05-19-05 Item 2CITY OF SOUTH MIAMI
OFFICE OF THE CITY MANAGER
INTER- OFFICE MEMORANDUM
To: Honorable Mayor, Vice Mayor
& Commissioners
From: Maria Davis
City Manager
South Miami
bllhd
All- America City
2001
Date: May 19, 2005
ITEM No.
RE: Affordable Housing Workshop
BACKGROUND
The City Commission at its April 9, 2005 meeting adopted Ordinance No. 08 -05 -1830
(attached) amending the City Code by creating a five member "Affordable Housing Advisory
Committee" appointed by the Mayor with the consent of the City Commission. The Committee
is to exist for one year and its duties are to advise the Planning Board, the CRA, and the City
Commission on potential affordable housing projects and possible housing incentives legislation
which would achieve affordable housing goals set forth in the City's Comprehensive Plan. There
are currently several entities which have a role in either developing or implementing affordable
housing in South Miami. These are:
City Commission:
Final authority to act upon affordable housing issues including actual funding of projects,
negotiating agreements with developers, adopting incentive legislation and adopting goals and
policies related to affordable housing in the Comprehensive Plan.
Planning Board:
oard:
The preparation, amendment and updating of the Comprehensive Plan is the responsibility of the
South Miami Planning Board which serves as the official Local Planning Agency. The Board is
responsible under State Law for formally recommending policies and programs to meet
established goals for affordable housing. The City's current affordable housing policies are set
forth on pp. 97 -100 of the Comprehensive Plan (attached). This section was updated and adopted
into the Comprehensive plan in March, 2000, as part of a State requirement that all governments
update their housing chapter to respond to the affordable housing issue.
The Florida Department of Community Affairs accepted the City's goal to provide 25% or 280
units of affordable housing by the year 2010. The Comprehensive Plan then sets forth in very
specific terms how the City plans to meet this goal (Housing Objective 1.3) and the
implementation policies related to affordable housing.
The Planning Board is now in the process of evaluating the Comprehensive Plan (EAR) and it can
be expected that goals and implementing tools for providing affordable housing will be updated.
(2)
Community Redevelopment Agency:
CRA has the authority within the CRA designated area to plan for and implement affordable
housing programs. The CRA Redevelopment Plan adopted in 1999 includes a section on
affordable housing policies (attached). There is a list of ten policies including specific
expenditures for developing and encouraging affordable housing programs.
SPECIAL ATTACHMENT
A very recent publication of the U.S. Department of Housing and Urban Development entitled
"Why Not in our Community? Removing Barriers to Affordable Housing" is an excellent
summary of the issues related to affordable housing and how different agencies are responding.
COMMITTEE WORK PROGRAM
It is suggested that the Advisory Committee meet as soon as possible. The following schedule is
suggested:
Phase I — Organizational
A. Determine Chair, Vice Chair, meeting schedule.
B. Establish a work program
Phase H- Educational
A. Presentations on affordable housing programs currently being undertaken by:
• State of Florida
• South Florida Regional Planning Council
• Miami Dade Housing Authority.
B. Presentations from private non - profit and other public agencies working in the affordable
housing field.
Phase III - Open Forum(s)
A. Conduct one or more open forums inviting South Miami citizens to discuss needs and /or to
present ideas related to affordable housing.
Phase IV— Establish South Miami Program
A, Determine a preliminary program for affordable housing for the City, including realistic goals,
specific projects, and legislative actions.
Attachments
Ordinance No. 08 -05 -1830
Comp Plan Excerpt on Affordable Housing
CRA Plan Excerpt on Affordable Housing
U.S. Department of Housing and Urban Development document
MD /DOD /SAY -
EXomm Items\2005 \5 -19 -05 W \Afford Housing Bd Report.doe
ORDINANCE NO. 08-05-1830
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO BOARDS;
AND CREATING SEC. 2 -26.11 ENTITLED "THE AFFORDABLE
HOUSING ADVISORY COMMITTEE "; PROVIDING FOR
SEVERABILITY, ORDINANCES IN CONFLICT AND AN EFFECTIVE
DATE.
WHEREAS, the City of South Miami 'Comprehensive plan encourages the
development of affordable housing in order to respond to the housing needs of the
community; and,
WHEREAS, private industry alone has not generated sufficient affordable housing
units to meet community needs and achieve the City's goal of assuring .the "availability
of sound and affordable housing" for all City of South Miami residents; and
WHEREAS, an affordable housing advisory committee created for the general
purpose of researching effective affordable housing measures implemented in other
municipalities and acting as a local resource to the City will help the City respond to
community needs;
NOW THEREFORE BE IT ORDAINED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA;
Section 1. The City of South Miami does hereby establish the Affordable
Housing` Advisory Committee.
Section 2. Sec. 2.26.11 of the City of South Miami Code is created to read:
Sec.2.26.11 The Affordable Housing Advisory Committee
(a) Created, composition. There is hereby created The Affordable
Housing Advisory Committee. The Committee shall consist of five members.
(b) Appointment and qualifications of Members. The Mayor with the advice
and consent of the Commission shall be responsible for appointing the members to
serve on the Committee.
(c) Change in number of members. The number of persons serving on the
Committee may be increased or decreased by the city commission. In the event of
Additions shown by underlining and deletions shown by ^vefstf
Page 1 of 3
Ord. No. 08 -05 -1830
a change in members, the number of members that must be present to constitute a
quorum for a meeting shall be half the total members plus one.
(d) Chairperson and vice - chairperson. The chairperson and vice- chairperson
shall be elected by the members of the Committee. The members may elect any
additional officers that they deem necessary.
(e) Duties. The duties of the Committee shall include, but not be limited to:
(i) serving in an advisory capacity to the Planning Board,_ and
the Community Redevelopment Agency, and the .City
Commission by identifying and evaluating, successful
affordable housing projects
(ii) consulting with property owners, builders and persons
experienced in the development of affordable housing.
(iii) assisting the Planning Department by reviewing data and
information collected relative to affordable housing statistics,
programs, grants and subsidies.
(iv) performing other duties, functions and services as may be
requested by the Mayor and City Commission.
(f) Term. The Term of the Committee shall be one year, unless
extended by the City Commission.
(g) Goals. The goal of the Committee shall be to submit, for
consideration, one or more affordable housing projects or affordable housing
incentive ordinances to meet community needs and achieve the compressive
plan's housing goal.
Section 3. If any section, clause, sentence, or phrase of this _ordinance is for any
reason held invalid or unconstitutional by a court of competent jurisdiction, the holding
shall not affect the validity of the remaining portions of this ordinance.
Section 4. All ordinances or' parts of ordinances in conflict with the provisions
of this ordinance are repealed.
Section 5. The provisions of this ordinance shall be included in the City of
South Miami Code of Ordinances.
Additions shown by underlining and deletions shown by overs4ik4ng
Page 2 of .3
Ord, No. 08 -05 -1830
Section 6. This ordinance shall take effect immediately upon approved
PASSED AND ADOPTED this day of , 2005
ATTEST: APPROVED:
CITY CLE O
I st Reading 3/10 / 0 5
2nd Reading 4 / 9 / 0 5
COMMISSION VOTE: 5 -0
READ AND ED AS TO FORM: Mayor Russell: Yea
Vice Mayor Palmer: - Yea
Commissioner Birts- Cooper: Yea
CIT TORNEY Commissioner Sherar: Yea
Commissioner Wiscombe: Yea
EXomin Items\ 2005 \3 -10 -05 \Ordinance Affordable Housing.doc
J:\My Documents \resolutions \Ordinance Affordable Housing.doc
Additions shown by underlining and deletions shown by ^•�°r�;
Page 3 of 3
SOUTH MIAMI COMPREHENSIVE PLAN
EXCERPT
pp. 97 -100
Affordable Housing (1998) Analysis:
The State of Florida has established a goal that by the year 2010 ...... decent and affordable housing
is available for all residents." A major initiative of this goal was to undertake a Statewide evaluation
of affordable housing availability. A study was completed in 1996 by the University of Florida's
Shimberg Center for Affordable Housing, under contract to the Florida DCA. The objective was to
provide a projection of the surplus and /or deficit of affordable housing units in every governmental
jurisdiction. Affordable housing is defined as housing for which monthly rent or mortgage payments,
including taxes, insurance, and utilities, does not exceed 30% o of the gross annual income of very -low
income, low - income, and moderate- income households.
The analysis preformed by the Shimberg Center for the City of South Miami uses a progressive series
of data factors, including housing inventory, population projections, household size, housing type,
and household income levels in order to determine the availability and/or deficits of affordable
housing units. The affordable housing assessment data (1998) for the City is presented in Tables 3 -12
through 3 -20. The accumulative affordable housing deficit for South Miami by income category is
shown below on Table 3 -19. The deficit summary for the City is shown on Table 3 -21.
The cumulative deficit of affordable housing units in South Miami is shown by household income
categories and for the years 1995, 2000, 2005, and 2010. The definition of affordable housing applies
to the very low income category (50 % of median family income), low income category (80 %) and
moderate income category (120 %). The very very low income category (30% of median income) is
eligible for subsidized and/or public housing and is therefore not included in the affordable housing
category. The City of South Miami has a deficit of affordable housing units as follows:
TABLE 3 -2I
CITY OF SOUTH MIAMI AFFORDABLE HOUSING DEFICIT SUMMARY
YEAR OWNER OCCUPIED RENTAL TOTAL
2000 -1095 86 -1009
2005 1137 92 1045
2010 -1204 84 -1120
In responding to the affordable housing deficit, it is important to note that the City of South Miami
has several conditions which limit the extent to which the deficit can be reduced. These include:
• The City is essentially built -out with little opportunity to add a substantial number of new
housing units, either at the market rate or at an affordable housing level. In fact, the actual
number of existing housing units decreased during the period 1980 -1995.
• The City has very limited vacant land left with development potential. A total of 29.42
acres (1.8 %) of the City's total land acreage is vacant. Of the total acreage currently vacant,
only 13.8 acres are in areas zoned for residential development.
Affordable Housing Opportunities:
Although the City of South Miami cannot completely eliminate the affordable housing deficit, there
are certain resources and housing programs which can reduce the current and anticipated deficits.
