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NAHB to Congress: Regulations 1/3 of multifamily costs

Posted by Editor on September 14, 2018
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Excessive regulation – local, state and federal mandates – translates into higher rents and reduced affordability for consumers, NAHB said.

WASHINGTON – Sept. 10, 2018 – Layers of excessive regulation translate into higher rents, reduced affordability for consumers and, on average, account for almost one-third of a multifamily project’s development and building costs, the National Association of Home Builders (NAHB) told Congress last week.

Testifying on behalf of NAHB before the House Financial Services Subcommittee on Housing and Insurance, Steve Lawson, chairman of The Lawson Companies, said housing-industry overregulation is felt at every phase of the building process.

“It results from local, state and federal mandates,” said Lawson. “It includes the cost of applying for zoning and subdivision approval, environmental mitigation, and permit … and other government fees paid by the builder. In many cases, these projects become financially infeasible and, therefore, are not built.”

The congressional hearing on regulatory burdens on multifamily housing development was spurred in part due to a study by NAHB and National Multifamily Housing Council called Multifamily Cost of Regulation that details how regulatory costs account for 32 percent of the cost of developing new multifamily properties.

The research found that over 90 percent of multifamily developers typically incur hard costs of fees paid to local governments, both when applying for zoning approval, and again when local jurisdictions authorize the construction of buildings. State and federal governments are increasingly becoming involved in the process and layering on additional levels of fees and regulations.

“Multifamily builders and developers are seeing strong demand, but there are headwinds that have impacted further development,” said Lawson. “Some developers have had difficulty getting projects off the ground due to regulatory burdens and neighborhood opposition in certain parts of the country.”

To help ease regulatory burdens and improve housing affordability, NAHB urged policymakers to:

Consider the cumulative effects of regulatory requirements to determine whether a new mandate is necessary to protect the health and safety of the public, or if it is simply a means to achieve a policy goal
Remove barriers to production of multifamily housing
Ensure that energy codes and standards are cost-effective, affordable and have a reasonable payback period of 10 years
Enact common sense updates to Davis-Bacon wage determination policies to help builders construct more affordable housing
Call on the Trump administration to resolve issues related to lumber and steel tariffs, which have needlessly raised the price of building materials
Maintain and properly fund federal rental assistance and multifamily production programs to serve very low- and extremely low-income Americans
© 2018 Florida Realtors®

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