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99-815CounCil File # RC � � I. g �, T'� � �� RESOLUTION CITY OF SAINT PAUL, MINNESOTA �3 Presented Referred To Committee: Date 2 WHEREAS, the City of Saint Paul has experienced a tremendous increase in construction activity the past three 3 yeazs arith double digit increases in the number of permits, inspections, construction valuations, and revenues 4 malang 1998 the single biggest year in terms of permits and ttte value of construction acfivity, toping the half billion 5 dollar mark for the first time in the City's history, and WHEREAS, new housing conshucrion has not kept pace with the overall increase in construction over the last five yeazs and the City of Saint Paul desires to stimulate a substantial increase in new housing construction, especially housing for low and moderate income people, and 10 1 I WHEREAS, the Office of License, Inspection, and Environmental Protecfion, and the Departments of Planning and 12Economic Development and Public Works have developed a pilot program to speed up the review and approval 13 process for all housing development and reduce fees for new housing developments for low and moderate income 14 residents, now, therefore be it 15 16RESOLVED, that the Council of the City of Saint Paul does hereby approve the program entitled "Pilot Program to 17 Reduce Costs and Speed Approvals for Housing Construction" in Saint Paul, which is described in the attached P 8 memorandum from Robert Kessler to Mayor Norm Coleman, dated August 6, 1999, and be it, 19 20FURTHER RESOLVED, that the following goals are established for the one year pilot program commencing 21 September 1, 1999 and ending August 31, 2000: Number of new housing units approved within 72 hours of receipt 22 of complete plans: 500 to 700. Nuxnber of new housing units designated for low and moderate income residents: Up 23 to 150 units, Amount of fee reduction for all housing units approved during the period 9-1-99 to 8-31-00: 50°/a. �� _ 27 3$Adopted by Council: Date ��-\ \� 39 (� � d.�Adoption Certified by Council Secre[ary 41 42sy: 43 44Approved M yor: D te � 4 � v/1 46ay: Requested by: Office of LIEP and the Department of Planning and Economic Development (PED) By: By: Approved by Director of Financial Services By: ��r�st-� .. e"�_(�"'C-zz.��i Form Approved by City A ey By: � C Approved by Mayor for Submission to Counci By: OFFICE OR L�EP � Au�st lo 1999 GREEN SHEET Department of PED Robert xessler NO . 64 9 0 7 5 �� 266-9112 BPPRITffiTl DIRHCPOR �C ITY COUNCIL ,. TY ATR�RNSY ITY CLS2K �uw�a ust be on Council Agenda by: °°° � DIRBCitlR �:mxcx sa ce �cmR � SAP YOR (OR ASSISTPSTl) OTAL # OF SIGNATIIRE PAGES 1 (CLIP ALL LOCATIONS FOR SIGNATURE) CTION REQUESTED: Approval of a resolution to initiate a special one year ilot program to reduce costs and speed approvals for new housing construction COhSffiNDATIONS: APPROVS (A) OR RSJECT (R) �SONN• SffitVICB CONTR11CfS MUST ANSNSR THB FOLWiPZNG: PLANNIxG COMiAISSION CZVIL SERVICS COAflhISSiON 1. Ha9 the pezsonjfiYm evei workad llndes a contxact fox thia depaxtment? CIH COMMITTEE BUSINESS R&VIEW COUNCIL SSS NO STAPF _ Ha9 this person/fixm ever been a City employee? DIS7RICT Q�URT YES NO Doea this pereon/firm possess a skill not normally posaessed by any SUPPORTS WHICFS COUNCIL OHJECTIVS? Q�Trent City employee? YES NO lain all YBS aasrere on a aeparate eheet and attaeh. INITIATING PROBLEM, ISSUE, OPPORTUNITY (Who, What, When, Where, Why): The Mayor and City Council have set ambitious goals to produce up to 2500 new ousing units in the next two years. Speeding up the permit review process, adding a preliminary review component, approving standard designs, and reducing fees by 50% are actions intended to help the city to attain its ousing goals. VANTAGES IF APPROVED: ill provide incentives for the production of new housing during a one year trial period to gauge the overall effectiveness of such incentives to the roduction of new housing units. It is fully expected that these incentives ill be effective. ISADVANTAGES IF APPROVEDc verall revenue will increase, but whether it will cover expenses is not certain. The test period will help us determine the efficacy of continuing reduced fees beyond the test period, allow us time to calculate our exact costs, and to determine what the additional staffing needs will be. ISADVANTAGES IF I30T APPROVED: ew housing production will languish without effective stimulus from the City, and we will miss an opportunity to try some very innovative approaches to stimulate housing production. OTAL AMOUNT OF TRANSACTION: To be determined COST{REVENUE BUDGETED YES NO FiTi3DII3G SOURCE LIEP Special Fund & Public Works Sewer Maintenance Fund FINANCIAL INFORMATION: (EXPLAIN) (Background memo attached) �� #� !