House Subcommittee Reviews Regulatory Burdens on Affordable Multifamily Development

By September 10, 2018 News

The House Financial Services Subcommittee on Housing and Insurance held a hearing on September 5 to review “The Cost of Regulation on Affordable Multifamily Development.” During the hearing, industry experts identified specific regulations at the federal, state, and local levels that can increase the cost of affordable multifamily housing development – worsening the current shortage of affordable rental homes for low income residents and driving up market-rate rents.

Witnesses from the National Multifamily Council, the National Association of Home Builders, and Continental Properties Company, Inc., called for reforms to decrease the regulatory and compliance burdens faced by developers. In his opening remarks, Subcommittee Chair Sean Duffy (R-WI) cited a study published in June 2018 by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC), “Regulation: Over 30 Percent of the Cost of a Multifamily Development,” which found that 32.1% of the cost of multifamily development can be attributed to state, local, and federal regulations.

Erika Poethig, vice president and chief innovation officer at The Urban Institute, defended federal programs that aim to increase affordable housing options for extremely low income Americans. She highlighted fair housing policies as critical tools for remediating the legacy of redlining and other discriminatory housing practices, such as source-of-income discrimination for Housing Choice Voucher recipients. She agreed with Representative Nydia Velázquez (D-NY) who stated that “the drastic cuts that have been made to programs like HOME, CDBG, Section 202, and Project-Based Section 8 – many of which successfully combine federal funding with private sector dollars – have exacerbated the lack of affordable housing in this country.”

Testifying on behalf of the NMHC, Sue Ansel, president and CEO of Gables Residential, stated that members of the NMHC would “agree completely that it needs to be a two-pronged approach to solve this problem.” She stated that “NMHC and the National Apartment Association have long been supporters not only of reducing regulation, but also of increasing funding to a number of programs – such as CDBG, HOME, and Section 8 – that can really help increase affordable housing and help those residents of the United States that need the most help.”

The witnesses unanimously acknowledged that the vast majority of regulatory costs could be attributed to regulations at the state and municipal levels. Representative Maxine Waters (D-CA) encouraged her colleagues on the committee and the witnesses to investigate and consider ways the federal government could leverage federal funding for infrastructure development to relieve regulatory cost burdens at all levels. She also encouraged the committee members and experts to consider strategies the federal government could pursue to incentivize state and local jurisdictions to revise burdensome zoning regulations that drive up the cost of development.

Learn more about the hearing at: https://bit.ly/2NqnXBb

Read the NAHB and NMHC report: https://bit.ly/2MpprIC

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