FRAMER Act

The FRAMER Act, HR7282, amends Section 104 of the Housing and Community Development Act of 1974. It mandates that states, to receive federal funds under this title, must provide payments to builders of covered dwelling units in Opportunity Zones. These payments cover the difference between the cost of the state's energy housing code and the Department of Housing and Urban Development's Minimum Energy Standard. This mechanism directly reduces the cost burden on homebuilders operating in these zones, making construction more profitable and encouraging new development. The bill also requires disclosure to the first buyer regarding these cost differences. The money trail is direct: states receive federal funds under the Housing and Community Development Act of 1974. If a state's energy codes exceed HUD's Minimum Energy Standard, the state must then reimburse builders for the cost difference to remain eligible for those federal funds. This creates a direct financial incentive for states to either align their energy codes with HUD's minimum or to directly subsidize builders for the additional costs. This mechanism effectively transfers a portion of construction costs from homebuilders to state budgets, which are then backfilled by federal allocations. Companies engaged in residential construction within Opportunity Zones are positioned to capture these reimbursements. Historically, legislative efforts to reduce housing construction costs have stimulated the housing market. For example, when the American Recovery and Reinvestment Act of 2009 included provisions for housing tax credits and incentives, homebuilder stocks like $DHI and $LEN saw significant rebounds in 2009 and 2010. While not a direct comparison, the principle of reducing builder costs through federal mechanisms has historically led to increased construction and improved builder profitability. The current bill focuses on energy codes, a specific cost driver. Specific winners are large-scale homebuilders with active projects or land holdings in Opportunity Zones. These include $LEN (Lennar Corporation), $DHI (D.R. Horton, Inc.), $PHM (PulteGroup, Inc.), $NVR (NVR, Inc.), and $TOL (Toll Brothers, Inc.). These companies will see reduced construction costs for qualifying projects, directly boosting their margins and potentially increasing their development pipelines in Opportunity Zones. There are no clear losers, as the bill aims to reduce costs for builders and potentially lower prices for consumers. This bill has been referred to the House Committee on Financial Services. As it is an introduced bill, it must pass through committee, then the full House, then the Senate, and finally be signed by the President. The earliest impact on builder financials would occur after enactment and subsequent state implementation, likely 12-18 months from now if it progresses quickly. The sponsor, Rep. Crank, is a Republican from Colorado, and the bill has two cosponsors, indicating initial, but not overwhelming, support.