Study says red tape takes a toll on affordable housing

Outdated, exclusionary and unnecessary government regulations continue to block the construction and rehabilitation of affordable housing in many parts of the country, according to “Why Not in Our Community?” a report from the Department of Housing and Urban Development.

The report — part of HUD’s America’s Affordable Communities Initiative and the department’s first substantive examination of the impact of regulatory barriers on affordable housing since its 1991 publication, “Not in My Backyard” — also finds that many communities are actively removing barriers and promoting the production of housing that was formerly beyond the reach of many working families.

“This report is a call to action for government at every level to rethink its approach to affordable housing and begin asking, ‘why not?’” said HUD Secretary Alphonso Jackson. “All of us need to raise the level of common sense to make sure we don’t create man-made obstacles that close doors on the very people who should be our neighbors.”

On hand for the Feb. 14 release of the report in Washington, D.C., NAHB First Vice President David Pressly said that removal of regulatory barriers remains a top priority of the nation’s homebuilders as they pursue efforts to increase the supply of affordably priced housing for teachers, police, firefighters, nurses and other essential employees in the communities where they work.

“In many areas of the country, the time required to obtain development approvals has gone from a few months to two years or more, and standards are often inconsistent, conflicting and excessive,” Pressly said.

These needless barriers and delays, Pressly said, can increase home costs by as much as 25 percent nationwide, preventing as many as 11.8 million households from buying the median-priced home.

“All too often it is the nation’s hard-working families who bear the burden of higher home prices,” he said. He cited a 2004 NAHB study finding that only one-third of the homes in the nation’s 25 largest metropolitan areas are affordable to essential workers and that workers with service and retail jobs fare even worse.

Higher-density zoning

Recent analysis by NAHB shows how the cost of regulatory barriers is making housing unaffordable for significant numbers of families in specific states and metropolitan areas:

• In California, assuming that 25 percent of the cost of the $479,000 median-priced new home is attributable to regulatory barriers, only about 1.8 million of the state’s households have the almost $132,000 income needed to qualify for purchasing that home with a 10 percent down payment and a 6 percent mortgage. When the cost of those regulatory barriers is deducted, the median-priced home falls in price by about $96,000, to $383,000, which 2.8 million families can afford, a difference of more than one million households.

• In Chicago, the median-priced $318,000 home drops to $254,000, a savings of almost $64,000, when the 25 percent cost of regulatory barriers is removed, and an additional 332,000 households can afford to buy it.

• The same analysis finds that 83,000 households are prevented from affording a median-priced home by regulatory barriers in Las Vegas and almost 181,000 in Atlanta.

Pressly said that NAHB would continue to battle “Not-in-My-Backyard” policies at the state and local levels that are designed to create what he called a “no-growth” environment.

“‘No growth’ simply can’t be tolerated in any part of our nation,” he said.

A constructive alternative to exclusionary zoning and other strict growth controls, he said, is the adoption of “smart growth planning policies that accommodate the demand for new housing, including higher-density zoning and infill development, while protecting environmentally sensitive areas.”

Conceding that builders are facing formidable regulatory obstacles in today’s housing marketplace, the HUD report also cites several successful state and local efforts to reduce those barriers, including:

• Creation of a one-stop permitting system and an expedited system to process state permits for affordable housing projects in Florida

• Creation in Minnesota of a new property tax classification to encourage property owners to preserve and create affordable housing

• A new housing rehabilitation code in New Jersey that has decreased rehab costs by 25 percent and increased rehab activity by the same percentage

• Streamlining in Tucson, Ariz., that allows small subdivisions meeting certain criteria to only undergo a final plan approval process

• A one-stop permit center in Berkeley, Calif., that has reduced the time required to review development projects

• Approval or disapproval for plans for small projects of up to 20 units in Cincinnati within eight to 10 days after they are submitted.

Pressly also recommended HUD’s Regulatory Barriers Clearinghouse as a resource for builders, planners and government officials who are seeking information on overcoming regulatory barriers.

Michael Beaudry is president of the Home Builders & Remodeler Association of New Hampshire.

Categories: News