Substitute House Bill No. 5396 introduces a streamlined process for municipalities to consider affordable housing developments proposed by religious organizations on their own land, effectively overriding conflicting zoning regulations. The bill defines "religious organization affordable housing development" as projects where at least 20% of the dwelling units are subject to affordable housing deed restrictions. It establishes criteria for these developments, including density limits, height restrictions, and setback requirements, while also allowing for off-street parking requirements if the development is situated more than half a mile from public transit. Certain properties, such as those owned by a religious organization for less than three years or located in flood hazard areas, are exempt from this summary review process.

The bill mandates that municipalities must make a decision on applications within 90 days, with possible extensions, and clarifies that the property will not be exempt from taxation unless specific criteria are met. It also specifies that to qualify as a religious organization affordable housing development, at least 20% of the units must be deed-restricted for a minimum of 40 years for individuals earning no more than 60% of the area or state median income. The legislation aims to facilitate affordable housing development while maintaining local zoning authority and community standards, ensuring that developments do not involve the demolition of historically significant properties without approval.