---
kind: "section"
citation: "42 U.S.C. § 19505"
title: "42"
title_heading: "The Public Health and Welfare"
number: "19505"
heading: "Innovation fund"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/19505"
units:
  - "Chapter 165 — Increasing Housing Supply"
  - "Subchapter I — Building More in America"
---

# §19505. Innovation fund

- (a) **Definitions—** In this section:
  - (1) **Attainable housing—** The term “attainable housing” means housing that serves households earning not more than 120 percent of the area median income, if the majority of the housing units are affordable to households earning not more than 60 percent of the area median income.
  - (2) **Eligible entity—** The term “eligible entity” means—
    - (A) a metropolitan city or urban county, as those terms are defined in section 102 of the Housing and Community Development Act of 1974 ([42 U.S.C. 5302](/usc/42/5302.md)), that has demonstrated an objective improvement in housing supply growth, as determined by the [Secretary](/usc/42/242q–4.md?p=2), whose methodology for determining such growth is published in the Federal Register to allow for public comment not less than 90 days before the date on which the notice of funding opportunity is made available; or
    - (B) a [unit of general local government](/usc/42/11851.md?p=12) or an Indian tribe, as those terms are defined in section 102 of the Housing and Community Development Act of 1974 ([42 U.S.C. 5302](/usc/42/5302.md)), that has demonstrated an objective improvement in housing supply growth, as determined by the [Secretary](/usc/42/242q–4.md?p=2), whose methodology for determining such improvement is published in the Federal Register to allow for public comment not less than 90 days before the date on which the notice of funding opportunity is made available.
  - (3) **Secretary—** The term “[Secretary](/usc/42/242q–4.md?p=2)” means the [Secretary](/usc/42/242q–4.md?p=2) of Housing and Urban Development.
- (b) **Establishment of a grant program—**
  - (1) **Establishment—** Not later than 1 year after July 11, 2026, the [Secretary](/usc/42/242q–4.md?p=2) shall establish a program to award grants on a competitive basis to eligible entities that have increased their local housing supply.
  - (2) **List of eligible entities—** The [Secretary](/usc/42/242q–4.md?p=2) shall make a list of eligible entities publicly available on the website of the Department of Housing and Urban Development.
  - (3) **Eligible purposes—** An eligible entity receiving a grant under this section may use funds to—
    - (A) carry out any of the activities described in section 105 of the Housing and Community Development Act of 1974 ([42 U.S.C. 5305](/usc/42/5305.md));
    - (B) carry out any of the activities permitted under the Local and Regional [Project](/usc/42/13641.md?p=2) Assistance Program established under [section 6702 of title 49](/usc/49/6702.md); and
    - (C) carry out initiatives of the eligible entity that facilitate the expansion of the supply of attainable housing and that supplement initiatives the eligible entity has carried out, or is in the process of carrying out, as specified in the application submitted under [paragraph (4)](#b-4).
  - (4) **Application—**
    - (A) **In general—** An eligible entity seeking a grant under this section shall submit to the [Secretary](/usc/42/242q–4.md?p=2) an application that provides—
      - (i) a description of each purpose for which the eligible entity will use the grant, and an attestation that the grant will be used only for 1 or more eligible purposes described in [paragraph (3)](#b-3);
      - (ii) data on characteristics of increased housing supply during the 3-year period ending on the date on which the application is submitted, which may include whether such housing—
        - (I) serves households at a range of income levels; and
        - (II) has improved the quality and affordability of housing in the jurisdiction of the eligible entity;
      - (iii) a description of how each eligible purpose described in [clause (i)](#b-4-A-i) may address a community need or advance an objective, or an aspect of an objective, included in the comprehensive housing affordability strategy and community development plan of the eligible entity under part [91](/usc/24/91.md) of title 24, Code of Federal Regulations, or any successor regulation (commonly referred to as a “consolidated plan”); and
