‘hypocrisy’: Congress Wants More Homes. Hud Is Closing Its Low-income Housing Pipeline.

While Congress celebrates bipartisan legislation to boost affordable housing for working-class Americans, local authorities are scrambling to build rental homes for their poorest residents before the Trump administration scraps a key financing tool.

The Department of Housing and Urban Development in August is shutting down the “Restore-Rebuild” initiative, which helps local governments build new homes eligible for federally subsidized rental vouchers. Now, some of those financially distressed agencies say they don’t know how they’ll raise money to create new housing for their lowest-income residents.

“This really caught us off guard,” said La Shelle Dozier, CEO of the Council of Large Public Housing Authorities. “For HUD, which touts all the time that they really want to increase affordable housing … this seems to be hypocrisy.”

The council, which recently asked HUD in a letter to reconsider its decision, calculated that local housing agencies across the country were eligible to build about 278,000 units through Restore-Rebuild.

The decision to end Restore-Rebuild comes as the cost of living dominates this election cycle and the lack of home supply drives prices higher. But the Trump administration is looking to shrink the footprint of its Cabinet-level housing agency and limit spending on direct federal assistance.

The bill Congress recently passed to boost the availability of affordable housing includes provisions to make low-cost home construction easier, help working-class home buyers afford mortgage loans and streamline rental voucher programs — which largely benefit extremely low-income people.

Benjamin Hobbs, HUD’s assistant secretary for Public and Indian Housing, said in a statement that the department is shutting down Restore-Rebuild because it “wants to limit the growth in rent assisted housing subsidy costs.”

“It is a priority of the department to dedicate our limited resources to the operating and capital needs of the current public housing stock and to repositioning those units to platforms where private sector leverage can help improve residents’ living conditions,” Hobbs said.

Howard Husock, a senior fellow at the conservative think tank American Enterprise Institute, said those priorities reflect the administration’s broader ideology toward government benefits.

“They're trying to make the voucher program more of a basis for upward mobility rather than focusing on long-term stability for tenants,” he said. “They believe in it.”

But local officials in charge of providing homes to Americans with the lowest incomes say they are hearing mixed messages from Congress and the administration.

“It is kind of in conflict,” said Lisa Porter, the executive director of a housing authority near the Virginia-Tennessee border. “We can try to do what they're asking us to do, and it seems like every time we turn a corner, there's another obstacle in the way.”

Porter said it's hard to secure financing for new home construction in Bristol, Virginia, a small city in the Appalachian region where she works.

The city, which oversees Porter’s housing authority, has been saddled with debt for years. And in recent decades, Congress has shifted money away from government-owned and operated public housing developments to Section 8 vouchers — another type of federal subsidy to help low-income tenants pay rent in sometimes privately-owned units.

Public housing agencies are local or regional government-controlled offices charged with administering both public housing and Section 8 voucher programs. Many, like Porter’s, are trying to transition the units they oversee from the public housing program to Section 8, which offers more opportunity for investment from the federal government as well as private backers.

That’s where HUD’s Restore-Rebuild initiative comes in. The department established the pipeline in 2021 to help public housing officials build new units for the Section 8 program.

Porter’s agency used the previous iteration of Restore-Rebuild to get construction for more than 20 new units approved by HUD. She hopes to develop almost 100 more. But without Restore-Rebuild, Porter said she’s worried the homes won’t be low-cost enough to house the people in her community who need it most.

“If you can't attach some subsidy to those units, they're not truly affordable for those who are most vulnerable — which is senior citizens and disabled [people],” Porter said.

Housing authorities in larger cities have seen bigger-scale projects thrown into limbo.

Lourdes Castro Ramírez, president of the Los Angeles public housing authority, said she has plans to build 1,600 units in the Restore-Rebuild approval process.

“This is a real hit to our pipeline,” Castro Ramírez said. Now, her agency is rushing to finalize its paperwork before the Restore-Rebuild window closes.

According to HUD’s announcement of its decision to wind down the initiative, projects like the Los Angeles development that have already gone through the first steps to receive federal approval have 90 days to either submit “a substantially complete development or acquisition proposal” or show they’ve applied for homebuilding tax credits.

But housing agencies and advocacy groups say that timeline is unrealistic. They argue that financing for federally subsidized housing is deeply complex, with various investors and levels of government involved. The planning process can sometimes take years.

“Ninety days is such a short time,” said Lisa Jones, president of the San Diego Housing Commission. “It feels almost like being set up for failure.”

Jones said her agency has plans for about 150 units that she’s rushing to get HUD’s final approval for now. But she was hoping to start applying to build around 700 more.

“Affordable housing access is already shrinking in some ways,” Jones said. “Restore-Rebuild is one of the few resources we have left for deep affordability, so now that's going to disappear too.”

This year’s presidential budget proposal includes a provision that would prevent public housing authorities from building any additional units after Oct. 1, 2027. It also includes language that would restrict local housing authorities from issuing “any new vouchers or otherwise assist new families” who don’t already receive HUD assistance.

Housing advocates say this would effectively shrink the federal assistance programs over time, as families who leave subsidized housing aren’t replaced with new ones who are waiting for help.

Those provisions aren’t likely to be included in the actual HUD budget passed by Congress. But the proposals reflect the administration’s overall ambitions to limit government assistance.

Instead of creating new units for voucher-holders, HUD is encouraging local public housing authorities to focus federal funds on rehabilitating their current properties.

Husock, of the American Enterprise Institute, said those priorities reflect the poor conditions in some public housing buildings. The National Association of Housing and Redevelopment Officials estimated that those properties faced a total backlog of $90 billion worth of maintenance in 2024.

“These are really serious problems,” he said. “If you're going to allocate scarce resources, it's highly defensible to say that renovation should be the priority.”