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NCSHA Washington Report | December 12, 2025

Published on December 12, 2025

NCSHA Washington Report - 2025

The explosive growth of large data centers, fueled by the AI investment boom, is increasingly on a collision course with a formidable foe well known to housing providers: NIMBYs.

The U.S. data center market, currently about $6.8 billion in size, is projected to grow 26 percent annually on its way to a $56 billion valuation in less than a decade. Hundreds of projects are in development. The Trump Administration, promising “a golden age for American manufacturing and technological dominance,” has pledged “federally owned land and resources” to continue the momentum.

But a public hearing this week in Palm Beach County (home to Mar-a-Lago), where county commissioners paused a proposed 200-acre complex after “hours of emotional public comment from more than 50 residents worried about nonstop low-frequency hums, heavy water consumption and long-term environmental impacts,” may illustrate a building trend.

Around the country at least 16 data center projects, representing $64 billion in planned investment, “have been blocked or delayed due to local opposition to rising electricity costs.” Even though data centers are only one reason why a lot of people are paying more for power, they are both a primary cause in some places — electricity costs have spiked as much as 267 percent compared to five years ago in areas located near significant data center activity, according to Bloomberg — and highly visible targets.

Ratepayers typically see their bills go up to fund the necessary infrastructure, then remain on the hook to cover costs even if the center isn’t built, eventually closes, or needs much less electricity than projected. To a lot of people already fed up with higher prices, that sounds like “heads you win, tails I lose.”

AI companies push back on this, saying new centers can result in lower rates because fixed grid costs can be spread across more customers. And officials in many red and blue states have been willing to offer developers generous incentives in return for higher tax revenues they believe will outweigh increased utility bills.

It’s hard to tell what the data center boom might mean for housing. Research after the Great Recession implied that higher home energy bills could lead to higher mortgage delinquency rates. A Carlyle research note in August suggested AI companies’ seemingly insatiable demand for investment capital could be putting upward pressure on interest rates. Brookings Institution analysts speculate that areas with substantial data center construction could see slower building approvals (until their energy supply catches up) and delays in housing construction (if workers are pulled from home-building sites to larger center jobs).

Bill Fulton makes a broader point, observing that, about data centers, one can say: “They consume all your land, electricity, and water; they raise health and safety concerns among neighbors; and although they produce lots of property tax revenue they don’t produce very many jobs. What a deal! Except they need to be somewhere.”

This week the Wall Street Journal reported Elon Musk and Jeff Bezos are “racing to take the trillion-dollar data center boom” to the one place where, presumably, the NIMBYs can’t stop it: outer space.

Stockton-Williams-Washington-ReportStockton Williams | Executive Director

In This Issue

      • Arrington Appointed Arkansas DFA President
        The Arkansas Development Finance Authority (ADFA) Board of Directors has selected Robert “Ro” Arrington as the agency’s next president. Arrington joined ADFA in 2014 and most recently held the position of vice president of homeownership and public finance while serving as interim president. He is a former municipal securities principal with more than 25 years of public finance experience. Arrington assumes the role immediately, succeeding Mark Conine, who stepped down in August.

        Financial Services Committee Leaders Release Bipartisan Housing Legislation After House Passes NDAA Without ROAD to Housing Provisions
        House Financial Services Committee leaders Thursday night released the Housing for the 21st Century Act, a bipartisan housing package that includes provisions designed to foster housing production and affordability by amending the HOME Investment Partnerships Program and other federal housing programs, incentivizing U.S. Department of Housing and Urban Development (HUD) funding recipients to streamline burdensome land use policies, and promoting regulatory relief and simpler program administration rules.

        Several of the bill’s provisions are similar to provisions included in the ROAD to Housing Act, which the Senate included in its version of the National Defense Authorization Act (NDAA) earlier this year but congressional leaders rejected from the final version of the NDAA the House passed this week, despite vigorous efforts from numerous housing advocates, including NCSHA and many HFAs.

        While the Housing for the 21st Century Act includes the HOME Reform Act sponsored by Housing and Insurance Subcommittee Chair Mike Flood (R-NE) and Ranking Member Emanuel Cleaver (D-MO), it does not include several other policy changes NCSHA is seeking. Specifically, the bill does not raise the limit on banks’ public welfare investments, codify the decoupling of rural rental assistance from rural housing mortgages, or enact the Whole Home Repair Act to allow states and other eligible grantees to provide grants and forgivable loans to homeowners and small landlords seeking to make home repairs. All these are NCSHA priorities included in the ROAD to Housing Act.

        The bill also does not include draft legislation Flood is leading to exempt various HUD and U.S. Department of Agriculture programs from Build America Buy America requirements (other than a limited HOME exemption included in the bill), which NCSHA supports.