      - (iv) a description of how the eligible entity has carried out, or is in the process of carrying out, initiatives that facilitate the expansion of the supply of housing.
    - (B) **Initiatives—** Initiatives that meet the criteria described in [paragraph (3)(C)](#b-3-C) include, but shall not be limited to—
      - (i) increasing by-right uses, including duplex, triplex, quadplex, and multifamily buildings, in areas of opportunity;
      - (ii) revising or eliminating off-street parking requirements to reduce the cost of housing production;
      - (iii) revising minimum lot size requirements, floor area ratio requirements, set-back requirements, building heights, and bans or limits on [construction](/usc/42/300s–3.md?p=7) that allow for denser and more affordable development;
      - (iv) instituting incentives to promote dense development for communities where increased density is needed;
      - (v) passing zoning overlays or other ordinances that enable the development of mixed-income housing;
      - (vi) streamlining regulatory requirements and shortening processes, increasing code enforcement and permitting capacity, reforming zoning codes, or other initiatives that reduce barriers to increasing housing supply and affordability;
      - (vii) eliminating restrictions against accessory dwelling units and expanding their by-right use;
      - (viii) using local tax incentives or public financing to promote development of attainable housing;
      - (ix) streamlining environmental regulations;
      - (x) eliminating unnecessary manufactured-housing or cooperative housing regulations and restrictions;
      - (xi) minimizing the impact of overburdensome energy and water efficiency standards on housing costs; and
      - (xii) other activities that reduce the cost of [construction](/usc/42/300s–3.md?p=7), as determined by the [Secretary](/usc/42/242q–4.md?p=2).
  - (5) **Grants—**
    - (A) **In general—** The [Secretary](/usc/42/242q–4.md?p=2) shall make not fewer than 25 grants on an annual basis (unless amounts appropriated to provide grant amounts consistent with [subsection (b)](#b) are insufficient, in which case fewer grants may be awarded), with strong consideration of different geographical areas and a relatively even spread of rural, suburban, and urban communities.
    - (B) **Limitations on awards—** No grant awarded under this paragraph may be—
      - (i) more than $10,000,000; or
      - (ii) less than $250,000.
    - (C) **Priority—** When awarding grants under this paragraph, the [Secretary](/usc/42/242q–4.md?p=2) shall give priority to an eligible entity that has—
      - (i) demonstrated the use of innovative policies, interventions, or programs for increasing housing supply; and
      - (ii) demonstrated a marked improvement in housing supply growth, as needed.
    - (D) **Grant administration and terms—** [Projects](/usc/42/13641.md?p=2) assisted under this section for activities described in sector 23 of the North American Industry Classification System shall be treated as [projects](/usc/42/13641.md?p=2) assisted under the Community Development Block Grant program under title I of the Housing and Community Development Act of 1974 ([42 U.S.C. 5301](/usc/42/5301.md) et seq.).
- (c) **Rules of construction—** Nothing in this section shall be construed—
  - (1) to authorize the [Secretary](/usc/42/242q–4.md?p=2) to mandate, supersede, or preempt any local zoning or land use policy; or
  - (2) to affect the requirements of [section 12705(c)(1) of this title](/usc/42/12705.md?p=c-1).
- (d) **Sunset—** The program established under this section shall terminate on the date that is 7 years after July 11, 2026.
- (e) **Authorization of appropriations—**
  - (1) **In general—** There is authorized to be appropriated to carry out this section $200,000,000 for each of fiscal years 2027 through 2031.
  - (2) **Adjustment—** The amount authorized to be appropriated under [paragraph (1)](#e-1) shall be adjusted for inflation based on the Consumer Price Index for all Urban [Customers](/usc/42/7275.md?p=5) published by the Bureau of Labor Statistics of the Department of Labor.

## Source credit

(Pub. L. 119–101, title II, § 208, July 11, 2026, 140 Stat. 875.)

## Notes

### Editorial Notes

### References in Text

The Housing and Community Development Act of 1974, referred to in subsec. (b)(5)(D), is Pub. L. 93–383, Aug. 22, 1974, 88 Stat. 633. Title I of the Act is classified principally to chapter 69 (§ 5301 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables.