Home Builders Call for Regulatory Reform to Ease Housing Affordability

Filed in Capitol Hill, Codes and Regulations, Multifamily by on March 22, 2016 1 Comment

Citing an acute shortage of affordable rental housing and severe regulatory burdens that drive up the cost of single- and multifamily housing for home builders and consumers alike, NAHB today called on Congress to pursue regulatory reforms that will help improve affordability and promote new development.

IMG_6281Testifying before the House Financial Services Subcommittee on Housing and Insurance, NAHB First Vice Chairman Granger MacDonald told lawmakers that home building is one of the most heavily regulated industries.

“Government regulations account for 25% of the cost of a new single-family home,” said MacDonald. “The regulatory burden includes costs associated with permitting, land development, construction codes and other financial hindrances imposed on the construction process. Oftentimes, these regulations end up pushing the price of housing beyond the means of middle-class working American families.”

NAHB is actively opposing new regulations from the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency, the Federal Emergency Management Agency and other agencies that could drive up the cost of housing. Specifically, regulations on energy codes, waters of the U.S., OSHA’s crystalline silica permissible exposure limit, and the U.S. Department of Labor’s persuader rule and new joint employer standard are only a few of the myriad of regulatory issues home builders must face on a daily basis.

Web Page Helps Members Navigate Flood Risk Standard

MacDonald also raised concerns that HUD’s forthcoming regulation to implement the new Federal Flood Risk Management Standard (FFRMS) will have a negative impact on the cost and availability of multifamily projects. Without maps of the regulatory floodplain, builders and developers using HUD products and programs will face unnecessary uncertainty as they plan multifamily projects.

To help members better understand how the FFRMS could impact their business, NAHB has created a Web page that includes a comprehensive primer on the standard, our comments on the draft implementation guidelines, a list of the federal multifamily housing programs that will be affected, and more.

Another factor that is driving up the cost of constructing affordable housing is the Davis-Bacon Act mandates on federal construction projects, which hinder the goals of government programs by unnecessarily creating additional layers of bureaucracy and costs.

“NAHB strongly opposes the mandatory use of Davis-Bacon prevailing wage rates and requirements,” said MacDonald. “As this law is currently enforced, it is artificially driving up construction costs on apartment communities that include HUD financing and the compliance burdens are creating barriers to entry for small mom-and-pop subcontractors to work on these projects.”

While NAHB continues to urge Congress to pursue regulatory reform, MacDonald commended the committee for its work on the Housing Opportunity Through Modernization Act of 2016 (H.R. 3700). The bill, which passed the full House earlier this year, would reduce inefficient and duplicative requirements that have made many of the HUD and rural housing programs unnecessarily burdensome.

MacDonald also called on lawmakers to continue support for successful housing programs such as the Low-Income Housing Tax Credit, and urged them to support full funding for vital rental housing programs such as the Housing Choice Voucher Program, Project-Based Section 8 Rental Assistance and the HOME Investment Partnership Program.

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  1. While the initial cost of housing might be higher due to changes in the energy codes, we have to consider the ongoing carrying cost of affordable housing. The default rate on mortgages is much higher on homes that are not Energy Star certified, for instance, because if a family has to choose between paying their mortgage and paying their utility bill, they will choose their utility bill.

    Also, the number one action that we can take to reduce the cost and increase the availability of affordable/workforce housing is to reduce the square footage of these homes. This lowers cost of construction as well as carrying cost (utilities, maintenance, insurance) but increases the per square foot cost of construction – so pricing should be looked at in terms of unit cost versus per square foot cost.

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