Most significant is the creation of the South Miami Community Redevelopment Agency (SMCRA)
and the designation of a 185 -acre redevelopment district. The Redevelopment Agency's work
program for Phase. I indicates considerable investment in the acquisition of vacant lots and loans and
mortgage subsidies to encourage affordable housing construction. A total of 24 units of affordable
housing will be built during the next two years. The SMCRA Board will be encouraged by the City to .
respond to future needs for additional affordable housing units.
The City has also worked closely with Habitat for Humanity, which has targeted South Miami for
construction of new homes for low and moderate- income families. It is anticipated that this program
along with other private organizations will produce at least five units of affordable housing units in
next five years.
The South Miami Metro Rail Station also presents the City with an excellent opportunity to provide
affordable housing units. The County's Rapid Transit Zoning District and the City's abutting Transit
Oriented Development District (TODD) both encourage multi- storied, mixed use development
projects. Due to the transit' needs of families needing affordable housing, projects providing
affordable housing will be given priority. It is anticipated that one such project, the Hometown
Station Project will include 100 `affordable housing units. Completion date is expected in the year
20010 With the encouragement and support of both the County and the City it can be projected that
one additional project of that scale can be completed by the year 2010.
If the above projects and programs are realized and implemented, considerable progress will have
been made within the City of South Miami to reduce the affordable housing deficit.
A. GOALS, OBJECTIVES AND POLICIES
HOUSING ELEMENT
Objective 1.3
To create and maintain affordable housing for all current and anticipated future residents of the
City and specifically supporting programs such as CRA and other private organizations which will
result in the construction of 30 units of affordable housing and an additional 100 units anticipated to
be part of the proposed Hometown Station project by the year 2005. It is projected that construction
of an additional 150 units of affordable housing can be achieved through various programs and
projects by the year 2010 (reducing the future deficit of affordable housing by 25 %).
Policy 1.3.1 Utilize the Future Land Use Plan and zoning map, making special use of mixed
use districts, to provide for areas which promote very- low - income, low- income,
and moderate- income households, while attempting to avoid the concentration of
these households in specific areas of the City.
Policy 1.3.2 Utilize existing Federal,` State, County, and private programs which assist
individuals with home ownership through such means as subsidies, loans, loan
guarantees, counseling, or through other similar means, including such programs
as the County Surtax mortgage program:
(2)
Policy 1.3.3 The City's Community Redevelopment Agency will implement its New Housing
Program in order to acquire vacant property and provide financial assistance to
construct at least 24 new affordable housing units.
Policy 1.3.4 The City's Community Redevelopment Agency will provide additional
incentives to private developers to construct projects with affordable housing
units.
Policy 1.3.5 The City will support and assist the efforts of private organizations to construct at
least five affordable housing units per yearn
Policy 1.3.6 The City and the County will jointly support development in the Rapid Transit
Zone in order to encourage mixed- use /residential multi - family projects
containing affordable housing units.
Policy 1.3.7 The City will work with the South Florida Regional Planning Council to help
implement a regional policy to produce affordable housing units.
x �
t
i
�E���IO.h� FIVE
1rir According to the Bureau of the Census 1990 housing figures, th
g g e number
of existing housing units in the City of South Miami actually decreased from 1980
to 1990 by a total of 162 units. This occurs at a time when approximately two_
thirds of the City's ad valorem tax burden falls upon residential property owners.
This reduction in housing units further increases the tax burden on South Miami
t homeowners.
r
3 ' 4 Over this same ten -year span, the percent of households in .the
t , , hey
redevelopment area which are below the poverty level actually rose from 37
'' to 38%, thus making it more difficult for residents to compete for p quality home
Ifrz, i. ownership within the City of South Miami.
The existing pressure for affordable housing will be further increased by
y e
the advent of new service /retail jobs that will be created b the redevelopment
of the Bakery Center into The Shops at Sunset. While this reclevelo p meet
t t creates welcomed new jobs and business opportunities, it will increase the need
;; for affordable housing in the nearby area. The expansion of redevelopment
area housing sfock will allow for current and future South Miami residents � ents of the
redevelopment community to have low -cost transit access to job sites.
x South Miami Communly Redeve lopment Plan
�' " page2O
N'
AFFORDABLE HOUSING.& RELOCATION POLICY
f„
A. AFf ®RDABLE HOUSING
,f Pr
POLICY STATEMENT
3
CURRENT HOUSING MARKET
s
1rir According to the Bureau of the Census 1990 housing figures, th
g g e number
of existing housing units in the City of South Miami actually decreased from 1980
to 1990 by a total of 162 units. This occurs at a time when approximately two_
thirds of the City's ad valorem tax burden falls upon residential property owners.
This reduction in housing units further increases the tax burden on South Miami
t homeowners.
r
3 ' 4 Over this same ten -year span, the percent of households in .the
t , , hey
redevelopment area which are below the poverty level actually rose from 37
'' to 38%, thus making it more difficult for residents to compete for p quality home
Ifrz, i. ownership within the City of South Miami.
The existing pressure for affordable housing will be further increased by
y e
the advent of new service /retail jobs that will be created b the redevelopment
of the Bakery Center into The Shops at Sunset. While this reclevelo p meet
t t creates welcomed new jobs and business opportunities, it will increase the need
;; for affordable housing in the nearby area. The expansion of redevelopment
area housing sfock will allow for current and future South Miami residents � ents of the
redevelopment community to have low -cost transit access to job sites.
x South Miami Communly Redeve lopment Plan
�' " page2O
u
pled upon 1995 data provided by the Beacon Council and the Appraisal and Real
ima:
„5tclte Economic Associates, Inc. (AREEA), the average cost of a new home in Dade
bounty is $139,910 and rising. Used home sale prices average $125,956. The
assessed value of homes in the redevelopment area range from $32,911 to $70,262,
ese facts make it a priorityfor the SMCRA to adopt an Affordable Housing Policy
that will:
of
<<
(1) In Phase 1, allocate $1.1 million for the potential acquisition of 57 vacant
' residential lots designated for affordable housing;
f (2) In Phase 1, allocate $565,000 for the rehabilitation of existing affordable
4 housing stock; I ,I
ii „.- (3) In Phase I, allocate $715,000 for Mortgage Subsidy Guarantees to assist low
A and moderate income families to purchase affordable housing;
(4) Implement a Role Model Residential Recruitment Program (refer to page 35 f
of this Plan) for home ownership in the area in which the affordable housing
programs will be implemented ;�,
Provide additional incentives to developers to construct housing in their
1 J I I f
redevelopment projects for low and moderate income residents;
{4 f
6 Assist in the construction of new housing on land that is owned by public
entities such as community development corporations or local govemments `
though the establishment of d Tax Increment Financing district;
(7) Establish housing prices that reflect "affordability in the market of potential
i
homebuyers from the area and at the time of redevelopment;
r (8) Aggressively implement redevelopment programs that improve and protect
the quality of existing housing stock;
ti (9) Establish priorities and incentives for local builders, realtors and financial
institutions to participate in affordable housing redevelopment programs;
and
.. (10) As required by Section 163.360(2) (c) F.S., the SMCRA shall coordinate with
the Metro -Dade Housing Agency and other affordable housing entities
M< functioning within the boundaries of the redevelopment area.
,
page 2i
uf6 Miami Community Redevelopment Plan - __
CRA PLAN UPDATE - PHASE 11 SELECTED DATA & ANALYSIS UPDATE
D. AFFORDABLE HOUSING
The Plan indicated that from 1980 to 1990, existing housing units in the City of
South Miami decreased by a total of 162 units. Census information reveals that
the number of existing housing units in the City rebounded about 3% between
1990 to 2000. Similarly, the redevelopment- area has seen few new housing
units constructed until recently.
Given the redevelopment area's unusually high poverty level, the large amount of
households spending a significant percentage of their income on housing,
predominantly older low-value housing availability, and influx of new service-
oriented jobs associated with recent retail deve opment, the construction of new
affordable housing alternatives should be a vital mission for the SMCRA.
711 ry
Of prima concern is that new "affordable" housing in the area be offered for rent
or sale at a rate that the current residents can afford. In general terms,
affordable housing" is dependent upon an income eligible household's ability to
spend no more than 30% of its income on. either rent or mortgage payment.
Income eligibility is defined in terms of area median income (determined by
HUD), adjusted for family size. Categories include "extremely low-income" (at or
below 30% of area median income), "very- lowAncome" (at or below 50% of
�
median income), "low-income" (at or below 80 °/® of median income), and
moderate income" (at or below 120% of area median income; at or below 100%
of median income for federal programs).
Appendix CE depicts the Florida Housing Finance Corporation's 2004 Income
Limits, Adjusted to Household Size for Miami PMSA used to establish income
eligibility and 2004 Maximum Gross Rents by Number of Bedrooms used to
establish the rent schedule for each income eligibility category. The 2004
median income for the Miami PMSA is $45,400. Using the charts in Appendix
GE, it can be derived that in order for for-rent housing to qualify as affordable in
the CRA it would need to fall within the range of $2751month for an efficiency for
an "extremely low-income" household to $1,833/month for a 4-bedroom, unit for a
I
moderate income" household. The most predominant housing size, the 3-
bedroom unit, ranges from $410 for an "extremely low-income" household to
$1,644 for a "moderate income" household.
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The mission of the U.S. Department of Housing and Urban Development is to increase
homeownership, promote community development, and expand access to decent affordable
housing without discrimination. Increasingly, we find that many of the constraints to providing
affordable housing and to developing communities lie within the communities and their regions
in the form of regulatory barriers.
Regulatory barriers were exposed as a problem 13 years ago, when the Advisory Commission on
Regulatory Barriers to Affordable Housing submitted its report, "Not In My Brick Yard'" Removing
Barriers to Affordable Housing. Despite some areas of progress, the Advisory Commission's finding
that exclusionary, discriminatory, or unnecessary regulations reduce the availability of affordable
housing remains true today.
At the direction of President Bush, I am therefore pleased to publish this update to the 1991 Advisory
Commission's report. Besides illustrating the Administration's and Department's commitment to
affordable housing, it demonstrates an ability to innovate and reach beyond narrow views of the federal
government as finder and regulator. HUD has grasped this opportunity to establish policies that lead
and enable state and local partners to address the issues we all deal with on a daily basis.
