Legislative Proposal: The Modest Growth Allowance Act – N.Y.U. Journal of Legislation & Public Policy

By John Overstreet

August 28, 2025

Housing reformers face a quandary: addressing the affordability crisis requires expansion of supply in areas where it is currently heavily restricted by law, namely suburbs. However, suburban voters typically oppose reforms that would allow denser development in their neighborhoods, which makes reform at the state level difficult. The failure of Governor Kathy Hochul’s proposed New York Housing Compact legislation in 2023 illustrates this dynamic.¹

I propose a state-level housing reform designed to significantly expand housing supply, especially in suburban areas, without provoking intense political opposition. To avoid pushback, the Act’s title is phrased in modest terms,² and its structure seeks to minimize the incidence of dramatic, visible changes to the built environment. Instead, the goal is broadly distributed and sustainable growth that accumulates into the large supply increase that scholarship tells us is necessary to address the housing affordability crisis.³

The Act’s structure draws from the builder’s remedy policies that numerous states have adopted as a tool to expand access to affordable housing in the suburbs. Broadly speaking, builder’s remedy policies consist of (1) a requirement that each municipality in the state meet some specified housing affordability goal, and (2) an enforcement mechanism in which non-compliant municipalities are subject to suits by developers, which if successful exempt developments containing affordable housing from zoning regulations.⁴ The affordability requirement may be either a flat numerical requirement uniformly applicable to all municipalities (e.g., 10% of housing units in the municipality must be affordable) or specifically tailored to each municipality through some methodology intended to achieve a fair distribution of the affordable housing.⁵

The basic idea behind the scheme is that municipalities are encouraged to plan for affordable housing on their own, in a way that makes sense for their local circumstances. If they fail to do so, the state claws back some of the zoning power it delegated to the local government in order to allow affordable housing development. My proposed Act would have the same structure, but with the following important changes. First, the overall goal is to increase housing supply generally (at any income level), which should serve to improve affordability at all levels over time.⁶ Second, the enforcement mechanism would encourage more broadly distributed growth, rather than isolated large developments that infuriate neighbors and lead to political backlash.⁷

More concretely, the Act would require that each municipality’s zoning ordinance allow for some specified growth amount in the number of households that can live there. Every few years, the state would collect data on each municipality’s average household size and review its zoning ordinance to determine whether it allows room for new housing to accommodate, say, five percent more households. If it does, the municipality can keep its zoning ordinance as is. My assumption here is that if developers legally could be building more in the municipality, but are not, that is prima facie evidence that the housing shortage in that municipality is not strong enough to warrant state intervention. Municipalities that have housing developed up to the full legal capacity are presumptively experiencing a shortage.

The state would need a sophisticated methodology for determining what the zoning ordinance realistically allows for, because municipalities could strategically design their zoning ordinances to, for example, legally permit lots of housing in a place where development is infeasible due to features of the terrain. This is a manageable task for the state,⁸ and with time, enforcing administrative bodies and courts would become adept at recognizing bad faith attempts by municipalities to avoid the obligation.

What, then, happens to municipalities that fail to zone for the requisite additional housing? My innovation is that the penalty should be a municipality-wide, but modest, zoning liberalization. The template for this is the acts recently enacted in a few states that require municipalities to permit middle housing (e.g., duplexes and triplexes) wherever single-family homes are permitted.⁹ Instead of a statewide requirement of this type, my proposed Act would impose it only on noncompliant municipalities. Municipalities are therefore faced with the choice of allowing for modest growth on their own terms or being forced to permit modest growth wherever developers choose. But unlike with the builder’s remedy, there is no possibility of a large apartment complex suddenly appearing in the midst of a single-family neighborhood, which should assuage suburbanite fears.¹⁰

Each adopting state would select the precise contours of the enforcement mechanism based on its own housing market and existing law. For example, a state that has already adopted a baseline requirement of allowing duplexes everywhere could require noncompliant municipalities to allow quadplexes. If appropriate, the Act could be updated in the future to make sure the contrast between the existing landscape and what the enforcement mechanism requires is strong enough for it to be an effective stick.

An advantage of the Act’s design is that, assuming the Act itself is held to be constitutional, there should not be much opportunity for litigating its application to each municipality. The administrative determination of whether the municipality is compliant is factual and so should be treated deferentially by courts, even after Loper Bright.¹¹ Once the municipality is determined not to be compliant, the application of the enforcement mechanism is straightforward, assuming it is clearly drafted; there is little opportunity for an aggrieved neighbor to challenge development on a specific lot based on the statute.