        Next week the committee will mark up the legislation, which was introduced by Financial Services Committee Chair French Hill (R-AR), committee Ranking Member Maxine Waters (D-CA), Flood, and Cleaver. In a statement issued after House passage of the NDAA, Hill said he hopes to negotiate a final bill with the Senate and see it enacted next year. With the bill text, the committee also released a section-by-section summary and one-page description.

        HUD Withdraws CoC NOFO, Pledges Revisions
        Earlier this week, HUD withdrew the notice of funding opportunity (NOFO) for fiscal year 2025 Continuum of Care (CoC) resources it published last month, just before a scheduled court hearing for two lawsuits challenging the NOFO (one on behalf of attorneys general and governors in 21 states and the other on behalf of various local governments and nonprofit organizations). As NCSHA previously reported, the NOFO would have established new rules limiting the amount of funds available for project renewals and permanent supportive housing (PSH), instead using the majority of funds for a competitive program that would prioritize transitional housing and programs that incorporate work requirements and/or require participants to accept services as a condition of assistance.

        HUD intends to reissue a revised NOFO soon addressing issues raised by the plaintiffs in their suits. NCSHA and our HFA members, in partnership with leading homelessness advocacy organizations, have been advocating for Congress to include language in the Transportation, Housing and Urban Development, and Related Agencies FY 2026 appropriations legislation that would direct HUD to renew existing PSH contracts for 12 months.

        HUD Announces FY25 Housing Trust Fund Allocations
        On Monday, HUD announced more than $223 million will be granted to the 50 states, the District of Columbia, and Puerto Rico through the fiscal year 2025 Housing Trust Fund (HTF) round of allocations. American Samoa, Guam, Northern Marianas, and U.S. Virgin Islands declined their FY25 allocations. Total allocations increased by $9 million, or more than 4 percent, over FY24 funding levels.

        Grantees will use the funding to increase and preserve rental housing supply for families earning between 0 and 50 percent of area median income, including families experiencing homelessness. HTF grants also can be used to increase homeownership opportunities for extremely low-income and very low-income families. Here is a breakdown of FY25 grant amounts for states and territories.

        Justice Department Eliminates Disparate Impact Liability from Civil Rights Act Regulations
        On December 10, the Department of Justice (DOJ) issued a final rule amending regulations related to implementation of Title VI of the Civil Rights Act to eliminate disparate impact liability as it relates to DOJ programs. Disparate impact liability is the legal theory prohibiting seemingly facially neutral policies that cause a disproportionate negative impact on protected classes, as opposed to more explicitly discriminatory policies and practices.

        The rule pertains only to Title VI and not the Fair Housing Act (Title VIII of the Civil Rights Act); as such, it does not directly impact federal housing programs or address the 2015 Supreme Court case that upheld disparate impact as cognizable under the Fair Housing Act. However, it is reasonable to expect other federal departments may coordinate with DOJ on future adjustments to regulations, particularly as an executive order issued by the White House earlier this year stated, “It is the policy of the United States to eliminate the use of disparate impact liability in all contexts to the maximum degree possible…”.

        Senate Confirms Nominations for Key HUD Posts
        The U.S. Senate yesterday voted to confirm four nominees for HUD leadership positions: Frank Cassidy as Federal Housing Administration Commissioner and Assistant Secretary of Housing, Joseph Gormley as President of Ginnie Mae, Ben Hobbs to serve as HUD Assistant Secretary for Public and Indian Housing, and Ronnie Kurtz as HUD Assistant Secretary for Community Planning and Development. The nominations were included in a package of 97 nominees approved via a single party-line vote of 52–47, with all Republicans present voting in support and all Democrats opposed. NCSHA previously voiced support for Cassidy’s and Gormley’s nominations.

        Also approved as part of the package was Travis Hill’s nomination to serve as Chair of the Federal Deposit Insurance Corporation.

        HUD Publishes 2026 FHA Forward Purchase Mortgage Limits
        On Thursday, the Federal Housing Administration (FHA) released Mortgagee Letter 2025-23 providing the maximum mortgage limits for FHA-insured Title II forward mortgages for calendar year 2026, which are calculated as a percentage of the national conforming loan limit. Next year, the FHA low-cost area “floor” for one-unit properties will be $541,287, and the high-cost area “ceiling” for a one-unit property will be $1,249,125. For Alaska, Hawaii, Guam, and the U.S. Virgin Islands, a higher ceiling of $1,873,625 applies. The new loan limits will be effective for case numbers assigned on or after January 1, 2026.

        FHA forward mortgage limits for individual MSAs and counties can be found here. Additional information, including the 10 jurisdictions where the loan limit decreased, is available here.

        Looking Ahead

        Legislative and Regulatory Activities

         

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