In June 2003, HUD launched a department -wide initiative among senior staff entitled America's
Affordable Communities Initiative; Bringing Homes Within Reach Through Regulatory Reform.
The Initiative reinforces HUD's commitment to work with states and communities to break down
the regulatory barriers that needlessly drive up housing costs and reduce the nation's stock of affordable
housing. The first fruits of this effort are abundantly evident in this document.
The update describes recent trends in regulatory barriers to affordable housing, reviews recent efforts
by states and local communities to reduce regulatory barriers, and details actions being implemented
by the Department to reduce regulatory barriers.
HUD is addressing these issues in a number of ways through this Initiative. The Department is leading
by example— streamnlining program regulations and ensuring that program applicants have appropriately
addressed regulatory barriers. We developed our Regulatory Barriers Clearinghouse website
(www.regbarriers.org) to share barrier reduction information and best practices with communities
across the nation.
My hope is that this update will increase awareness of regulatory barriers and stimulate additional
national dialogue on this important issue.
I �
Alphonso Jackson
Secretary
J��
Tbirteen years ago, the Advisory Commission
on Regulatory Barriers to Affordable Housing
submitted its report, "Not In My Back Yard':
Removing Barriers to Affordable Housing (the
1991 Report). Its basic finding remains true
today: exclusionary, discriminatory, or unnecessary
regulations constitute formidable barriers to
affordable housing. Understanding that
government should help, not hinder, the creation
and rehabilitation of affordable housing, then
Secretary of Housing and Urban Development
Mel Martinez resolved that regulatory barriers
to affordable housing must become an issue
of national concern and action. Today, Secretary
Alphonso Jackson is equally committed to
knocking down barriers to affordable housing,
as he makes clear in the following statement:
As a long -time advocate for increased
affordable housing, I know that regulatory
barriers have an enormous impact on the
cost and availability of housing for hard-
working American families. For the past
three years, we at HUD have been working
with states and local communities to break
down these barriers. I am committed to
assuring that this important work continues.
No clear "bright line" definition can delineate
when a state or local policy is a regulatory
barrier —each policy or rule must be assessed on
its own merits. Many policies and regulations that
restrict housing are implemented or promulgated
with other worthy goals. A policy, rule, process,
or procedure is considered a barrier when it
prohibits, discourages, or excessively increases the
cost of new or rehabilitated affordable housing
without sound compensating public benefits.
Although Recommendation 6 -16 of the 1991
Report suggested creating an Office of Regulatory
Reform to develop ways to reduce regulatory
barriers at the state and local levels, former
Secretary Martinez and then- Deputy Secretary
Jackson realized that creating a separate office
would only create more bureaucracy, add expense,
and take a considerable amount of time. Seeking
a daily focus on this issue, they ordered senior
staff immediately to undertake a department
wide initiative entitled America's Affordable
Communities Initiative. Bringing .Homes
Within Reacb Through Regulatory Reform
(the Initiative).
The Initiative seeks to help state and local
governments identify regulatory barriers to
affordable housing. It also assists community
and interest groups and the general public in
understanding that well- designed, attractive
affordable housing can bean economic and
social asset to a community.
Housing is affordable if a low- or moderate -
income family can afford to rent or buy a decent
quality dwelling without spending more than 30
percent of its income on shelter. Some describe
affordable housing for moderate - income families
as America's workforce housing. The increased
availability of such housing would enable hard-
working and dedicated people—including public
servants such as police officers, firefighters,
schoolteachers, and nurses —to live in the
communities they serve. The social and economic
benefits of having these hard - working citizens live
in the communities in which they work is self -
evident. Removing affordable housing barriers
could reduce development costs by up to 35
percent; then, millions of hard - working American
families would be able to buy or rent suitable
housing that they otherwise could not afford.
For lower- income families and individuals, subsidies
can be essential tools for helping them gain
stability and self - sufficiency People who have built
or tried to build affordable housing, however,
recognize the constraints imposed by unnecessary
or excessive barriers. Barrier removal will not only
make it easier to find and obtain approval for
affordable housing sites; it also will enable available
funds to go further in meeting vital housing needs.
The Initiative has made reducing regulatory
barriers to affordable housing a top departmental
priority receiving high -level attention on a daily
basis. HUD hopes that this effort will change
the outdated thinking of citizens and public
officials from "not in my back yard" to "why
not in our community ?"
Some progress has been made in responding to
the concerns raised by the Advisory Commission,
but the problem of regulatory barriers persists.
This update does not aim to recreate the 1991
Report, but seeks to examine the trends in the
regulatory environment affecting housing
development in the past 13 years. In addition,
this update charts a workable and innovative
strategy for HUD to help states and local
communities reduce regulatory barriers. It
also includes a plan for decreasing barriers to
affordable housing production at the federal level.
2
The update is organized into the following
sections:
Section I describes recent trends and demonstrates
that the problem of regulatory barriers to
affordable housing still remains.
Section II reviews recent efforts by states and
local communities to reduce regulatory barriers.
Section III identifies some of the major actions
being implemented by the Department to reduce
regulatory barriers.
The Appendix is a reprint of the first part of the
1991 Report's executive summary. This document
summarizes the problem of regulatory barriers
to affordable housing. Readers unfamiliar with
the general nature of regulatory barriers to the
development of rental and affordable housing
may find it helpful to review the Appendix before
reading Sections I through III.
A though a number of studies and commissions,
since as early as 1967, have addressed the
issue of regulatory barriers, the 1991 Report for
the first time identified regulatory reform as a
necessary component of any overall national
housing policy. The 1991 Report found that
various regulatory barriers -public processes and
requirements that significantly impede the
development of affordable housing without
commensurate health or safety benefits — directly
raise development costs in some communities by
as much as 35 percent. These regulatory barriers
have other significant negative impacts on the
country's ability to meet national housing needs.
By constraining overall supply and the market's
ability to respond to demand, housing prices and
rents in many markets are inflated. Regulations
that restrict market rate and affordable housing
options, such as higher density housing,
multifamily rental housing, accessory units,
and manufactured homes, further exacerbate
the problem by limiting or excluding many
affordable housing options.
The 1991 Report identified a number of causes —
including infrastructure costs, local building
practices, bureaucratic inertia, and property taxes —
for this extensive network of regulatory barriers
to affordable housing development. The 1991
Report, however, concluded that one powerful
motive lay behind many of these regulatory barriers:
opposition by residents and public officials alike
to various types of affordable housing in their
communities. This opposition, which the 1991
Report called "not in my back yard" (NIMBY),
was found to be a pervasive practice motivating
local political officials to intentionally limit growth
in general and affordable housing in particular.
Notwithstanding the achievement of some
reforms; "NIMBYism" continues to prompt the
implementation of regulatory barriers that pose
major obstacles to rental housing, high- density
development, and other types of affordable housing.
EvIDENCE THAT REGULATORY BARRIERS
INCREASE HOUSING COSTS
Recent research has confirmed that
regulatory barriers pose a major obstacle
to the development of affordable housing.
Consider the following examples:
a One study found that excessive regulation
drove up the cost of a new home in New
Jersey by as much as 35 percent.
® Another study determined that the price
of newly built homes in New York City
would decline by as much as 25 percent
if the city reduced regulatory barriers.
The results of these and other recent studies are
summarized in Table 1.
While regulatory barriers are not the only factors
responsible for increasing housing costs, they
are major factors. Their significant role in driving
up housing costs poses a crucial obstacle to
achieving the national goal of increased
homeownership. Regulatory barriers also. have a
negative impact on costs for all types of housing,
whether single -family or multifamily, manufactured
or site - built.
Regulatory barriers also affect the location of
housing. To the extent that regulatory barriers
prevent development in the suburbs and other
areas of high job growth, they can force lower
income households to live far from job
opportunities. This home -to -work distance can
make it more difficult for the unemployed to find
work; for the employed, it lengthens the commute,
which lowers the quality of life.
3
Sundig and
,
�.
Various forms of housing regulation decreased the total amount of housing built
Swoboda
and increased prices by as much as $40,000.
(2004)
•-------------- - - - -
-- ----------------------------------------------------------------------------------- - - - - -- --- - - - - --
, - - --
Ben- Joseph
Regulatory system has gotten more complex over the last two decades and constitutes
(2003)
.--------------------'------------------------------------------
the single greatest problem in getting housing built.
---- - - - --- ------------------------------------------------
Glaeser and
Government regulation is responsible for high housing costs where high costs
Gyourko
exist. Measures of zoning strictness are highly correlated with high prices.
(2002)
---------------------
-------------------------------------------------------------------------------------------------------
The typical new Alachua County, Florida, household pays more than its actual share
Dewey
of infrastructure costs by $3,114, demonstrating how ill- conceived fees can undermine
(2001)
affordable housing.
------------- - - - - --
Baden and
---- - - - - -- ------------------------ - - - - -- --------------------------------- - - - - -- ------- - - - - --
In suburban Chicago, municipal fees increase new housing costs by 70% to 210% of the
Coursey
actual fee imposed, which ranges from $2,224 to $8,942 for an average four - bedroom
(2000)
home in the study.
---------------------
; ------------------------------------------------------------------------------------------------------
Green and
Moving from a light regulatory environment to a heavy regulatory environment raises
Malpezzi
rents by 17%, increases house values by 51%, and lowers homeownership rates by 10
(2000)
percentage points.
--------------------;------------------------------------------------------------------------------------------------------
Luger and
Excessive regulation can raise the final new home price by $40,000 to $80,000, or
Temkin
approximately 35 %. In New Jersey, this amount prices approximately 430,000 house -
(2000)
holds out of the market.
Mayer and
A metropolitan area with a 4.5 -month delay in approval and two different types of
Somerville
growth control restrictions would experience 45% (estimated) less construction than a
(2000)
metropolitan area with a 15_ month approval delay and no growth -management
_
Phillips and
Portland's Urban Growth Boundary law has increased median house prices in the
Goodstein
1
Portland metropolitan area.
(2000)
Green
In Waukesha County, Wisconsin, banning manufactured homes increased home prices
(1999)
by 7.1% to 8.5 %. Increasing required minimum frontage by 10 feet drove up prices by
6.1% to 7.8 %.
-------------------- ------------------------------------------------------------------------------------------
------ - - - - --
Levine
A study of 490 California cities and towns found that growth control measures that
(1999)
remove land from development or require less intense development reduced rental
,
and ownership�housing. Impacts on rental housing were particularly severe.
-------------------- r-----------------------------------------
- - - - -- --------------- - - - - -- ---------------------------
Salama,
In New York City, the price of newly built homes could decline by 25% if the city
Schill, and
implemented a comprehensive barrier removal strategy.
Stark (1999)
;
------------ - - - - -- -; ------------------------------------------------------------------------------------------------------
National
1
In 42 metropolitan areas, eliminating unnecessary government regulations, fees,
Association
11
and delays could reduce housing costs by 10 %. Results varied significantly by area.
of Home
Builders
(1998)
TRENDS IN THE REGULATORY ENVIRONMENT
AFFECTING HOUSING DEVELOPMENT
Since 1991, regulatory barriers to development
of market rate, rental, and affordable housing have
become more widespread in suburban regions and
some rural areas as communities seek to limit
population growth. Generally, regulatory tools
that were barriers then remain barriers today.
Regulatory mechanisms, such as restrictive zoning,
excessive impact fees, growth controls, inefficient
and outdated building and rehabilitation codes,
multifamily housing restrictions, and excessive
subdivision controls have been in use for decades.
These controls have become more sophisticated
and prevalent. The current regulatory framework
makes building a range of housing types
increasingly difficult, if not altogether impossible,
in many areas. Although some recent market
research appears to indicate a greater willingness
by the general population to accept affordable
housing for moderate or middle income families
in their communities, no evidence exists that such
abstract acceptance has translated into large -scale
action at the local level to undertake significant
regulatory reform.
The following trends stand out:
9 Increased complexity of environmental
regulation. Over the past decade,
environmental protection regulation has
increased in complexity, resulting in lengthy
review and approval processes, additional
mitigation requirements, and new requirements
for consultants. Although environmental
protection is an important national objective, .
inefficient implementation of environmental
regulations results in higher development
costs and restricted development opportunities.
Misuse of smcartgrou7th. A major change in
the development climate over the past decade
is the rapid emergence of the smart growth
movement. Some smart growth principles,
such as higher density development, can
facilitate the development of affordable housing.
A number of communities, however, have used
smart growth rhetoric to justify, restricting
growth and limiting developable land supply,
which lead to housing cost increases.
Still NIMBY in the suburbs. Many suburban
communities continue to enact affordable
housing restrictions, use exclusionary zoning
practices, impose excessive subdivision
controls, and establish delaying tactics for
project approvals. These development barriers
can effectively exclude rental and affordable
housing development in a community.
a Impact fee expansion. Impact fees are
an accepted and growing mechanism to
finance the infrastructure and public services
associated with new development. Although
some impact fees reflect actual front -end
infrastructure development costs, others are
disproportionate to communities' actual costs,
reflect an unnecessarily high level of
infrastructure investment, or are assessed
in a regressive manner.
a Urban barriers building codes, rehabilitation,
and infill development. Slow and burdensome
permitting and approval systems, obsolete
building and rehabilitation codes, and infill
development difficulties remain serious
impediments to affordable housing
development in cities. Obsolete building and
rehabilitation codes are one of the most
widespread urban regulatory obstacles,
requiring old - fashioned and expensive materials,
outdated construction methods, and excessive
rehabilitation requirements that make
construction and rehabilitation more expensive
in certain regions.
Each trend is described in detail below.
Iancreased. Complexity of
Environmental Regulation
Environmental protection regulation is essential
to building healthy and sustainable communities.
Environmental protection and affordable housing
development need not be competing objectives.
How these regulations are implemented, however,
Section 1. Regulatory Barriers to Affordable Housing Persist 5
often has the unintended consequence of
preventing development of much - needed
affordable housing. Good planning considers,
integrates, and balances a host of public
objectives: a clean environment, adequate public
infrastructure, schools, quality of life, and fiscal
concerns, as well as housing needs and future
growth accommodation. Unfortunately, in
practice, developmental and environmental
reviews are often two distinct processes with
often - conflicting standards and approval
procedures. Such inefficiencies result in conflicting
environmental requirements, prolonged review
processes, lack of justification for environmental
decisions, and regulations that extend beyond
the scope of the desired goals —all combining
to reduce the supply of developable land and
increase the cost of development.
A number of trends indicate that since 1991
poorly designed enviromnental procedures and
regulatory processes have become more significant
barriers to the development of affordable housing.
Major trends include the proliferation of national
mandates, the increasing complexity of urban
environmental regulations, layering of additional
local environmental laws, and the misuse of
environmental regulations by those opposed
to affordable housing.
Major National Mandates. National mandates
such as environmental impact assessments, clean
water, safe drinking water, wetlands protection,
endangered species protection, and clean air
remain in force and have become more complex.
As clean water quality and wetlands protection
became higher priorities in the 1990s, regulations
for these mandates were broadened to encompass
storm water management and were made more
stringent. In particular, the federal government
made the general nationwide wetlands permit —
the most common type of development permit
issued increasingly difficult to obtain. Greater
uncertainty, delays, reduced land availability, and
increased housing construction costs have resulted.
Many of the problems result from administrative
procedures that are vague, not time- sensitive, or
poorly integrated into the overall planning and
developmental review process. The lack of clarity
and certainty regarding wetlands determinations
is an example of such a problem.
As the federal government delegated greater
responsibility to the states to implement
environmental mandates, the states added their
own requirements, increasing the layers of
regulatory reviews that proposed developments
must undergo.
Environmental Regulations in Cities. A notable
exception to the growing complexity of
environmental reviews has been in "brownfields"
urban properties or facilities whose development
or redevelopment may be complicated by the
potential presence of site contamination. Federal,
state, and local governments have worked together
to streamline and simplify brownfield clean -up
requirements to promote urban revitalization.
This cooperation and partnership could serve as a
model for other areas of environmental regulation.
Local Environmental Regulations. In addition
to the barriers driven by national environmental
regulation, the 1990s saw the emergence of purely
local environmental regulations. In many cases,
local regulations duplicate federal and state
environmental regulation and are not integrated
into pre- existing local planning processes,;creating
new procedures, reviews, and requirements.
For example, a number of communities now
require their own environmental impact
statements. Such requirements are often
superfluous, as they are over and above existing
local requirements for environmental reviews
required as part of the comprehensive planning and
development approval process. In many cases,
they become one more tool to stop development.
Misuse of Smart Growth
Smart growth refers to an amalgam of ideas,
planning concepts, and goals intended to improve
urban/suburban livability and reduce sprawl. This
term is increasingly used in public regulatory and
policy debates regarding planning, land use,
and density. Many smart growth principles appear
consistent with the goal of promoting affordable
housing. In practice, however, a number of
communities, especially in the suburbs, have used
the smart growth rhetoric only to justify growth
controls that act as substantial regulatory barriers
to affordable housing.
Although no clear consensus exists on what
constitutes smart growth, some elements such
as expanding housing choices, increasing density,
and enhancing the fairness and predictability of
development decisions would, if actually
implemented, be valuable tools for expanding
housing affordability, especially in the suburbs.
Many national organizations that support smart
growth understand the importance of housing
affordability and support reforms that would
eliminate many regulatory barriers. There have
been some examples which have demonstrated
that NIMBY resistance can be overcome and high -
density developments built because of the adoption
of local smart growth policies.
More generally, however, these components of
the smart growth agenda are far less likely to
be adopted in most suburban jurisdictions than
those limiting growth. Under the rubric of smart
growth, citizens and community groups that have
long objected to affordable housing now have
an intellectual justification to limit growth and
exclude affordable housing. The result is that
affordable housing advocates, the local business
community, builders, and landowners find it ever
more difficult to resist policies that restrict overall
housing supply. Downzoning, higher impact fees,
mandated amenities, and building moratoriums
represent the types of barriers and regulations that
a growing number of communities have begun
to implement to slow or stop growth. If only such
selected parts of the smart growth agenda (open
space, growth limits, moratoria) are enacted, smart
growth will endanger, rather than encourage,
housing affordability.
Still NIMBY in the Suburbs
Many suburban communities continue to pass
affordable housing restrictions, make the approval
processes increasingly complicated, use exclusionary
zoning practices, impose excessive subdivision
controls, and put in place tactics to delay project
approvals. These barriers can exclude rental and
affordable housing developments in a community.
Affordable Housing Restrictions. Limited empirical
data exists that tracks how many suburban
communities ban or discourage affordable housing
options. However, most experts agree that
problems have not improved substantially over the
past 13 years. Regulatory conditions often make
affordable housing the most difficult to build. Too
few communities provide a diversity of
development options, such as multifamily housing,
duplexes, or manufactured housing. NIMBY
sentiment plays a key role in the exclusion of these
types of housing.
Although research strongly argues to the contrary,
advocates of restrictions on multifamily housing
development often argue that such development
will reduce property values and increase the
demand for public services. As a result, many
suburban communities do not permit multifamily
housing development anywhere in the jurisdiction.
Also prevalent are restrictions on other economical
forms of housing, such as accessory apartments,
duplexes, and manufactured housing. In, other
communities, zoning rules may permit the
construction of affordable housing options,
but NIMBY sentiments derail efforts to actually
develop such options.
Growing Complexity of Approvals. Administrative
processes for developmental approvals continue
to become more complex with ever - lengthening
reviews and requirements for multiple, duplicative
approvals. Each time a community adds substantive
requirements, the review process becomes more
complicated and burdensome. Rarely are pre-
existing regulations reviewed to determine
whether they are still needed or conflict with
new regulations. Too many communities see little
Section 1. Regulatory Barriers to Affordable Housing Persist 7
public benefit in streamlining the processes, even
though each day of unnecessary delay eventually
raises development costs with subsequent increases
to housing prices and rents. In some cases, an
unnecessarily complex approval system may be
consciously used by communities and opponents of
affordable housing as a growth management tool, a
way to extract greater concessions from the
developer, or a method for keeping out affordable
housing.
Excessive Subdivision Controls. Subdivision
ordinances, which regulate the land development,
infrastructure, and site design characteristics of
new housing, are a primary tool communities use
to plan and regulate residential development. Some
of these controls unnecessarily raise the cost of
housing. Such excessive controls, often referred
to as "gold- plated" standards, may mandate
excessively wide streets or require, for example,
at least 4.5 parking spaces per dwelling unit, even
for multifamily development. Many communities
require excessively rigorous standards to reduce
long -term maintenance costs on the infrastructure
they will eventually inherit from developers or to
preclude lower cost developments. The new
homebuyer, however, is the one who eventually
pays the price in higher initial costs for a home.
Inefficient Permitting and Approval Systems. The
land development review process also has become
more complicated and contentious. Among other
issues, the increased use of discretionary approvals,
plan-tied unit developments (PUDs), and layered
approval systems have added to the burden and
complexity of the approval process. More and
more, approvals require a complex negotiating
process between the developer and the community.
Some communities have eliminated zoning "as of
right" and treat all new development as a PUD
for review and approval. Time is critical in housing
development, because financing and profitability
depend on keeping to the schedule. It is no longer
unusual, however, for it to take developments
5 years or more to gain all the necessary permits
and approvals.
8
Impact Fee Expansion.
A dramatic change in the regulatory environment
since the release of the 1991 Report has been the
widespread adoption of impact fees. Using local
power to regulate land use, communities are
asking developers to bear a larger share of the
front -end burden of supplying new infrastructure
and added services as a means of paying for
continued growth. Although not new, impact
fees are becoming a prevalent financing strategy
for new development almost everywhere across
the United States —and they are often a significant
impediment to the development of affordable
housing. The higher costs of building homes due
to impact fees are passed on to the homebuyers.
In many communities, these fees exceed $10,000
per unit; a number of communities in California
now report fees of $45,000 per unit and higher.
While all impact fees increase the cost of new
housing, some are more reasonable than others.
Localities are often constrained in setting property
tax levels by state taxation limits and have little
choice but to impose impact fees to help pay for
rapid growth. Other communities are unwilling
to raise property taxes to provide schools or more
services. Impact fees have increased in popularity
because they provide a politically attractive
mechanism for raising revenue. When they are set
at a fair, reasonable, and predictable level, they can
be an efficient means :of paying for growth- related
infrastructure costs.
Impact fees pose the greatest barrier to
affordable housing when they are regressive
or disproportionate to actual development costs.
Unlike property taxes, which are based on home
value, impact fees can be regressive if they are
assessed on a per -unit basis. In such cases, a
home built for $80,000 is.subject to the same
fees as a $300,000 home. Regressive impact fees
can pose an insurmountable barrier to affordable
housing development. In 2001, for example,
the Waukesha, Wisconsin, chapter of Habitat
for Humanity sat idle because it could not afford
to build affordable units as a result of skyrocketing
impact fees.
Far too often, impact fees are used to pay costs
unrelated to the development. This forces
developers to pay not just for the marginal costs
of the housing they produce (that is, the costs
associated directly with the new housing), but
also for public goods for the entire community.
Urban Barriers — Building Codes,
Rehabilitation, and Infill Development
Despite some progress in reducing regulatory
barriers in a number of cities, urban centers
generally continue to rely on an assortment of
obsolete building regulations that impede infill
development. These barriers continue to exist,
despite the demand for new and rehabilitated
residential units. Regulatory barriers to urban
development include a diverse and often archaic
and complex mixture of building codes, labor
ordinances, and local tax provisions. In cities
particularly, the development approval process
tends toward a multilayered approach requiring
coordination among various dissimilar agencies.
Maneuvering through such processes typically
adds significant additional time and cost constraints
to projects already hampered by the challenges
of site assembly, obtaining clear title, and the
unique challenges of urban sites.
Despite a growing need for housing rehabilitation,
many cities continue to use building codes that
emphasize criteria more suitable for new
construction to the detriment of rehabilitation
activities. In a 1998 survey of building code
authorities, respondents cited regulatory
requirements as frequent impediments to increased
rehabilitation. Of 223 officials surveyed, more
than 80 percent reported building requirements
requiring a review by two or more city agencies
that often failed to communicate during the
approval process.
Infill development, the method by which
housing is generally built in older cities, involves
a complicated and time- consuming process of land
acquisition and regulatory approvals. Difficulties
in acquiring a sufficient number of parcels for infill
development continue to prevent many, builders
from using the economies of scale that they rely
on when developing affordable housing in the
suburbs. Such acquisitions are complicated by the
tedious, antiquated procedures many cities employ
for delinquent tax foreclosures or condemnations.
In concert with the additional difficulties builders
encounter when attempting to obtain clear title
to various unrelated parcels, these complexities
continue to bog down time- sensitive projects
to the point of infeasibility.
Section 1. Regulatory Barriers to Affordable Housing Persist 9
The growing complexity of the regulatory
environment poses a serious obstacle to
the development of affordable homeownership
and rental housing. However, this impediment
is not insurmountable. A number of states
and localities have made progress in reducing
regulatory barriers to affordable housing. HUD's
online Regulatory Barriers Clearinghouse
(www.regbarriers.org) provides a database of
state and local strategies and success stories
about removing regulatory barriers.
STATE EFFORTS To REDUCE REGULATORY BARRmRS
States play an important role in reducing
regulatory barriers to affordable housing. State -
level enabling legislation sets the ground rules
for local land use controls, which can encourage
or discourage affordable housing development.
Most states have devolved land use control to
localities and employ a hands -off approach to
land use planning. However, a number of states
have recently taken action to reform the regulatory
barriers within their local communities. Consider
the following examples:
Idaho enacted legislation requiring municipalities
to permit manufactured home sittings in residential
areas. The increased availability of such
housing will increase many families' affordable
housing options.
Florida created a statewide one -stop permitting
system to make state reviews more user - friendly
without diminishing environmental, public health,
or safety standards. Florida also adopted an
expedited system to process state permits for
affordable housing projects and is actively studying
how to streamline building code provisions to
facilitate the rehabilitation of existing structures.
to
Minnesota created a new property tax classification
that encourages property owners to preserve and
create affordable housing. The legislation enables
qualifying property owners to take a deduction of
up to 50 percent from their property taxes. From
its inception to 2001, 107,000 units have qualified
for this property tax break; approximately 40
percent of these were formerly market -rate units.
New Jersey adopted a new housing rehabilitation
code that has decreased rehab costs by 25
percent and increased rehab activity by
approximately 25 percent.
Table 2 provides additional examples of state
actions taken since the 1991 Report to reduce
regulatory barriers to affordable housing.
California California amended its Health and Safety Code to require a housing strategy to provide
(1991) for a coordinated system of housing planning and to help communities meet their fair
share of regional housing needs. 1991, S.B. No. 913, P. 8171.
Connecticut Municipalities are authorized to implement indusionary zoning to promote the
(1991) development of affordable housing for long -term retention by use of deed restrictions,
density bonuses, and requiring payments into a housing trust fund. 1991, H.B. No.
7118, P. 987
-------------------J- ---------------------------------------'-`------------------------------------------------------------
Illinois Illinois requires an analysis of the impact on affordable housing of every bill that
(1992) potentially increases or decreases the cost of constructing, purchasing, owning, or
selling a single -family residence. 1992, H.B. No. 3803, P. 5033.
- - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------- - - - - --
Idaho
Idaho amended its statute defining "single - family dwelling" to include homes in which
(1993)
eight or fewer unrelated elderly persons reside. Local governments may not require
special permits or variances for the operation of such residences. 1993, S.B. 1021, P. 83.
------------------- =-------------------------------------------------------------------------------------------------------
Washington The Affordable Housing Advisory Board and the State Department of Community
(1993)
Development prepare a plan including identification of regulatory barriers to affordable
housing and recommendations for meeting affordable housing needs; local governments
1
must incorporate these recommendations concerning development and placement of
accessory apartments. The State Department of Community Development is to provide
technical assistance to local governments to help remove such barriers. 1993, S.B. No.
5584, P. 3387.
--------------- - - - -y- --------------- - - - - -- --------------------------------------------------- ----------------------
California
Certain proposals for developing affordable housing are exempt from most requirements
(1994)
relating to environmental impact statements. 1994, S.B. No. 749, P. 8909.
------------- - - - - -- ---------------------------------- - - - - -- --------------------------------------------------------------
Georgia
The legislature established the Barriers to Affordable Housing Committee to study
(1994)
possible elimination of the barriers to affordable housing. The Committee is charged
with looking at building codes, property taxes, tax incentives, zoning and other land -use
issues, and housing appropriations at all levels. 1994, S.K 406, P. 3333.
Oregon
Oregon enacted provisions to require certain municipalities to inventory the supply of
(1995)
housing and buildable land in their urban growth areas to determine density and growth
rates and to analyze housing needs. If necessary, the municipality must amend its urban
growth boundary to include sufficient buildable land to accommodate housing needs.
1995, H.B. 2709.
--------------------
1
Florida created a functional statewide, one -stop permitting system to make permitting
(1999)
in the state more user - friendly without diminishing environmental, public health, or
safety standards. The legislation also is intended to encourage local governments to
expedite and streamline permitting, to adopt best management practices, and to
integrate the local permitting process with the statewide one -stop permitting process.
Counties can obtain grants to coordinate their permitting process with the state system.
1999, S.B. 662.
(chart continues on following page)
Section 2. Efforts to Solve Barrier Problems at the State and Local Level -11
E
4; STATE
ACTION
fi
Idaho
Municipalities are required to permit siting of manufactured homes in residential
(2001)
areas.' A municipality may require that a manufactured home have a garage or carport
constructed of like materials only if the same requirement applies to other newly
constructed traditional homes. 2001, H.B. 154.
-------------------
j------------------------------------------------------------------------- - - - - -- -------------------
Florida
The legislature directed the Florida Building Commission to develop building code
(2002)
provisions to facilitate rehabilitation of existing structures and identify legislative
changes required to implement code provisions. 2002, H.B. 1307
Florida amended its statutes relating to affordable housing. Among the changes
is a requirement that the processing of permits for affordable housing be expedited
to a greater degree than other projects. 2002, H.B. 547
The Illinois Local Planning Technical Assistance Act defines a comprehensive plan,
Illinois
which must include a housing element, whose "purpose... is to document the present
(2002)
and future needs for housing within the jurisdiction of the local government, including
affordable housing and special needs housing; take into account the housing needs of
a larger region; identify barriers to the production of housing, including affordable
1
housing; access [sic] the condition of the local housing stock; and develop strategies,
programs, and other actions to address the needs for a range of housing options"
(emphasis added). 2002, H.B. 4023 /Public Act 92 -0768.
LOCAL EuoRTs To REDUCE REGULATORY EARRmR_$
Some localities also have taken actions to reduce
regulatory barriers to affordable housing. For
example, New York City recently announced a
comprehensive barriers removal strategy that
involves overhauling the city's outdated building
code, rezoning commercial and industrial areas
for residential use, developing city -owned property
for affordable housing that the city has usually sold
at auction, and streamlining the approval process.
The barrier removal strategy is crucial to meet
the goals of Mayor Michael Bloomberg's $3 billion
housing plan to rehabilitate and preserve 38,000
units of existing housing and build 27,000 new
units. Other examples include the following:
Tucson, Arizona, allows streamlined processing
of requests to create small subdivisions. If the
proposed subdivision meets certain criteria, only
a final plan approval process is undertaken.
12
Berkeley, California, operates a one -stop permit
center that has reduced the time required to review
development projects, thus removing a major
problem faced by developers.
Cincinnati, Ohio, guarantees that plans for small
1.
projects (up to 20 units) will receive approval or
disapproval of plans with explanation within 8
to 10 days after submission.
Cambridge, Massachusetts, offers an expedited
review process for townhouse development.
Significant improvements also have been made
in streamlining environmental regulation in
cities, most notably for brownfields. These
changes have helped make well- positioned land
available for affordable infill housing development
on sites with pre - existing infrastructure and have
returned land to the property tax rolls. Some cities
have combined these efforts with funding to
redevelop brownfields and restore the land to
productive use. For example, through its City of
Chicago Corporate Funds, Chicago has spent more
than $4 million of general city resources on
brownfields remediation for housing development
A recent and encouraging development has been
the emergence of public /private partnerships
at the local level that include regulatory reform
and barrier removal as part of their overall
housing strategy. For example, the Silicon Valley
Manufacturing Group, a partnership of leading
businesses, local governments, and public officials
in the Silicon Valley, supports barrier removal and
affordable housing production to tackle the lack
of affordable housing in the area. A current
priority of the organization addresses streamlining
California's environmental review process for
infill development. Another local effort, the Long
Island Campaign for Affordable Rental Housing,
a network of business, public, civic, and nonprofit
organization leaders, works with officials of Long
Island, New York, municipalities to identify and
promote affordable housing through zoning
reform, public land re -use, tax abatement,
and other incentives. In the Boston area, the
Commonwealth Housing Task Force, a broad
coalition of public and private leaders, including
the Greater Boston Chamber of Commerce,
recently called on communities and the state to
enact new zoning rules to allow more apartments
and single- family homes on smaller lots.
Section 2. Efforts to Solve Barrier Problems at the State and Local Level 13
The ultimate actions needed to reduce
regulatory barriers to die production and
development of affordable housing are principally
within the control of state and local governments.
HUD is not in a position to reduce these barriers.
HUD can ensure, however, that the Department's
own rules do not constitute barriers to affordability.
It can also take a leadership role in working with
states and local communities to identify strategies
to reduce regulatory barriers or mitigate their impact.
HUD has addressed these issues by implementing
an ongoing effort to remove the Department's
own regulatory barriers; establishing barrier removal
as a significant departmental policy priority;
disseminating information on best practices to state
and local governments; building coalitions
of groups interested in reducing barriers; and
continuing to conduct much- needed research
into the subject of regulatory barrier issues.
By placing the problems and issues related to
regulatory barriers on the national agenda, HUD
hopes to be a catalyst for reform.
HUD has taken a number of important steps
to implement these strategies, some of which
are described below.
CREATING THE AMERICA'S AFFORDABLE
COMMUNITIES INITIATIVE
Early in 2003, the Department underscored the
importance of addressing regulatory barriers by
establishing the America's Affordable Communities
Initiative. HUD created a department -wide
Initiative Team responsible for coordinating
all regulatory reform efforts. Established in the
summer of 2003, the Initiative Team, consisting
of highly experienced senior personnel, meets
regularly and undertakes multiple responsibilities,
including ensuring that the federal government,
and HUD in particular, removes or reduces
14
federal barriers to housing affordability. The
team coordinates a major research effort to
better understand the impact of regulatory
barriers on affordability and develops tools
and strategies aimed at reducing these barriers.
The Initiative provides tecImical assistance to
governments, local housing groups, associations,
and housing advocates on strategies for reducing
regulatory barriers, including model regulatory
approaches and systems. It encourages a
public /private partnership with state and local
coalitions that addresses regulatory reform
at state and local levels. Finally, the Initiative
provides a prominent public voice for the issue
of regulatory reform and, through speeches,
conferences, and other venues, assures that this
issue remains highly visible in the public policy
arena. For more information on the Initiative,
visit wvwv .hud.gov /affordablecommunities.
LEADING BY ExAMPLE
HUD believes tharit must review and, if ,necessary,
remove or modify its own regulations that affect
housing affordability, if the Department is to be
a meaningful advocate for state and local reform.
Since the Initiative was created, the Department
has taken a number of major steps in this regard.
On November 25, 2003, the Department
published a Federal Register notice seeking
the assistance of current and former program
participants, including state and local governments,
public housing agencies, state finance agencies,
nonprofit organizations, and other interested
members of the public, in identifying HUD
regulations that present barriers to affordable
housing. HUD received 31 comments, many
of them extensive, with a broad range of
suggestions as to how the Department, through
administrative, regulatory, or statutory change,
could address its own barriers to housing
affordability. The affected offices within the
Department are required to respond to each
comment and recommend regulatory or
administrative changes, or, if no action is to
be taken, explain why suggested changes cannot
be implemented. The Initiative Team reviews all
Office responses to the Federal Register call for
recommendations for reform. The Department's
final response to these comments will also be
published in the Federal Register.
The Secretary has also launched Operation Regnet,
a department -wide effort in which all offices are
directed to review their existing rules, major
handbooks, notices of funding availability (NOFAs),
and other notices to determine whether they
constitute barriers to housing affordability. An
example of such reform is the 2003 elimination
of policies and procedures that the Department
long had in place to approve planned unit
developments (PUDs). Given the strong role
state and local governments play in reviewing
and approving PUDs, a HUD review was
unnecessary. Elimination of this requirement
reduces costs to both lender and developers
and, ultimately, the homebuyer.
In addition, the Secretary has directed all offices,
on a continuing basis, to review all pending rules,
major handbooks, NOFAs, and other notices
to ensure that the Department is not introducing
new regulatory barriers to housing affordability.
The Secretary has also asked the Initiative
Team to review all these pending rules to assess
independently whether they may be or may create
regulatory barriers. HUD rules published in the
Federal Register that address the production or
rehabilitation of affordable housing will refer to
this review procedure and include a finding as to
whether such new rule or regulation is consistent
with the objectives of regulatory reform.
REGULAToF.y BARRIER REFORM
AS A DEPARTMENTAL POLICY PRIORITY
The Department traditionally includes in its
NOFAs various policy priorities for ,,which higher
rating points are available to applicants that
effectively address the departmental priority.
To stress the importance of regulatory reform,
on March 22, 2004, the Department published
a Federal Register notice stating that it intended
to include in most of its fiscal year 2004 NOFAs,
including HUD's SuperNOFA, a policy priority
for increasing the supply of affordable housing
through the removal of regulatory barriers. The
Notice included a detailed list of questions on the
local regulatory environment to be asked of states,
localities, and other applicants located in these
jurisdictions. As a policy priority (and like the other
policy priorities), higher rating points are available
to applicants that choose to address these questions
and are able to demonstrate successful efforts at
regulatory reform within their jurisdiction. This
policy priority is now included in almost all
departmental NOFAs.
SECRETARIAL AWARDS
The Secretary has announced an Affordable
Communities Awards program that will provide
much - needed national recognition to states, cities,
towns, counties, and other jurisdictions that have
made significant changes in their procedures,
processes, fees, and regulations to reduce
regulatory barriers to the production of housing
affordable to lower - and moderate- income families.
This new awards program, showcasing successful
efforts at barrier removal, is expected to make
clear to other local governments that these efforts
are important, possible, and worthy of national
recognition. Nominations for the awards will
come from individuals, states and localities,
builders, associations, nonprofits, and others
committed to regulatory reform.
Section 3. HUD's Commitment to Barrier Removal Efforts 15
COALITION-BUILDING AND EDUCATION
For regulatory barriers to be addressed effectively
by the thousands of local jurisdictions that
regulate development, attitudes and perceptions
about affordable housing must change. Local
governments, local constituencies, and the general
public need to know that affordable housing is a
community asset, not a burden. They must better
understand the impact of excessive or duplicative
regulations on housing supply and cost. HUD has
committed itself to assuming a leadership role in
this area by working with organizations interested
in developing solutions to the problem and
encouraging their implementation. HUD is
working cooperatively with public interest
organizations, industry groups, and state and
local governments to, build a public consensus for
regulatory reform. The Department is convening
a series of conferences in every region of the
country to discuss regulatory barriers and to
obtain recommendations on how the Initiative
can better meet its goals.
As an important f rst step in this effort, in March
2004 the Department distributed a new brochure,
"America's Affordable Communities .Initiative:
Bringing Homes within Reach Through Regulatory
Reform," to more than 25,000 mayors, county
executives, and city managers across the nation.
This brochure describes the Initiative, identifies
common regulatory barriers, suggests possible
solutions, and includes a letter from Secretary
Jackson encouraging elected officials to conduct
local public forums or establish local commissions
to discuss regulatory barriers and their impact on
the local supply of affordable housing.
Although extensive research has shown that an
adequate supply of affordable housing is essential
to the economic health and vitality of a region,
many communities continue to view affordability
as a liability rather than an asset. The Department
continues to develop tools that may help overcome
these misconceptions. Working together with
organizations that include the American Institute
of Architects, the Enterprise Foundation, the
16
Federal Home Loan Bank of Boston, and the
Local Initiatives Support Corporation, HUD
developed the Affordable Housing Design Advisor
(www.designadvisor.org), a web -based tool to
educate communities and affordable housing
providers on the importance of good design,
particularly in gaining broad -based community
acceptance. A recent exhibit at the National
Building Museum, Affordable Housing. Designing
an American .Asset, largely funded by the
Department, presented the very best in affordable
housing design. This exhibit will travel across the
nation to educate communities that attractive,
well- designed affordable housing can be a valuable
community asset.
REGULATORY BARRIERS CLEARINGHOUSE
Collection and widespread dissemination of useful
information on regulatory barriers and successful
efforts that communities have taken to address
these problems are essential components of
any long -term barrier removal effort. HUD's
Regulatory Barriers Clearinghouse
(wwwregbarriers.org) provides a database of
state and local strategies used to address barriers
and success stories involving their removal, an
extensive publications list of studies and guidance
materials, and an electronic newsletter] that
highlights success stories. This website also enables
interested parties to subscribe to an email list to
stay informed on the latest research and efforts
that support regulatory solutions. The
Clearinghouse was created to support state and
local governments, nonprofit organizations,
homebuilders, and others seeking' information
about barrier removal strategies, and laws,
regulations, and policies affecting the development,
maintenance, improvement, availability, and cost
of affordable housing.
"` A "
REGULAT®RY BARRIERS RESEARCH
The 1991 Report recommended that HUD
expand its research efforts to better understand
the impact of regulatory barriers on housing supply
and costs and to develop model statutes and
ordinances for state and local governments to use
in reforming their own regulatory systems. Since
the release of the 1991 Report, the Department
has continuously supported research efforts to
implement many of the Advisory Commission's
recommendations, including extensive financial
support for 5 -year research effort that developed
model state planning and zoning enabling
legislation. The Department, using landmark
research in New Jersey, also developed new model
rehabilitation code language that, when enacted at
the state or local level, will provide the needed
flexibility to accomplish cost - effective
rehabilitation. These so- called "smart codes" have
been enacted in New Jersey and Maryland with
dramatic results in reducing costs and stimulating
much- needed rehabilitation. A number of other
local communities have already enacted or are
considering similar smart codes.
Since the Initiative was created, HUD has
significantly expanded its regulatory barriers
research efforts. In April 2004, the Department
convened a national conference on the status of
regulatory barriers research with the goal of
developing a long -term research agenda. Led by
renowned academics in the field, participants also
included representatives of local governments,
housing practitioners, regulators, and affordable
housing advocates. This conference was the first
comprehensive academic and policy review of
regulatory barriers. For fiscal year 2004, HUD's
Office of Policy Development and Research is
spending approximately $1.5 million on regulatory
research, including research on land development
standards, impact fees, and the development of
a methodology for conducting housing impact
analysis. Under the latter effort, HUD is
developing an analytical tool that other federal
agencies, as well as state and local governments,
can use to conduct impact analysis of proposed
rules and regulations to ensure that costs and
consequences of regulations that affect affordability
will be properly balanced against other important
public purposes.
The Department has proposed more than $1
million for regulatory barriers research for fiscal
year 2005. This research effort will enable HUD to
undertake new efforts to learn more about the
nature and extent of the problem and develop
promising strategies and tools for local
governments to use to address barriers.
The Secretary and the Initiative Team are
committed to a sustained effort to change not
just regulations but, more importantly, the way
that many communities view affordable housing.
Access to adequate affordable housing is not
simply a matter of equity. Increasing the supply
of affordable housing will create jobs, stimulate
economic growth, and sustain the long -term
economic health of our cities and metropolitan
areas. Regulatory barriers will fall only when
Americans do not dismiss the term "affordable
housing" with "not in my back yard" but respond
with an affirmative "why not in our community ?"
Section 3. HUD's Commitment to Barrier Removal Efforts 17
his analysis was prepared by past and present members of the Department's Office of Policy
Development and Research: David Engel, Trent Frazier, Peter Lawrence, Jeffrey Lubell,
Konrad Schlater, and Edwin Stromberg. Additional assistance was provided by A. Bryant Applegate,
Senior Counsel and Director of America's Affordable Communities Initiative; Ralph Rosado, intern
from Princeton University; and Robert Schrum, intern from Yale University.
In connection with the preparation of this analysis, HUD commissioned six outside papers to assess
the continued relevance of regulatory barriers to housing development as an issue of public concern.
Special thanks to the following individuals who wrote papers: Anthony Downs, Senior Fellow, The
Brookings Institution; William A. Fischel, Professor of Economics, Dartmouth College; Michael Luger,
Professor of Public Policy Analysis, Planning, and Business, University of North Carolina; Stuart Meck,
Fellow of the American Institute of Certified Planners; Michael H. Schill, Professor of Law and Urban
Planning, New York University; and Ronald D. Utt, Ph.D., Research Fellow, Domestic Policy, Heritage
Foundation. These papers provided HUD staff with important new insights, critical analyses, and
research findings that were essential to completion of this paper.
19
1991 .Executive Summary of `Tot In My Back Ytxrd'Removing Barriers to
Affordable Housing —The Report of the Advisory Commission on Regulatory
Barriers to Affordable Housing
M ilhons of Americans are being priced out
of buying or renting the kind of housing
they otherwise could afford were it not for a web
of government regulations. For them, America —
the land of opportunity —has become the land of
a frustrating and often unrewarded search for an
affordable home:
Middle- income workers, such as police officers,
firefighters, teachers, nurses, and other vital
workers, often live many miles from the
communities they serve, because they cannot
find affordable housing there.
Workers who are forced to live far from their jobs
commute long distances by car, which clogs roads
and highways, contributes to air pollution,
and results in significant losses in productivity.
Low - income and minority persons have an
especially hard time finding suitable housing.
Elderly persons carmot find small apartments to
live in near their children; young married couples
cannot find housing in the communities where
they grew up.
These people are caught in the affordability
squeeze. Contributing to that squeeze is a maze
of Federal, State, and local codes, processes, and
controls. These are the regulatory barriers that -
often but not always intending to do so -delay
and drive up the cost of new construction and
rehabilitation. These regulatory barriers may
even prohibit outright such seemingly innocuous
matters as a household converting spare rooms
into an accessory apartment.
Government action is essential to any strategy
to assist low - and moderate - income families in
20
meeting their household needs. But government
action is also a major contributing factor in
denying housing opportunities, raising costs, and
restricting supply. Exclusionary, discriminatory,
and unnecessary government regulations at all
levels substantially restrict the abiliq, of the private
housing market to meet the demand for affordable
housing, and also limit the efficacy of government
housing assistance and subsidy programs.
In community after community across the country,
local governments employ zoning and subdivision
ordinances, building codes, and permitting
procedures to prevent development of affordable
housing. "Not In My Back Yard" —the NIMBY
syndrome —has become the rallying cry for current
residents of these communities. They fear that
affordable housing will result in lower land values,
more congested streets, and a rising need for new
infrastructure such.-,as schools.
What does it mean if there is not enough
"affordable housing "? Most urgently, it means
that a low- or moderate- income family cannot
afford to rent or buy a decent - quality dwelling
without spending more than 30 percent of its
income on shelter, so much that it cannot afford
other necessities of life. With respect to renters,
the Commission is particularly concerned about
those with incomes below 50 percent of the area
median income. In other cases, it also means that
a moderate- income family cannot afford to buy
a modest home of its own because it cannot come
up with the downpayment, or make monthly
mortgage payments, without spending more
than 30 percent of its income on housing.
Concern about the effect of regulations on housing
affordability is not new. Other commissions over
the past two decades have examined the causes,
framed the issues, and recommended solutions
concerning the impact of regulation on housing
prices. The fact that the problem remains today
should not deter continued efforts to resolve it.
This Commission has therefore considered both
what should be done and how to make sure that
it is done
Many forces in addition to regulatory barriers
affect the problem of affordability of housing.
Certainly some aspects of both the housing
finance system and the tax structure seem to
inhibit the availability of affordable housing. For
very low- income households, the root problem is
poverty. But even for very low- income households,
regulatory barriers make matters worse.
Those other forces are beyond the purview of this
Commission's study. What is within its purview
is the effect of regulatory barriers on the cost of
housing, and that is substantial. The Commission
has seen evidence that an increase of 20 to 35
percent in housing prices attributable to excessive
regulation is not uncommon in the areas of the
country that are most severely affected.
JKU�_.
THE BASIC PROBLEM
Whether the search for housing takes place in
rapidly growing suburban areas or older central
cities, the basic problem is the same: because
of excessive and unnecessary government
regulation, housing costs are too often higher
than they should and could be. Yet the specific
government regulations that add to costs in
suburban and high- growth areas tend to differ
from those adding to costs in central cities.
Regulatory Barriers in the Suburbs
In the nation's suburbs, the landscape of the
affordability problem reveals a variety of topical
features. Exclusionary zoning, reflecting the
pervasive NIMBY syndrome, is one of the most
prominent. Some suburban areas, intent on
preserving their aesthetic and socioeconomic
exclusivity, erect impediments such as zoning
for very large lots to discourage all but the few
privileged households who can afford them.
Some exclude, or minimally provide for,
multifamily housing, commonly acknowledged
to be the most affordable form of housing.
In theory a way of separating "incompatible"
land uses to protect health and safety, zoning has
become a device for screening new development
to ensure that it does not depress community
property values. As a result, some suburban
communities, consisting mainly of single -family
homes on lots of one acre or more, end up as
homogeneous enclaves where households such
as schoolteachers, firefighters, young families, and
the elderly on fixed incomes are al4regulated out.
Suburban gatekeepers also invoke gold - plated
subdivision controls to make sure that the physical
and design characteristics of their communities
meet very demanding standards. Many of these
communities are requiring that developers provide
offsite amenities such as parks, libraries, or
recreational facilities that can add substantially
to the housing costs of new homebuyers.
Communities are increasingly charging large fees
to developers who seek the privilege of building
housing in them. These fees may bear little
resemblance to the actual cost of providing
services and facilities that new subdivisions require.
