The White House on Monday released a Housing Development Toolkit that highlights regulatory barriers to housing development and outlines tools and strategies that local governments can use to diminish the impact these barriers have on housing production and affordability.
The President’s FY2017 HUD budget includes a $300 million proposal for Local Housing Policy Grants to help facilitate the modernization of its recipients’ housing regulatory approaches.
These tools and strategies include:
- Establishing by-right development
- Taxing vacant land or donating it to nonprofit developers
- Streamlining or shortening permitting processes and timelines
- Eliminating off-street parking requirements
- Allowing accessory dwelling units
- Establishing density bonuses
- Enacting high-density and multifamily zoning
- Employing inclusionary zoning
- Establishing development tax or value capture incentives
- Using property tax abatements
NAHB has long embraced a move toward fewer regulatory roadblocks and more efficient development processes. Inefficiency costs developers and builders time and money, hurts housing affordability and availability, increases government offices’ administrative costs, and stifles economic growth.
NAHB recently released a report—Development Process Efficiency: Cutting through the Red Tape—which offers examples of developers, builders, land use officials and other stakeholders working together to improve the local development review and approval process and create a win-win for all parties.
Case in Point
Within the last decade, development approvals in many parts of the country have shifted from taking only a few months to two years or longer. An economic impact analysis recently commissioned by the Montgomery County (Maryland) Department of Permitting Services shows just how much is at stake.
Adding a year to the review process can reduce the value of that property by an average of 20%. Or, from a more positive viewpoint, shortening the time from concept to occupancy by one year could save the business as much as 20% of the project cost, lowering the cost of housing for its residents.
The county executive implemented a streamlining initiative in 2012, and since then record plat processing declined from 20-30 weeks to 8-12 weeks. Site plan reviews that used to take more than a year are now required to be completed within 120 days. And the time frame for building permit approvals dropped from 12 weeks to 30 days.
While many of the recommendations in NAHB’s report mirror those found in the White House toolkit, such as streamlining the permitting process and updating zoning codes, there are also key differences.
Namely, NAHB believes that there is too much focus at all levels of government on inclusionary zoning. In fact, it’s one of the strategies referenced in the White House toolkit as a preferred method of achieving affordable housing goals. The problem is that inclusionary zoning is a complex market intervention and, like impact fees, is dependent on the varying pace of construction.
Inclusionary zoning is not flexible enough to respond to changing market conditions and many communities have found that it does not produce the amount of affordable housing as hoped. Inclusionary zoning policies as implemented in some communities act like a tax on housing construction, the expense of which is passed on to consumers, builders and landowners.
NAHB urges government to encourage local communities to adopt long-term comprehensive strategies that will meet the demand for new housing and economic development. The association will continue to follow implementation of the White House report. Visit nahb.org for more information or resources on affordable housing strategies and process efficiency.