In summary, the Modest Growth Allowance Act sets up a framework that allows for a continued push toward more housing development in the suburbs, but with several features that make it more palatable to suburban voters. First, if the municipality’s housing supply appears to already meet demand, no changes are required. Second, if growth is required, the municipality has an opportunity to plan for it on its own terms by revising its zoning ordinance. Finally, if the municipality fails to accommodate growth on its own, the state-imposed modification is designed so that no individual experiences a dramatic change to their neighborhood: permitted development increases only incrementally.

Of course, the Act’s modesty is also a drawback, in that it is a gradualist approach to an immediate crisis. However, since it compels growing municipalities to continually update their zoning ordinances to allow for more development, it promotes sustained growth and mitigates the likelihood of a new political fight with each change. In the long term, this approach may be more viable than a more dramatic reform that opponents can portray as radical.

John Overstreet, J.D. Class of 2025, N.Y.U. School of Law.

Suggested Citation: John Overstreet, Legislative Proposal: The Modest Growth Allowance Act, N.Y.U. J. Legis. & Pub. Pol’y Quorum (2025).

1
See Eric Kober, Why Gov. Hochul’s New York Housing Compact Failed, N.Y. Post (May 27, 2023), https://nypost.com/2023/05/27/why-hochuls-new-york-housing-compact-failed/ [https://perma.cc/3M8J-9B6H].
2
See Matthew Yglesias, There’s No Need to Exaggerate Biden’s Legislative Achievements, Slow Boring (Aug. 11, 2021), https://www.slowboring.com/p/theres-no-need-to-exaggerate-bidens [https://perma.cc/A2B3-JRAE] (arguing that describing legislation as moderate makes it more politically durable because “lots of people don’t particularly want sweeping policy change.”).
3
See generally Vicki Been et al., Supply Skepticism Revisited, 35 Housing Pol’y Debate 96 (2024).
4
For two paradigmatic examples of builder’s remedy policies, see Mass. Ann. Laws ch. 40B, § 20–23 (2024) (Massachusetts’s model, more or less copied by Connecticut, Rhode Island, and Illinois) and S. Burlington Cnty. NAACP v. Mount Laurel Twp., 456 A.2d 390, 420 (N.J. 1983) (New Jersey’s judicially-created Mount Laurel doctrine, which has since been bolstered by legislation).
5
See ch. 40B, § 20 and Mount Laurel, 456 A.2d at 420. Massachusetts’s Chapter 40B takes the former approach, while the Mount Laurel doctrine takes the latter. California also takes the bespoke approach. See Cal. Gov’t Code §§ 65589.5(d)(1), 65584.01 (Deering 2023).
6
See Supply Skepticism Revisited, supra note 3 at 103–106.
7
Demonstrating the potential for political opposition to these policies, a ballot measure to repeal Massachusetts’s Affordable Housing Law in 2010 garnered 42% of the vote. See Robert Foster, Voters Reject Ballot Question to Repeal Chapter 40B, LexBlog (Nov. 3, 2010), https://www.lexblog.com/2010/11/03/40b-repeal-defeated/ [https://perma.cc/END6-N5WG]; see also Ellen Callahan, Note, Will an Increase in Profits Increase Affordable Housing? Examining the Limited Dividend Requirement of Chapter 40B of the Massachusetts General Laws, 50 Suffolk U. L. Rev. 649, 653, n.30 (2017).
8
New Jersey courts and regulators have developed standards to deal with this sort of behavior as part of its Mount Laurel regime. See Peter Buchsbaum, Affordable Housing and the Mount Laurel Doctrine: Lessons Learned, 57 Willamette L. Rev. 201, 216 (2021).
9
See, e.g., Me. Rev. Stat. Ann. tit. 30-A, § 4364-A (2025); Mont. Code Ann. § 76-2-304 (2025).
10
Admittedly, even allowing for duplexes is enough to strike terror into some hearts. See, e.g., Montanans Against Irresponsible Densification, LLC v. State, 418 Mont. 78, 82 (2024) (quoting a member of the plaintiff organization, “I dread the possibility of waking up one morning and finding that one of my neighbors has sold her property to a developer who is then erecting a multi-unit building or a duplex, or an accessory dwelling unit right next to our nice and carefully maintained single-family dwelling.”)
11
Loper Bright Enters. v. Raimondo, 603 U.S. 369, 392 (2024) (“Section 706 does mandate that judicial review of agency policymaking and factfinding be deferential.”). While Loper Bright is controlling only for review of federal agency decisions, state courts may choose to adopt the same standard for state agency decisions. See Jack Jones & Kate Welty, Ins’t for Pol’y Integrity, Loper Bright and the End of the Chevron Doctrine (2024), https://policyintegrity.org/publications/detail/loper-bright-and-the-end-of-the-chevron-doctrine (noting that “state courts that followed Chevron voluntarily may reassess their decision to do so” in response to Loper Bright).