NAHB Implores Congress to Reduce Multifamily Development Fees

September 6th, 2018 by Drew Vass

Yesterday, the National Association of Home Builders (NAHB) told Congress that excessive regulations are causing higher rent and reduced affordability for customers.

Steve Lawson, chairman of The Lawson Companies based in Virginia, testified on behalf of the NAHB before the House Financial Services Subcommittee on Housing and Insurance. He told the subcommittee that overregulation of the housing industry bleeds into every aspect of the building process.

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

The hearing on regulatory burdens on multifamily housing was due to a new study by the NAHB and National Multifamily Housing Council called Multifamily Cost of Regulation that specifies how these regulatory costs account for 32 percent of the total cost of developing multifamily housing.

Research shows that over 90 percent of multifamily developers encounter hard costs of fees to the local government. They encounter these both when applying for zoning approval, and when local jurisdictions authorize the construction of buildings. State and federal governments are becoming increasingly involved in the development process, adding many additional fees and regulations.

“Multifamily builders and developers are seeing strong demand, but there are headwinds that have impacted further development,” says Lawson. “Some developers have had difficulty getting projects off the ground due to regulatory burdens and neighborhood opposition in certain parts of the country.”
The NAHB is asking policymakers to ease the regulation of fees, making housing more affordable. They suggest six points of action:

  1. 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;
  2. Remove barriers to production of multifamily housing;
  3. Ensure that energy codes and standard are cost-effective, affordable and have a reasonable payback period of 10 years;
  4. Enact common sense updates to Davis-Bacon wage determination policies to help builders construct more affordable housing;
  5. Call on the Trump administration to resolve issues related to lumber and steel tariffs, which have needlessly raised the price of building materials; and
  6. Maintain and properly fund federal rental assistance and multifamily production programs to serve very low- and extremely low-income Americans.
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