How the ROAD to Housing Act changes environmental review for HUD-funded housing

Three sections of the 21st Century ROAD to Housing Act shorten or shift the federal environmental review that HUD-funded housing has to clear. One of them names office-to-housing conversions directly.

Checked against the enacted text of Public Law 119-101 · Updated September 14, 2026

At a glance

What changes: Federal environmental review under the National Environmental Policy Act (NEPA) for housing that uses HUD money. Federal involvement, such as HUD funding, is what triggers that review.
Section 205: Lets HUD designate more of its assistance so that state and local governments, and now tribes, carry out its environmental reviews themselves.
Section 206: Directs HUD to move many housing activities into exempt or categorically excluded review, including conversions of existing office buildings into housing.
Section 501: Makes four kinds of HOME-funded projects exempt from NEPA review by statute, including rehabilitation, and limits repeat reviews when funding sources change.
When: Section 205 applies to money appropriated after July 11, 2026. Section 206 applies once HUD issues rules, and only to money appropriated after they take effect. Section 501 gives HUD a year from enactment to issue its rules.
Where they came from: Section 205 began as H.R. 4810, from Rep. Sam Liccardo (D-CA) with Rep. Mike Flood (R-NE). Section 206 began as H.R. 4660, from Rep. Flood with Rep. Liccardo.

Section 206: three lighter review tiers

Section 206 directs HUD, through notice-and-comment rulemaking, to reclassify housing activities into three categories modeled on its environmental rules as they stood on January 1, 2025.

The two excluded tiers apply only when an activity does not materially alter environmental conditions and does not materially exceed the project’s original scope.

Exempt

Like HUD's “exempt activities,” 24 CFR 58.34

The lightest treatment: no environmental assessment.

Tenant-based rental assistance
Supportive services, such as health care, housing placement and short-term rent or utility payments
Operating costs, such as maintenance, security and utilities
Economic development activities not tied to construction
Help for homebuyers, such as closing costs and down payment assistance
Affordable housing predevelopment costs with no physical impact, such as site options and zoning approvals
Approval of supplemental assistance to a project HUD already approved
Emergency repair or replacement of HVAC, water heaters and other required utilities

Categorically excluded, no related-law review

Like 24 CFR 58.35(b) and 50.19

No environmental assessment, and the related federal laws in 24 CFR 58.5 are not separately reviewed.

Repair or reconstruction of public facilities and improvements, other than buildings, that stay in the same use with no more than a 20% change in size or capacity
Rehabilitation of residential buildings with one to four units, and their existing utility connections
New construction or acquisition of up to four scattered-site homes, with no more than four on any one site
Acquisition, leasing or disposition of existing structures or vacant land that stay in the same use

Categorically excluded, related laws still apply

Like 24 CFR 58.35(a) and 50.20

No environmental assessment, but related federal laws, such as historic preservation and floodplain rules in 24 CFR 58.5, still have to be checked.

Conversion of existing office buildings into residential development, up to a number of units HUD will set and with no more than a 20% change in building size
New construction or acquisition of 5 to 15 homes on a site
Scattered-site projects of 15 or more homes with no more than 15 on any one site, spaced as HUD determines
Rehabilitation of residential buildings with 5 to 15 units, if density stays at 15 or fewer and land use does not change
Infill projects of new construction, rehabilitation or development of housing
Acquisition of open space or residential property to help residents move out of a high-risk area
Voluntary acquisition of properties in floodways, floodplains or similar areas affected by a threat that a federally declared disaster caused or worsened

Office-to-housing conversions get their own line. Conversion of existing office buildings into residential development moves into the third tier, subject to a maximum number of units HUD will set and a limit of 20% on the change in building size. That means no environmental assessment, but historic preservation, floodplain and the other related-law checks still apply.

The changes apply only to funds appropriated after HUD’s new rules take effect, and not to a project that combines funds appropriated before and after that date. Section 206 sets no deadline for those rules. Starting two years after enactment, HUD must report to Congress each year for five years on how much review time and administrative cost the changes save.

