The state mandates that some of the allocation go too "affordable housing" and that the placement of said housing is not obviously redlined (e.g. you can't just dump some flophouses on an abandoned military base and call that an affordable housing solution). The state does not mandate rent control, and not all cities with huge housing needs pursue rent control. So yes, there's a shape to the stare-level intervention, but nothing as draconian as you describe.