure of typical household income in a specific geographic area.
Eligible entity: Cities, urban counties, local governments, or Indian tribes that have shown measurable growth in housing supply, as determined by HUD using a transparent methodology published for public comment.
Secretary: Refers to the Secretary of HUD.

Establishment of the Grant Program:
HUD must set up the program within one year of the bill's enactment.
Grants are awarded competitively to eligible entities based on their recent housing supply increases.
A public list of eligible entities will be maintained on HUD's website.

Eligible Uses of Funds:
Support activities under the existing Community Development Block Grant program (e.g., housing rehabilitation, public facilities).
Fund local infrastructure projects like transportation improvements.
Serve as matching funds for EPA clean water or drinking water programs.
Implement local initiatives to expand attainable housing, such as:
Allowing more types of housing (e.g., duplexes, multifamily buildings) without special approvals in certain areas.
Reducing parking requirements, lot sizes, or building restrictions to lower costs.
Offering incentives for denser development, streamlining permits, or easing rules on accessory dwelling units (small secondary homes on the same property).
Using tax incentives or public financing for affordable housing.
Simplifying environmental reviews or reducing unnecessary regulations on manufactured homes and energy standards.

Application Process:
Eligible entities must submit applications detailing fund uses, recent housing data (e.g., affordability and income served), alignment with local housing plans (called "consolidated plans"), and ongoing housing expansion efforts.
Applications must attest that funds will only support approved purposes.

Grant Awards:
At least 25 grants per year (fewer if funding is limited), prioritizing diverse geographic areas (rural, suburban, urban).
Grants range from $250,000 to $10,000,000 each.
Priority for entities using innovative policies (e.g., those referenced in a separate section of the bill) and showing strong housing growth.
Certain projects (related to construction) are treated like Community Development Block Grants for administration.

Rules of Construction:
The program cannot override local zoning or land use decisions.
It does not change existing requirements for comprehensive housing plans under federal law.

Funding:
Authorizes $200 million annually from fiscal years 2027 to 2031, adjusted for inflation using the Consumer Price Index (a measure of price changes for everyday goods).

Significant Changes to Existing Law

This bill introduces a new competitive grant program under HUD, building on but distinct from programs like Community Development Block Grants and EPA revolving funds. It does not amend existing laws directly but integrates with them by allowing grant funds to support or match those programs. A key addition is the emphasis on rewarding proven local housing growth through objective metrics, with public input on HUD's measurement methods—a novel accountability feature not present in prior HUD housing initiatives.

Potential Impacts

Government Agencies: HUD will gain new administrative responsibilities, including developing methodologies, processing applications, and awarding grants, potentially increasing its workload and requiring staff or systems upgrades. Local governments and Indian tribes may receive funding to enhance housing and infrastructure, easing budget strains for affordable housing projects.
Citizens: Low- and moderate-income households (up to 120% of AMI) could benefit from increased housing supply, leading to more affordable options, better quality homes, and reduced shortages in urban, suburban, and rural areas. Broader communities might see improved infrastructure and economic development tied to housing growth.
International Relations: No direct impacts, as the bill focuses on domestic housing policy.

Main Stakeholders Affected

Local Governments and Indian Tribes: Primary recipients as eligible entities, gaining funds to scale housing initiatives.
Low- and Moderate-Income Households: Beneficiaries of attainable housing expansions, potentially improving access to affordable homes.
Developers and Builders: Indirectly supported through reduced regulatory barriers and incentives for denser, cost-effective construction.
Federal Agencies: HUD (lead administrator) and EPA (for matching funds), with oversight roles.
Community Organizations: Involved in local planning and could influence how funds align with consolidated plans.

Notable Legal, Constitutional, or Political Implications

Legal: Reinforces federalism by explicitly prohibiting HUD from preempting local zoning laws, preserving state and local control over land use—a nod to the 10th Amendment (which reserves powers to states). It ties into existing statutes like the Housing and Community Development Act of 1974 without altering core requirements, reducing legal challenges.
Constitutional: No apparent conflicts; the bill uses Congress's spending power to incentivize (rather than mandate) local actions, avoiding coercion issues seen in some federal-local partnerships.
Political: Could encourage progressive zoning reforms in conservative-leaning areas by framing grants as rewards for results, potentially bridging partisan divides on housing affordability. The public comment period on methodologies promotes transparency, mitigating concerns over federal overreach, but funding limits may spark debates on adequacy amid national housing shortages.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Cleaver, Emanuel [D-MO-5]

Cosponsors (1)

Rep. Pressley, Ayanna [D-MA-7]

Recent Actions

2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committees on Transportation and Infrastructure, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committees on Transportation and Infrastructure, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-11-07: Referred to the Committee on Financial Services, and in addition to the Committees on Transportation and Infrastructure, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2025-11-07: Introduced in House
2025-11-07: Introduced in House

Bill Versions

Innovation Fund Act — issued 2025-11-07 — PDF (10 pages)