For Section 206, an infill project is one within a municipality, served by existing utilities and public services, on previously disturbed land of no more than 5 acres substantially surrounded by residential or commercial development, that repurposes a vacant or underused parcel or a dilapidated or abandoned structure for a residential or commercial purpose.

Section 205: letting state, local and tribal governments run the review

Section 205, the BUILD Housing Act, lets HUD hand more of its environmental review work to the governments closest to a project.

It allows HUD to designate assistance it administers as funds for a “special project” under section 305(c) of the Multifamily Housing Property Disposition Reform Act of 1994, the provision under which a state or local government can take on HUD’s environmental review responsibilities. The designation does not apply where another law already sets the review procedure for that assistance. The section also adds federally recognized tribes to the governments that can take on the reviews.

It applies only to funds appropriated after July 11, 2026, and not to a project that combines funds appropriated before and after that date.

Section 501: HOME projects exempt by statute

The HOME reforms in Section 501 go further than Section 206 for projects that use HOME money: four categories become statutorily exempt from NEPA review.

New construction infill housing projects
Acquisition of real property for affordable housing
Rehabilitation projects under HOME’s eligible uses
New construction projects of 15 units or fewer

Section 501 also directs HUD, to the extent practicable and permitted by law, not to require a second review of a project solely because another source of federal money is added, swapped or reallocated, as long as its scope, scale and location stay substantially the same. HUD must coordinate environmental reviews with other federal agencies by regulation, and issue rules for these changes within a year of enactment. For HOME, an infill housing project is a residential project within a municipality, served by existing utilities, on previously disturbed land of no more than 5 acres, and substantially surrounded by residential or commercial development. Other HOME changes →

What this means for office-to-housing conversions

Once HUD writes its rules, a HUD-funded conversion of an existing office building can skip a full environmental assessment, as long as the building’s size changes by no more than 20% and the project stays under HUD’s unit cap. Historic preservation and the other related-law reviews remain, and many downtown office buildings are old enough for historic review to matter.

Every conversion this site models stays inside the existing building, so the 20% size limit would not be what stops any of them. The unit cap could be. HUD has not set it, and the 18 buildings in downtown San José that would pencil only with a RESIDE grant would each create between 49 and 319 homes.

A conversion with no federal money does not go through HUD’s environmental review at all; these changes matter for projects that use HUD programs such as HOME, CDBG or a future RESIDE grant.

Questions

What does the ROAD to Housing Act change about environmental review?

Three sections change federal NEPA review for HUD-funded housing. Section 205 lets HUD designate more of its assistance so state, local and tribal governments carry out the review. Section 206 directs HUD to move many housing activities, including conversions of existing office buildings, into exempt or categorically excluded review. Section 501 makes four kinds of HOME-funded projects, including rehabilitation and new construction of 15 or fewer homes, exempt from NEPA review by statute.

Are office-to-residential conversions exempt from NEPA under the ROAD to Housing Act?

Not fully. Section 206 directs HUD to treat conversions of existing office buildings into residential development as categorically excluded from an environmental assessment, but still subject to related federal laws such as historic preservation review. The conversion can change the building's size by no more than 20% and must stay under a unit cap HUD will set, and the rule applies only to HUD funds appropriated after HUD's new rules take effect.

When do the ROAD to Housing Act's environmental review changes take effect?

Section 205 applies to funds appropriated after the Act became law on July 11, 2026. Section 206 applies only after HUD issues rules and only to funds appropriated after those rules take effect; the section sets no deadline for them. Section 501 requires HUD to issue its HOME rules within a year of enactment. Projects that mix older and newer funds are left out of the Section 205 and 206 changes.

Who wrote Sections 205 and 206 of the ROAD to Housing Act?

Section 205, the BUILD Housing Act, began as H.R. 4810, introduced by Rep. Sam Liccardo (D-CA) with Rep. Mike Flood (R-NE) on July 29, 2025. Section 206, the Unlocking Housing Supply Through Streamlined and Modernized Reviews Act, began as H.R. 4660, introduced by Rep. Flood with Rep. Liccardo on July 23, 2025.

Sources

More on the law: The ROAD to Housing Act explained · CDBG and HOME changes · Opportunity Zones