Transit-Oriented Housing Development Act of 2026
- Sponsor
- Sen. Booker, Cory A. [D-NJ]
- Committees
- Finance Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
The bill provides substantial new federal funding and tax incentives to accelerate the construction of affordable housing in transit-accessible locations across the United States.
What it actually does
This bill significantly expands federal support for affordable housing development near public transit. It increases the state ceiling for housing bonds by 30% for transit-oriented projects, enhances the Low-Income Housing Tax Credit (LIHTC) by 150-200% for such developments, and appropriates $30 billion annually for ten years to the Housing Trust Fund, prioritizing transit-oriented projects. The aim is to incentivize the creation of affordable housing in areas with good public transportation access.
Proponents argue
Proponents argue that this bill directly addresses the nation's severe housing affordability crisis by leveraging existing successful programs and directing resources to areas that maximize public benefit. They contend that developing housing near transit reduces residents' transportation costs, decreases carbon emissions, and provides low-income individuals with better access to jobs, education, and services, fostering economic mobility and sustainable community growth.
Opponents contend
Opponents might raise concerns about the significant federal spending and potential increases in the national deficit, particularly the $300 billion in direct appropriations over ten years. They may also argue that focusing incentives solely on 'transit hubs' could divert resources from other high-need areas lacking robust public transportation, or that the specific income restrictions might be too complex or not sufficiently broad to address diverse housing needs.
The bill is relatively short and its core provisions are clearly stated, making it accessible for an informed reader to evaluate within a reasonable timeframe.
Section 2(a), amending Internal Revenue Code Section 146(d)(5)
Increase and Set Aside for Housing Bonds for Transit-Oriented Developments
This provision increases the amount of tax-exempt private activity bonds (housing bonds) that states can issue by 30% for calendar years beginning after 2025. This additional bond capacity is specifically set aside for 'qualified housing issues,' which are projects where at least 95% of net proceeds are used for residential rental property located within a 'transit hub.' These projects must serve individuals earning 120% or less of the area median gross income, with specific set-asides for units serving those at 50% or less, and 30% or less (or poverty guidelines). A 'transit hub' is defined as an area within half a mile of a fixed guideway public transportation station, intercity bus station/stop, or intercity passenger rail station.
Supporters argue
Supporters argue that increasing bond capacity specifically for transit-oriented affordable housing is a highly effective way to address both housing shortages and climate goals. They contend that this provision will unlock significant private investment, making it easier and cheaper to build housing where people can rely on public transit, thereby reducing reliance on cars and lowering household expenses for low-income families.
Critics contend
Critics might express concern that earmarking a 30% increase in bond capacity for specific types of projects could limit flexibility for states to address other pressing housing needs that may not be transit-oriented. They might also argue that the administrative burden of defining and verifying 'transit hubs' and complex income tiers could slow down project development.
Tradeoffs
This provision balances the need for increased affordable housing financing with the strategic goal of promoting transit-oriented development. The tension lies in potentially prioritizing location-specific development over broader geographic housing needs, and the administrative complexity of ensuring compliance with multiple income and location requirements.
Section 3(a), amending Internal Revenue Code Section 42(d)(5)
Increase in Low-Income Housing Tax Credit (LIHTC) for Transit-Oriented Developments
This section increases the value of the Low-Income Housing Tax Credit (LIHTC) for projects that are transit-oriented. Specifically, for new buildings, the 'eligible basis' (the amount on which the tax credit is calculated) is increased by 150%. For existing buildings undergoing rehabilitation, the eligible rehabilitation expenditures are also increased by 150%. This boost applies if 25% or more of the project's total basis (building and land) is financed by the 'qualified housing issue' bonds defined in Section 2. Furthermore, if workers employed in the construction of such a building are paid not less than the prevailing wage (as determined by the Secretary of Labor), the increase in eligible basis or rehabilitation expenditures rises to 200%.
Section 4, amending Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568(a))
Appropriations for Housing Trust Fund with Transit Hub Priority
This section appropriates $30 billion annually to the Housing Trust Fund for each of fiscal years 2026 through 2035, totaling $300 billion over ten years. It mandates that states, when distributing these funds, give priority to projects located within a 'transit hub' (as defined in Section 2). Additionally, it waives a specific deadline (subsection (c)(10)(B)) for the use of these newly appropriated funds, providing greater flexibility for states and developers to utilize the money.
This subclause specifies that 10 percent or more of the residential units in a qualified housing issue project must be rent-restricted and occupied by individuals whose income does not exceed the higher of either the poverty guidelines updated by HHS or 30 percent or less of area median gross income. It also includes an exception for public housing agencies or projects in Puerto Rico or other U.S. territories/possessions regarding the poverty guidelines.
Section 2(a), amending IRC Section 146(d)(5)(B)(ii)(II)(bb)
Why it matters:The nesting of definitions is standard legislative practice for precision in tax code amendments, ensuring that the specific income targeting is clearly linked to the overall project qualifications. It's not necessarily evasive but requires careful reading to fully grasp the deep affordability requirements.
Case for: Supporters would argue that this specific language is crucial for ensuring that the bill effectively targets the deepest levels of housing need, providing affordable options for extremely low-income individuals and families. The flexibility to use either poverty guidelines or 30% AMI helps tailor the benefit to local economic realities.
Case against: No specific opposition is typically raised against this level of detail in income targeting, as it aims to ensure the program serves its intended beneficiaries. However, some might argue that such granular requirements can add complexity for developers and administrators.
Estimated impact: Ensures a portion of the newly incentivized housing units are accessible to the most vulnerable populations, potentially impacting thousands of households.
This clause specifies that the increase in LIHTC eligible basis for transit-oriented developments can rise from 150% to 200% if workers employed in the construction of the building are paid a wage not less than the prevailing wage for similar employment in the locality, as determined by the Secretary of Labor.
Section 3(a), amending IRC Section 42(d)(5)(C)(ii)
Why it matters:This is a common legislative technique to add a conditional benefit or requirement without making it the primary focus of the section's title. It's a substantive policy choice integrated into the incentive structure.
Case for: Proponents argue that this provision ensures federal tax incentives support fair labor practices and provide good-paying jobs, preventing a 'race to the bottom' in construction wages. It aligns housing development with broader economic justice goals.
Case against: Some developers and industry groups might argue that prevailing wage requirements increase construction costs, potentially making projects more expensive or harder to finance, even with the enhanced credit. They might contend it adds an unnecessary layer of complexity and cost.
Estimated impact: Could significantly increase wages for thousands of construction workers on qualifying projects, potentially increasing overall project costs by a measurable percentage.
This clause states that the deadline under subsection (c)(10)(B) shall not apply to the $30 billion annual appropriations made to the Housing Trust Fund for fiscal years 2026 through 2035.
Section 4(C)
Why it matters:This is standard legislative drafting to modify existing law by reference. It's not evasive but requires knowledge of the underlying statute to understand its full impact.
Case for: Proponents would argue that waiving the deadline provides states and developers with necessary flexibility to plan and execute complex affordable housing projects, which often have long development timelines. This ensures the appropriated funds can be fully utilized without artificial constraints.
Case against: Some might argue that waiving deadlines could reduce accountability for timely project completion or allow funds to sit unused for extended periods, potentially delaying the delivery of needed housing. However, this is a less common criticism for housing funds given project complexity.
Estimated impact: Allows for more effective deployment of the $300 billion in Housing Trust Fund appropriations over the decade, preventing funds from lapsing due to administrative or project delays.