Identifying Regulatory Barriers to Affordable Housing: Housing Prices Nationwide Have Increased Dramatically in the Past 15 Years. A Number of Factors Have Contributed to the Rising Prices, Including Federal, State, and Local Regulations That Affect Land and Housing Development

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While many regulations provide important public benefits, others are outdated, excessive, unnecessary, or exclusionary. Obstructive regulations have contributed to rising housing costs and created roadblocks to affordable housing in urban and suburban communities.

What are regulatory barriers?

In 1991, HUD appointed the Advisory Commission on Regulatory Barriers to Affordable Housing (Commission) to study the impact of state and local regulations on housing prices. The Commission found that regulatory restrictions raise development costs in some communities by as much as 35 percent. The Commission also found that regulations can be used to limit affordable housing options by prohibiting high-density housing, multi-family rental housing, accessory dwelling units, or manufactured housing.

Regulations that affect housing prices occur in several categories, as a component of building codes, environmental stipulations, land use and zoning, impact fees, and administrative processes. The point at which a regulation becomes a regulatory barrier is not always clear. Regulations that raise housing costs should, however, serve a greater public purpose. The policies that raise concern are those which disproportionately impact low- and moderate-income individuals by deliberately or indirectly prohibiting or discouraging affordable housing, with little compensating public benefit.

NIMBYism. Some regulatory barriers are used to support the "Not In My Back Yard" mentality, or NIMBYism, which underlies resistance to affordable housing, particularly in suburban communities. Residents fear that affordable housing in the neighborhood will lead to lower property values, increased congestion, and higher taxes to support increased public service demands by the residents of this housing.

To discourage affordable housing, communities employ exclusionary zoning tactics, including large minimum lot requirements or density limitations that restrict multi-family housing development. Alternative forms of affordable housing such as accessory dwelling units and manufactured housing are often prohibited by zoning codes.

Some communities impose high architectural standards or require developers to include attractive amenities that increase the costs and demand for housing in a community.

Outmoded building codes are another barrier to affordable housing. Building codes designed to regulate new construction create an expensive and unrealistic burden on developers interested in rehabilitating existing buildings.

Smart growth. "Smart Growth" principles, including growth boundaries and open space preservation, also create potential barriers to affordable housing. These policies limit the supply of available land for development, which leads to increased land costs, and most likely, higher housing prices.

If smart growth principles such as revitalizing urban core neighborhoods and increasing housing density are implemented in conjunction with those that limit land supply, affordable housing opportunities could increase. However, approaches that limit growth are often more politically popular.

Impact fees. Many jurisdictions impose impact fees to cover the increased costs associated with new development. In theory, impact fees are supposed to shift the cost of new development to new residents so existing residents are not burdened by higher taxes to support the needs of new residents. However, fees can also be used to discourage affordable housing.

Administrative processes. Complex administrative processes can also become a barrier by significantly increasing housing costs. Developers are often required to work with several different agencies to obtain approval for development, and coordination with these agencies can lead to significant delays in the permitting process. Administrative inefficiency and delays in permitting often increase developer costs and lead to higher housing prices. …