Although fee schedules are often driven by fiscal
concerns, they have a regressive effect. Fees are
generally fixed regardless of how much they affect
the cost of a new home. Thus, households that
can only afford less expensive houses end up
paying a higher proportion of the sales price
to cover the cost of fees.
Slow and overly burdensome permitting is another
regulatory obstacle. The original rationale for
establishing permitting and approval processes
is unassailable: to ensure that construction meets
established standards related to health, safety, and
other important public concerns. But, in many
jurisdictions, the process involves multiple, time-
Appendix 21
consuming steps that add unnecessarily to housing
costs. Delays of 2 to 3 years are not uncommon.
The affordability landscape comes most sharply
into focus in areas that are experiencing rapid
growth. These are the places that attract
households seeking opportunities, and the places
where growth -- controlling regulations can add
considerably to the cost of housing. Local
residents — concerned about road congestion,
overburdened sewer and water systems,
overcrowded schools, and strained city budgets —
have many ways to limit growth. Households that
do not want to forgo the job opportunities in
growing areas must often travel far afield to fund
affordable housing.
A look at some cost data can be very sobering.
Land developers in Central Florida, a boom area
under intense de,,yelopment pressure, must add a
$15,000 surcharge to the price of a $55,000 house
to cover the cost of excessive regulation. As a
result, a $55,000 house becomes a $70,000 house.
In Southern California, the cost of fees alone has
contributed $20,000 to the price of many new
Homes, and fees of $30,000 or more are not rare.
In New Jersey, developers report that excessive
regulation is adding 25 to 35 percent to the cost
of a new house. It is clear that the costs of
regulation in suburban and high - growth areas
are causing large numbers of households to forgo
their dreams of homeownership or to make
difficult tradeoffs involving very long commutes.
Regulatory Barriers in Cities
Any government regulation that adds to the cost
of urban housing is especially significant because
of the concentration of low- income households
in central cities. Unlike suburban areas where
large -scale new subdivision development is taking
place, the regulatory problems in cities involve
either the rehabilitation of older properties or
new infill construction to provide affordable
housing for families of limited means. Central -
city reinvestment has been further compounded
by restrictive and racially discriminatory
lending practices.
22
Chief among the urban regulatory barriers are
building codes geared to new construction rather
than to the rehabilitation of existing buildings.
The codes often require state -of- the -art materials
and methods that are inconsistent with those
originally used. For example, introducing newer
technologies sometimes requires the wholesale
replacement of plumbing and electrical systems
that are still quite serviceable.
Excessively expensive requirements have also made
new infill units in some urban jurisdictions more
than 25 percent more expensive than identical
units constructed in adjacent suburban localities
that allow less costly materials and methods.
Despite the pressing need to provide shelter for
low - income households, city building codes
seldom provide for the construction of "no- frills"
affordable housing such as the new single -room-
occupancy (SRO) hotels: that have recently proven
so successful in San Diego. Waivers on code
requirements in that city cut the cost of some
SRO living units by as much as 60 percent.
Other regulations that affect the availability of
housing, such as rent control, also seem to ignore
the plight of the poor. In the long run, the
primary beneficiaries of rent control are frequently
upper and middle - income groups rather than lower
income households who need assistance in
obtaining decent homes in safe neighborhoods.
By limiting annual rent increases and thins
providing incentives for higher income tenants
to remain in older but pleasant neighborhoods,
rent control hinders upward mobility of low -
income families to better housing opportunities.
Urban neighborhoods could benefit substantially
from such affordability- enhancing options as
manufactured housing, the use of modular units
in construction, and the legalization of accessory
apartments. But, too often, regulatory barriers
completely block or seriously impede the
introduction of these options. Manufactured
housing is still frequently relegated to rural areas
by local zoning ordinances. State highway
regulations and local building codes sometimes
mandate modifications to modular units that offset
the savings these prefabricated units can provide
for infill construction. Finally, local zoning
regulations often prohibit accessory apartments,
which could be a significant source of affordable
housing: as many as 3.8 million units could be
added to the nation's rental housing supply
through this means alone.
Environmental Protection
and Affordable Housing
Exerting considerable influence on both urban and
suburban landscapes, otherwise valuable
environmental protection regulations seriously
restrict the amount of buildable land that is
available for development. This effect raises the
cost of what land remains open for homebuilding.
Regulations that mandate environmental impact
studies increase developers' costs by prolonging
the permitting process and thus increasing the
carrying charges that they must pay to finance
business operations. Costs are also raised by the
assessment of special fees and exactions for
wilderness and wildlife conservation. In some
instances, developers are required to set aside
land for preserves, pay mitigation fees, or
undertake mitigation projects (such as creating a
new wetland) in exchange for the use of property
designated as a wetland. Increases in development
costs associated with environmental protection are
passed along to the consumer and thus have a
direct effect on housing affordability.
Regulations for the protection of wetlands have
hindered residential development in many areas.
Over the past several years, the Federal definition
of a wetland has become more expansive.
Protection has recently been extended to some
areas where the soil is only temporarily saturated
with water for short periods each year.
Considerable duplication exists between Federal
and State regulations, rendering the permitting
process for wetlands development unnecessarily
lengthy and complicated and'therefore unnecessarily
expensive. At the Federal level, the jurisdictions
of the Environment Protection Agency (EPA) and
the Army Corps of Engineers overlap considerably,
at times introducing conflicting expectations and
requirements into the permit approval process.
The Endangered Species Act (ESA) also affects
housing affordability. Designed to help ensure
the survival and well-being of existing species of
plants and animals, the ESA allows the Fish and
Wildlife Service (FWS) to ban or severely restrict
development in thousands of acres for years at a
time, if such land is the habitat of a species judged
to be "endangered" or "threatened." The ESA
does not take into account the socioeconomic
impact of these restrictions on human activity.
Construction is allowed after the FWS approves a
Habitat Conservation Plan, which usually involves
the permanent establishment of preserves for the
endangered animal.
These preserves increasingly involve the purchase
of private, prime development land. Recently,
in Riverside County, California, the initial phases
of creating a 30- square -mile system of preserves
for the Stevens Kangaroo Rat cost some $100
million. Estimates of the entire protection effort
run more than twice that amount. A special
impact fee of $1,950 is now leded on each acre
of Riverside County that is developed, with
new homebuyers bearing the cost. Housing
affordability is becoming an inadvertent casualty
of environmental protection.
ROOT CAUSES AND NEw DIRECTIONS
There can be little disagreement that government
land -use and development regulations are often
barriers to affordable housing. Why is this so,
and what should be done about it?
Root Causes
Part of the problem kavolves a classic conflict
among competing public policy objectives.
Numerous Federal, State, and local regulations
that are intended to achieve specific, admirable
goals turn out to have negative consequences
for affordable housing. The impact on housing
costs may not have been considered when the
regulations were promulgated.
Appendix 23
Another major part of the problem is the
fragmented structure of government land -use and
development regulation. Not only do many local
jurisdictions control land uses and development
within each metropolitan area, but multiple levels
of government, and a multiplicity of agencies at
each level, also have responsibility for one aspect
or another of this process. Duplication, uneven
standards, and other cost - producing consequences
result from this regulatory system. Hence, the
cumulative impact goes well beyond the intent
of sound and reasonable government oversight
responsibilities.
Perhaps the most potent and, to date, intractable
cause of regulatory barriers to affordable housing
is NIMBY sentiment at the individual,
neighborhood, and community levels. Residents
who say "Not In My Back Yard" may be
expressing opposition to specific types of housing,
to changes in the character of the conmunity;
to certain levels of growth, to any and all
development, or to economic, racial, or ethnic
heterogeneity. In any case, the intention is to
exclude, resist change, or inhibit growth.
The personal basis of NIMBY involves fear of
change in either the physical environment or
composition of a community. It can variously
reflect concern about property values, service
levels, fiscal impacts, community ambience, the
environment, or public health and safety. Its
more perverse manifestations reflect racial or
ethnic prejudice masquerading under the guise
of these other concerns.
NIMBY sentiment — frequently widespread and
deeply ingrained —is so powerful because it is
easily translatable into government action, given
the existing system for regulating land use and
development. Current residents and organized
neighborhood groups can exert great influence
over local electoral and land - development
processes, to the exclusion of nonresidents,
prospective residents, or, for that matter, all
outsiders. Restrictions on affordable housing
are the result.
24
New Directions
The root causes of regulatory barriers to affordable
housing have been in place for many years, and
the evidence is overwhelming that these barriers
are unlikely to disappear, absent significant
incentives and effort. All levels of government
need to work, at removing barriers in conjunction
with private interests.
Certainly, the Federal Government needs first to
put its own house in order. It should remove or
reform existing Federal rules and regulations that
have an adverse effect on housing affordability, and
initiate procedures to minimize adverse effects in
future regulations. Simply stated, Federal agencies
promulgating major rules must account for the
impacts of those rules on affordable housing.
Because States delegate authority to local
governments to regulate land use and
development, States should take the lead in
removing regulatory barriers to affordable
housing. What each State should do depends on
it own circumstances and situation, but there is
no question that State leadership is the only path
likely to bring about desired change.
A few States have been substantially involved in
attempting to promote affordable housing through
the removal of regulatory barriers. Their efforts
include recognizing affordable housing as a formal
State goal, creating–procedures for reconciling local
regulations with State goals, eliminating redundant
regulations, developing procedures for resolving
disputes, setting statewide standards in support
of :affordable housing, elinni.natung discrimination
against certain types of affordable housing, and
providing State financial incentives for affordable
housing and local regulatory reform. Clearly,
however, more effort on the part of more States
is called for.
Despite the appropriateness and desirability
of State action, States are unlikely to play a strong
role in the absence of Federal incentives to do
so. Therefore, the Federal Government must
take appropriate actions to engage the States.
Such actions include conditioning Federal
housing assistance on the establishment of State
and local barrier - removal strategies, relaxing
Federal requirements in response to reform
efforts, and providing planning grants to assist
in barrier removal.
Finally, concerted educational and group actions
are needed at the local level to expose the negative
consequences of certain government regulations,
build coalitions for pursuing regulatory reform,
and stimulate local barrier - removal efforts. Such
actions are intended to complement and reinforce
proposed State and Federal actions. In this way,
affordable housing can become a reality for those
deprived of it by government regulation.
Appendix 25
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