_1 AUG 1 7 189,9 i,�� CITY OF SAINT PAUL INTERDEPARTMENTALMEMORANDUM DATE: August 6, 1999 TO: Mayor Norm Coleman FR: Robert Kessler, LIEP Director � 11-&� RE: Pilot Program to Reduce Costs and Speed Approvals for Housing Construction This memorandum is in response to your request for creative thinking on ways to increase housing production in the City of Saint Paul. This proposal has been developed in cooperation with PED Director Brian Sweeney, his staff, and your Housing Roundtable. The pilot program is described in some detail, but there srill are details that need to be worked out. As you know, a recent study by the National Associarion of Home Builders (NAHB), states that govemment regulation of new housing construction can drive up the costs of new housing by as muclx as 10%.' The NAE3B's report (attached) says that "rising regulatory costs idenrified by NAHB are pushing millions of borderline home buyers out of the mazket..." and similarly, the cost of regulatory controls on multifamily housing developments makes rent levels beyond the means of working families. The regulations that affect housing producrion aze numerous and complex; they come from the federal, state, regional, and local levels. Besides the sheer volume of regulations, builders have repeatedly expressed concern about lengthy time delays associated with regulatory inefficiencies and stressed that the longer the reviews the more costly the pmject becomes. While many of the complaints about government regulation have to do with the various building codes, zoning, and subdivision regulations, plus the costs of providing off-site infrastructure improvements (roads, sewers, etc.), local government can positively and directly address the length of the reviews, the costs associated with local permits and inspections, and the identification, preparation and assembly of vacant sites for development. We propose to do the following to stimulate the development of housing, especially housing for low and moderate income residents: Reco�nmendat�ons To Reduce the Cost of Housing Production & Speed Approvals: 1. Start the review process at the preliminary project planning stage. Projects often require zoning variances, special use permits, etc. from the Plam�ing Commission and/or the Board of Zoning Appeals. Key representadves of the affected city departments must be involved with PED staff early in the project planning process to identify all approvals that need to be obtained for development. This will allow required notifications to be sent and hearings to be scheduled to reduce the time lag in the review and approval process. Special attention ' The Truth About Regulatory Barriers to Affordable Housing, National Association of Home Builders, Washington, D.C. 1998. Mayor Norm Coleman August 6, 1999 Page 2 �tg - �t5 should be paid to neighborhood and community concems about density, congestion, and other social factors associated with affordable housing. 2. Establish a special "ad hoc" interdepartmental review team, an adjunct to the current site plan review process. This designated group of City staff would have the eapertise and authority to approve new single and multifamily housing projects in 72 hours or less, usually through a single meeting, and immediate follow-up. The Office of LIEP will provide staffing to this group to facilitate timely review of all new housing proposals. 3e Reduce permit, sewer access, and review fees for publicly ass9sted low income mulhfamily housing and single or dupiez developments on scattered HRA owned lots. We are proposing a 50% reduced permit pricing schedule for all housing with pemuts approved between September 1, 1999, and August 31, 2000. 4. LIEP staff should pre-approve certain �°standard" single family designs that can be used interchangeably for the development of the approximate 100 "buildable" vacant single/double lots scattered throughout the City. Moreover, LIEP and PED staff should also work together to prepare an inventory of all buildable lots in the City to identify the zoning and subdivision regulations (lot coverage, set backs, height, width, etc.) that apply to the development of each parcel, so that required variances can be obtained in a timely fashion. Implementarion Steps � W e seek yow support and cooperation to approve this pilot program and Council Resolution to implement this proposal as a one year test. The resolution establishes the program, sets several specific measurable goals, a time period, and approves the 50% fee reduction in pernut and related fees. It also includes an evaluation component to determine whether the program should be continued or expanded beyond September of the yeaz 2000. • We aze also recommending the designafion of Roger Curtis, from the Office of LIEP, as the project coordinator to facilitate the streamlined interdepartmental review process in cooperation with Tom Beach, the staff person in charge of the site plan review process. Roger will also be responsible for getting the preliminary design pre approved, monitoring the pilot program and conducting the evaluation by October 1, 2000. c: Joe Reid, Financial Services Director Ivlayor's Housing Development Team Tom Eggum, Director of Public Works Bernie Bullert, Water Department General Manager Tom Beach, LIEP Dede Demko, Budget Analyst Tom Cran, Budget Analyst Proposed Reduced Fee Schedule For Affordable Multifamily Housing Current permit fees (plan review fees, building permit, electrical permits, excavarion, mechanical, plumbing, etc.) average between 1.5% and 2.0% of the total cost of the development. qa-�,s Here aze the rough appro�nations of current fees for your information and comparison, the proposal is to cut these fees in half: Current �ll Fee Eaample: $1,000,000 Mnitifamily Development Plan Review Fee Building & Excavation Pernut Electrical Permit Plumbing Pernut Mechanical Permit Variance State Surcharge * Site Plan Review Sewer Access Charge Storm Water Management 1'otal Current Fee Example: $114,000 Single-Family Dweliing Plan Review Fee Building & Excavation Pernut Electric Pernrit Pluxnbing Permit Mechanical Pernrit Variance State Surcharge* Site Plan Review Sewer Access Chazge Storm Water Management Totai $ 3,20Q $ 5,000 $ 1,800 $1,500 $ 2,200 $ 300 $ 500 $ 225 $ 840 $ ? $15,565 $ 646.00 837.00 200.00 410.00 161.00 225.00 63.00 N/A 900.00 52.00 $ 3,494.00 * State Surchazge Law Requires a$.50 fee per $1,000 in valuation f' TDt lTI..I IlRfl11T f�Grl ff flTflt}V RIlDt?I�RC to Housing AfFordability -� -� � .� � �� . �.� , �,�� `� ��-. ;, �� °, �.� - ��;�� - _ ; ,= � . .� ;� � � s a _ .�.�� id� 4 , � �"' ", ""�' - �.,v�"i: �.z. � ,} a ... 'a � " :y ..,e ` [�'i: > �� ` �� i'�. , .,, t * wW � �f� °`am.,� ...�.,,,.. � "� � . a-, � ;, i ` �*"+ � r �� ,_ ,.;(. - . �"` . ,. .. ,�__ `,'� . :r F. , �� . �� _ �. .�. ��,� � � R ��'� G�'. �� . 6 4 { i k� u� A Pubhcation of the Nat�onal Assoaation of Home B€�t� � � v _ v_ ,.,�.,A �w , A a x�a �� * + � � , '#`' .�ps .�S"�"" � �,'. � - s ^ s , .:�' " -- t � , ,--,-. �,... 2 �� -_ ; , � � � ; � �.n �� € ��, � ;; ,��cr,� . - �:; � `� � ._� �� . . ��s�t -� _ . -- " so-�� ;' L 7 a ��i �� v �i S R' d �� a ��` � ,�,��.- E � �.. .. �9%§��` � 5 �� ' . A ��. .._�._._.. � ry�. ( �Z �( £ �>Y `—� .� � � ...». � .. 5 �. yn � f ;� -��`: � . :. . � .. 4 �.�_. � .. °t � 4 ' • N t � y .. �! r '.�+ Iv. u � .. �: z .+ , ' g • i . , . _ ' , . " . . . . ,.- � a.z � " ' t�e.:. • 3 � A � . . .. .. _ �.v gs .. v . : � ta _. . . p _. . i `.^ . v } "� X _ f ` _. -.._ ..,..:. .b�b.- � . reach of millions of prospective home buyers. 2 A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS of the strong housing homeownership gains of A riptide of government regulatlons imposed at the local, state and federal levels conanls how housing is constructed, where it is bullt, development density, and ihe fees and taaces impased on buIlders to pay for roads, schools and other off-site public infcastruaure. Ultimately, these regulations can have a profound effect on the cost of a new home, driving it up 10 percent or more in a typical market. Based on a su�vey of home buIlders, this report examines the cast of government regulation as a shaze of the sales price ir� 42 mazkeu azound the country As part of llvs study. NAHB polled buffders and followed up with individual interviews to track their experiences in dealing with regularory au[hodties from ihe time they purchase land and submit subdivision plans until the sale of the home. The survey resvlts are very alarming, especially in the light of the nation's growing popula[ion and the resulting demand for new homes. The compiexities, numbe� of approvals, time delays and costs of ineeting regulatory requirements aze increasing rapidly Builders �' are being required to pay a larger share of the cost of a 3 providing off-site in&asiructure irnprovements such as a fr new schooLs, fire statlons, roads and other public facil- x = ities that benefit an entire community—not jusi peo- recent years and to drive the cost of housing—and homeownership—beyond the ��S NAHB's survey found that about'f0 pertent of the cost of building a typical new home can be atffibuted to excessive regulation. ple living in newly-constnicted homes. In years past, these casts were funded by the communiry at large through general ta� revenues. NAHB's survey found that about 10 percent of the cost of buffding a rypical new home can be attrib- uted to excessive regulation, needless red tape and reg- ulaxory delays. In some highly regula2ed mazkeu, the coss can tota120 percent or moze of the sales price of a typical home. And it is clear frorri TF�e indroidual buIlder interviews. e�aznples of wluch aze afso mdud ed in this report, that no relief is m s�ght In fact con` : ditions are worsening. The rising regulatory costs itYestitifie,cl by,L�FAHB are pushing millions of borderlute I�ome buyerscsut ti, , of the market. Peopie who aze attemphng to buy tfies ' 3 i, first home find that it is beyond the�r reach;`Llvst[end threatens to slow or reverse the recent�giawth irc the naaon's homeownership rate and greatlydimaiishes the chances of achieving the � an overall homeownership ra turn of the century. Further complicating the; folding debate over urban grocvC development pattems and inflati land still available for residential�i Prince William County, Va., descr typical of conditions in many parts of the countiy where the door to homeownership is being slamined in the faces of prospective home awners.. ClearIy, dia- logue on ways to sirnphCy and streaznline the regeila- tory and Iand use process goveming resideniiai de- velopment is essential. At NAHB's strong urging. Federal legislarion that would require a housing impact analysis before the gov- ernment could "unpose any new federal regularion is already moving through Congress. This legislauon would compel federal lawmake�s and regulators to con- sider the often unintended consequences of their ac- tions before new regulztions aze put on _the books. Conducting such an analy- _ is; in.o"ur view a good starf"and a : move thatshould be followed by every � state county and murucipality; in�the . counuy .,- , . ".;Dialogue, at all levefs is,paracu- : ,'larly3mportar�t,because studies `de- � .� scnbed��in tivspu6lication showthat' . the public suppores reasonabfe �welt- - managed growth and does noYfador highiy-restrictive �, poJ?cies. They also show fhat sveamlining the �,.regulatory process is absolutelycritical ta effores to s,.� � . � . eszpand fiomeownership oppoitunities. [ni�ld afford- able hou'suig and re-estaUlish housing as a[op nation- al pdoriry :As q✓ith �mast compTex,iss,ues, there is no simple `;.. ; solution.fn the` question of regiifation. It eammpasses concems ranqing from 6u�ldin�,codes, perreiittipg de- tays ancl `urequi5able fees w environmentat sestrictions. growth_contro7s��and more. However, it is,clear that . � without a serious effort to make sweeping changes in the way ihat conshvcaon of new homes is regulated, costs will continue to rise and homeowne�hip will corr tinue to be an elusive goal foc tens of thousands of families. ■ � � . The Tivth About Regulamry Barrie[s to Hovsing AffordabIIity 3 the sale price of a typical new home, according to a nationwide poll of home builders in 42 metropofitan markets. Conducted by the Natunal Association of Home price ff unnecessary goverrunent regulations, delays Builders in the summer of 1998, the survey asked buIlders [o provide a detailed breakdown of the cast of constiucting a 2,150-squaze-foot ho�se with 3 or 4 bedrooms on a 7,500- to 10,000-square-foot lot. The average sales pdce of a new home in the 42 markets eacample, an estimated 28.6 percent of the sales pdce was $226,680, and builders estimated that an average could be trimmed if the regulatory process was re- of 10 percent ($22,668) could be virnmed from the Tota1 construction cost Fi�ancmg eost - Overhead and general expenses .MarkeG�gcast; - . . .:� (nclr�e�ing home buyer financingF � Sales commission ,, . � �[O�[':a:S,a�.,_ �, � -' _._ . ;°� Totalsatesprice a< =' r . . .... � `.a_�..�._�x` .,3,226;i .�. xs . _ 5.350 4.3 �?s�.-.` `��_,`.�.,.�'., -.,�:7£45'.;3 �.g..:.. 7318 59 ' . _, ...�..�:..;�'�...:`�fi69,= `38 ^:: .. Pavin 4859 91 �..�,: _ 1292 '10 -.- °�Wa*z�an6se.ver" _ . ,.a�4533 ._:,a86 �, HVAG.��-' , _ �:.:.'.� , �.__ .°`��, =5'I�FV's _ 41 '. . � Erosion anci sediment � t A76 Z p "?.: Insulation � 1,793 1.4 � Impac[arialysis .� . _-,- ?A$ .. - 'l 4 .. `' DryVValt �; . . -. �6.&Q7`�. � 5- 5.5 .. Water/electric hookup 1,260 2 4 � t pamnng 4,734 3.8 Lantl detlication or fee in tieu - 168 . 0 3 -� CaMnets, cbuntettops .�' - _ " 6,t67 . 5.6 Bonding/escrow fee 349 0.7 �.,� Appliances 1.675 1.3 , . . ..�_. _ . Financingms[ , 2,729 '-.� ° � 4A. �., :..`°,Sitesandrzryei .......:::. . _ .'..,.�.:r;. :F5.971 . � ... 4.8 Tree preservation and planUng 762 'f 4 � n Tnm ma[erial 3,861 3.7 . rA/eUand preservation - 235 : � : „�.0 4 .;-:e tandscaping and sodding '- . . rv , 2:250 � � '- t.8 . Value of unbudt land as green space & park 536 1.0 _-�' Wood deck or paLO 827 OJ , OFher costs �- � . - ' 845 ...: �� 1 5 . c:: AsPFrak:�,drivzway ' . . .. ,_ .'t:873 :,-", . , 1.5 and fees were eliminated. Amounts that could be saved varied consider- ably from market to market, and tended to be greatest in highly populated urban azeas. In San Francisco, for formed and streamlined; in Grand Rapids, Mich., the � :-:;, . ' i` ,.: . �-...� 124.276 54 8 °1,- lmpact fees 1 182 t0 _ :=.4 266 � � , si 9 Fs,��.,5^�atec;a2K7 sewer crispECtigti .. .... , . 'h �07r=�.'f', _ ^ �9 4 � -'" . 12.955 5 7 ;: ExcavaGOn, foundation, backfil 'I'1,952 9.6 . =� -., .�c SteeS : �. �. .,;..:,� '� 4f r } 4 :: . _., ,<. ....'.4 7R(5 :s. ��T�"4.. e,r�. °c, `�: c..�.,.�.,.. r. «e� ��,� �1.o�rF.,..� �c n5� �n � . �. l.l UL'1 Rav�el,otcost�.e��.` .. .., r :;$.;'=..3008'{; Development cosu .,�astof�proc`essiiigaPProvais': ` :°�t,79�,: Site preparaGOn 4.075 :'Site�mpco`v"ement . . - Totaf developmenc cosu S 23,434 Totalfrnsheiflot(raw+deveiopment)' ta53,515 E.>... 4'A PLfBL{CAY10N 6P TNE NATtONAC AISSOCIAFfC . e ' �r.,. -. 9 , . :.d. .;.`� 9.603 7.7 n eos({�`� - `#724 27B .. � ='100.0%a . 4 " r ' drive up the cost of constructing housing and add about 10 percent to "There are [oo many time consaming reviews and approvals,'said David Koskinen of Greenway De- velopment Co., Inc. in Montvale, NJ. On the opposite coasC San Diego builder Foagt &ehni concurred. ° 'Ihe bottom line is that there aze too many approvaLs and reviews for land development, ar�d many are repetitive or overlapping,' he said. ° We have to get as many as 15 to 20 sepazate approvals. Significantly, the majority of the builders who were sunreyed indicated that conditlons are worserring. Almost half (48.6 percent) said that the length of time to obtain a routine sir�gle-faznily project approval (wn- u�g and subdivision) increased considerably between 1987 and 1997 and another 24.3 percent said it in- creased somewhat. No change in the aznount of time required was reported by 16.2 percent, and 8.1 percent said it had shortened somewhat. None oF the bullders surveyed reported tha[ the time to get projec[ approval was considerably shorter than a decade earlier. Even more striking, more than three-quazters of the builders surveyed said that there was a significant increase in the number of state and fedecal regulations over the decade, and another 21.6 percent said there had been some increase. Only 2.7 percent said they were unsure if ihere had been a change. Builders also reported sigrtifican[ increases in the cost of developing a lot for construction. Ten pucent said that the cast of developing a lot increased by 100 percent or more between 1987 and 1997, and 23.3 percent said development costs ttad increased 50 to 99 percent. Another 23.3 pereent reported increases of 20 w 49 percent, and 43.4 peicent said costs had increased up to 19 percent. "Sewer and water pemut fees neady doubled this year." said Lee Kitson. abuilderfrom Grm�d Rapids. Mith.. while a Melboume, Fla. builder, Paul )oyal, noted �hat "the raw lot cos[ includes several [housand dolla� paid by the land seller for miagatlon of sciub jay habitat" Z7°k � : � "We need a more equitable means of paying for grow[h rather chan impact fees (which are anposed on new constiuctlon) said john Huh of Fagle Creek Prop- erties, Inc. in Naples, Fla. 'Impact fees should be spread over all home sale fransactlons, particularly school fees, because faznilies with kids move into older homes pre- viously occupied by empty nescers," said Jon Haycnan of the Hayman Companies in Bwlingame, Cal'rf. ° Com- mercial users should help pay for vatfic impacts, too," he added. The Truth About Regularory Barriers m Housing Affordability 5 - - _ -- - � 99 -8'!5 sales pace could be�ut by abaut 4 percent. _ �,�;,_ � „ $oyrce� NqH6'z Surveyaf BuJtlers in 42 meVO areas-1998 R9 -�1S �: lpercenc or raaF r.ro�7 �: �Ma�Ceflrig'cou_:7. ' �--�'Corsrtut6dnfu .9% ' ., ; 4ia 5irionms - 21.4% � . .....,. .,, ,.._,,.__..__, --__.__._.� 7 Yo tZ rtitttc»ths ZS°lo , --{. :_.,...m _ . _ ___......_....,,___.,,.. .;:t�mantluorioae� ' �. m�� -' 2� 14.3°k �-3 — 37.2% - - --� � . , ,t0ormore --..�... ^ 48.5% _ . .. Source NAHBS Survey of BuJOers m 42 meW areaz-1998. 6 A PUBLICATION OF THE NATIONAL ASSOCIATION OF HOME BUILDERS In all, the survey revealed, the finished lot ac- counted for 23.6 percent of [he sales pace of a new home while acmal conswction costs accounted for 54.8 percent Profit comprised 9.2 percent of the sales price, and overhead, consuucaon financing, marker ing and sales commissions accoun[ed for 12.4 percent of the total. Builders frequendy dte delays as a cornributlng factor in rising housing casts. and the survey showed that prolonged delays in receiving consuucuon ap- provaLs are commonplace nationwide. When it is necessary to get land rezoned in or- der to build, only 1 l.l percen[ of the builders report- ed a wait of six months or less to receive building per mits. Tltirty-seven pereent reporced a delay of 7 to 12 months, and 29.6 percent said they face a delay of 13 to 23 months. Another 22.2 percent reported a wait of 24 months or longer. It takes considerably less time to get building per- miu when zoning is already in place. Even so, more than 60 percent of the buIlders surveyed said it takes 7 mornhs or longer to get pemuts; about 40 percent of the builders surveyed said that it takes six months or less to ge[ buIlding pennits when zoning is in p1ace. "Unfortunately, in towns and citles across the na- tlon, the bureaucrau at the desk have the power to hold you up," said a builder from Southern California. "'Ihey're no[ accountable for the tlme delays they cause." Delays in the process were cited by many builders as a sigruficant problem, and 1 l.l percent said that 10 or more govemment approvals and reviews aze required before land can be developed. More than 44 percent reported 5 to 9 revievrs and approvals, and 44.4 per cent repoRed 2 to 4. Inspections during ihe home conshvcROn process can aLso cause substantial delays, the buIlders report- ed. Almost half (48.5 percent) said that 10 or more in- spections are required, and 372 percent said that 5 to 9 are required. Only 14.3 percent reported fewer than five inspections. Sourte NAHB's Survey of 9uiltlers in d2 �metro areas—t998 � � �^ interviews are representative of the remarks builders made and reveal several common themes among builders' concerns. For example, all of the buIlders quoted here saw the necessity for greater efCidenty in the permitting process. They tallced about the need for permi[ting agencies to coordinate their efforts, the need to set a specific time limit on the approval process, and the need ro keep new home buyers from having to shoulder the enure burden of cosu for off-site infrasvucture such as roads and schools Significandy, all the buIlde�s with whom we spoke I n the Pituburgh metro area. there are moce than 1001oca1 municipalitles, each of wMch has its own set of mles for buIlders to follow This complicates the permitting process, which can take arrywhere finm one to three years, says Murray Rust of Montgomery & Rust. were concemed about time delays associated with reg- Inc. His ideas for refo�rning the process are in line with ulamry inefficiencies, and mos[ stressed the point that those of Ms fellow builders. 'It would be great to be the longer the pecmitting process, the greater the wst co the home buyer. The five builders quoted here esti- ma[ed that if sigcuficant regulatory reforms were un- plemented in their markets, new home prices wuld be thousands of dollazs lower. a61e to go to a single desk for all necessary pecmits," he says, "and it would be good to have some cost-benefit requicement to mee2 before new regulaflons get pffed on top of old ones." In the 26 years he's been a home builder, Rust has seen the development process become infinitely more complicated. His company builds about 25 town- houses per year, pdced in the low $200,000 cange. Mast of those homes are sold to first-time buyels and emp- ry-nesters. If significant regulatory reforms were un- plemented, Montgomery & Rust, Inc. estimates buy- ers might save up to $ percent on the cost of its $220,000 homes. "It woutd be good to have some cost-benefit requirement to meet before new regulations get piled on top of old ones." The Truth Ahout Regutatpry Bazners to Housing Affordability 7 individual concerns about tocat regufations. Excerpts from five of these 99 -8'1S •"That buyer does�`t get to say wfiat he o� sfie is willing to help pay for, even though that buyer is the one who will see higher housing cosu as a result of the require- ments." I n the 36 years that Califomia archi[ect Mike Davis of the Hazold W. Smith Co. has been in the home I n Austin. Texas, it takes Clark Wilson Homes, Inc. 7 to 12 months to obtain a building permit afcer building business, he's seen the time it takes to get a applicauon for rezoning. Company eacecutive Nedda single-family building permit for a fuushed lot in Con- Brown has witnessed a great deal of 'passing the ba- ira Costa County go from a single day to one month or ton" among depar[ments, and says "it's not right that more. The county used to issue building pernrits from while one development gets approved, a sirnflar one a central depar[ment, but now each city has its own winds up snagged in the regiila[ory jungle." She em- permitting agency with which builders must comply phasizes the need For "consistent enf'o�cement and prw Like tvs fellow buffders, Davis wishes thece was a spe- cessing" in the pemritting arena. cific time limi[ for commenting on a projec[ and mak- ing recommendations for submitted plans. Davis also makes an important point about regulations and hous- ing affotdability. "The only person who doesn t get a say in what geu buil[ in a given residential area—what schools, roads, and parks must be provided—is the home buy- er, the one who will be living there," he notes. "That buyer doe.vit get to saywhathe or she is willing to hetp pay for, even though.thztbayei� is the one who will see higher �iousing co"sfs as a�result of the requiremenis." It's fiUSU�abng, Dauis continues, when buIlders are ac- cused�of not auilding "affordable' homes while re- quirements thac boost the cosf of housing aze beyorxi their cont[ol. �� "it's not right that while one development gets approved, a simiiar one winds up snagged in the regulatory jungie." Most concerning, says Brown, is the "constant nile-changing' that occurs. "Our city is committed to preserring some sectlons of the meun area for non-de- velopment," she explairvs. "The problem is that some of the land to be preserved was purchased before the preservation niles took effect, and while developers as- sumed itwould be'grandfathered; it's not. Now buildecs can't build ro the density they'd planr�ed. and it's cost- Builders in the $an Francisco Bay azea (the na- ing them." tion's most expensive housing market) used to count Clark Wilson sells homes in a vadety of price on about six mond�s t'or €he permitdng process for lot development, but now theywind up cazrying land for up to three years while the neeessary approvaLs are se- cvred. During that time, the builder who owns the lot is payuig ta�es on the land and his costs aze going up. If cegulawry reforms could sigitificanfly reduce the �me it takes to ga through Fhe development process, Davis says buyers mightsee up to a 10 percent reduction in the cost of a$600,�OQ home on a$250.000 lot. ranges, from below $100,000 up to $350,000. The company targers primarily second-time and move-up buyers. though about 20 percent of its customers are first-time buyers. Brown estimates that if significant regulatory ceforms were implemented—and especial- ly if those refornvs could speed up the process—homes her company sells in the $140,000 range could sell from a thousand dollars to several thousand dollars less. 8 A PUBLIGATION OF THE NATIONAL ASSOCIATIpN Oi HOME BWLDERS q9 -8'�5 B akimore-area builder Tom Brown says his com- pany, American Builder Sen+ices Inc., often buys firushed lots within established subdivisions in order to avoid problems associated wiih ]and development. According to him, fIluaiion requirements are one factor driving home prices upwazd in the Baltimore region. "We have many ueas that are near dvers and stceams around here and many wedand properties," Brown explains. "Builde� are therefore required to do percolation tests, and related cosis can get as high as $7,000." Brown would like to see a sunplified waiver process ihat wouid, for exaznple, allow small landown- ers to subdivide property ihey own without having to go through the same process as a company putting in a lazge development. American BuIlder Services buIlds "Streamlining the regulatory process could save home buyers at least $4,000 per single-family unit." be[ween 12 and 15 homes per year with prices start- ing azound $ I50,000 [plus lar�dJ. "Streamlining the reg- ulatory process." says Brown, "could save home buy- ers at least $4,000 per single-famIly unit" In the nearly five decades he's been a home builder. Brown estimates the development process has become 200 to 300 per- cent more complicated and time consuming. C hesapeake Homes, in Norfolk and Virginia Beach, Va., avoids some regulatory hassles by buying ready-io-go lots from a land development com- pany Yet execuave Bill Ganzenmuller faces many of the sazne problems as other buIlders in obtaining con- stcuctlon approvals—especially lack of coord"utation aznong pemutting agencies. Wltile he declines ta esti- mate how much less his homes might sell for if regu- latory refomis were irnplemented—he doesn't do land development—he affirms that housing would be more affordable. "tf you could reduce lot and uffiity costs," he reasons. ° you could reduce the final cost.' Among the difficulties he faces, "It's aetually de- partmental paper flow thats the problem. One agency in chazge of an inspection doesnt mmmunicate with another, and this causes delays," he says. Ganzerunuller "If you could reduce lot and utility �CO5Y5, you could reduce the final cost." also cites the lack of uniformity in local building codes , and regula[ions. The result, he says, is that two com- ��' _ mvrrities just five miles apart require widely c�ivergent � � pre-conshvction fees. . - ' ` - . "The actual difference is around $4;706," he � says, "and thafs ridiculous." In the more �pensive ama, "it cwt5 over $5,000 per lot even before bu}�ng a build- ing permit. Keep in mind that $5,000 is a'hard' cost in tenns of the home. We can't absorb it, so home buyers wind up paying it, and it has no value to them. They already pay monihly fees for services " Ganzenmuller aLso makes another point about how regulatlons affect affordabfliry. "In some countles t}�ere's a virtually ur�tapped market for singlefanuly hom� in the $100.000-range,' he says. "The reason is that af- ter all the costs from regulatlons and utilitles, it's eco- nomically unfeasible to build lowerpaced homes. In my mind, this is the biggest pmblem facing home buyeis to- day" Chesapeake Homes builds 200 to 250 homes per year, mast of them in the $120,000-$140,000 range. The Truth About Regulatory Barrien ro Housing Affordability 9 s part of one of this country's fastest grow- ing metropolitan regions and an area in which severe restrictions have recently been imposed on residentlal buIlding, Prince Williazn County. Va. is a houpot in the natlonwide debate on regulatory barriers to growth. Pnnce William is one link in a chain of subur- ban counties enciccling Washington, D.C., and whats happening there is representative of situations arising in the outskirts of high-growth metropolitan areas na- nonwide. Census Bureau figures indicate the counry's lots even without thousands of e�a dollazs tacked on for impact fees. Only the wealtrries[ people would be able to afford a home in the westem half of Prince Williarn, raising the questlon of why ihe county has cho- sen to e�cclude buyers in orher income brackets. "The argument is that residential development doesnt pay its way," says Roy O. Beckner, president of the Prince William Chapter of the Northem Virginia BuIlding Indusiry Association. "Supposedly, it cosu the county more to provide services for a home and its in- habitants than the home generates in revenue for the population increased 18 percent between 1990 and county. But to say a$200.000 house doesn't pay its 1997, a double-digit growth rate typical of the Wash- way, whffe a bigger house will, is eliasm. It's saying the ington area. Pop�latlon forecasts for P�ince Williarn re- counry only wanrs a certain kind of people." veal the counry is expected to see a 67 pucent increase in its resident base benveen 1995 and 2020. Believing the growth rate is too fast, munty otfi- cials adopted a plan for reducing the number oE po- tential homes on five-year plarv�ing maps by 27,000. One section of the slow-growth initiative, dubbed the "curai crescent plan," sets aside about 8�,0�0 acres— nearly half of the county—for farms and subdivisions with lots no smaller than 10 aaes. It atso quintuples impact fees required of developers to as much as $15,000 pu house. Unequal Treatment In the targeted area, the plar� will virtually eliminate new home purchases by middle- and lower-income buyers, who woulddt be able to afford homes buIlt on 10-acre The Economic Impact of Building Clauns that residentlal building doesn't "pay iu way' aze based on the a�sumpuon that property taees paid by home owneis dont generate enough revenue to pay for seivices like roads and schools those home owners require. Unforcunatety, these assumptioas ignore the fact that buIlding acuvity generates other types of rev- enue for the jurisdicuon and is a driving factor behind any thriving area's economic base. Findings of a 1998 report, "The Impact of the Building Industry on the Washingcon Area Economy" by Stephen Fuller, Ph.D., of George Mason University, strongly discount the idea that buIlding activity of all kinds does not "pay its way' In fact, the Washington metro amas overall buffding industry accounted for 14.8 �O A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS percent of Gross Regional Product, or $26.7 billion, in 1997. D'uect income generated by the building indus- try aznounted to $15.7 billion, and totaljobs support- ed regiornvide by the building indumy reached 432,844, or 17.6 percent of all privarejohs in and around Wash- ington. Such figures should settle any doubis �as to whether residendal development—as a component of all building—pays iu way in Prince William. Like Squeezing a Balloon "For a counry in one of this country's fastest growing regions to enaci such rigorous restricGOns on residen- llal bullding is dearly a big mistake," says Gary Gar companies will hire will be able to afford the houses czynski, a Northern Virginia home builder. `Think about it this way—the Washington metro area is like a partially inflated balloon. When it gets squeezed in one place, it expands somewhere else. Imposing slow- growth mandates wont take away ihe demand for new housing, it will only tause people to move further ouc ronically. regulations imposed under the guise of preserving quality of life car� reduce homeowner- ship opportunitles and housing choices. That's what happened in Pordand. Ore., where 25 years ago the government established an urban growth boundary (UGB) beyond which new development would be prohibited. qq.r►s or to neighboring counties in hopes of achieving the American Dream. Housing Variety = Jobs Beyond denying homeownership to many faznilies and corrtributing to leapfrog develapmern, Prince William's slow-growth plan could darnage the county itself. The BIAs Beckner poinu out that Washington metro azea counGes have been vying to lure high-tech and bio- tech compazues for some time now "Everybody wanu these clean businesses that pay high salaries," he says, "but the fact is, not all of the people the Fortune 500 that are being bullc You have to understand that com- panies scouting the area are looking for a variety of housing types, so all of their employees can live neaz- by Otherwise, they wouldn't be looking to move in the first place. Prince William County is making the wrong irnpression." fourth least affordable metro azea, according tn NAHB's second quarter 1998 Housing Opportuniry Index. Lot sizes have declined dramatically, and some residenis have rebelled against the kind of krigh-densi- ty development encouraged by the UGB. According to Kelly Ross, D'uector of Govemment Affairs at the Home Builders Associatlon of Metro Portland,'Any other azea The so-called "Wall of Portland" is having severe considering this type of model has to be aware of the but predictable consequences as the supply of devel- irade-offs and casu—it's not an easy road. Be prepared opable land cuns low Once known as one of the narions for higher housing cosis, more traffic congestion and mast affordable housing mazkeu, PorHand is now the increased densities in established neighbofioods." The Tcu[h About Regulatory Bazriers to Housing Afforda6ilicy 11 driving housing costs beyond the reach of young people and other first-time buyers who are disproportionately affected by higher costs caused by multiple layers of regulations. 'Ihe Americar� Homeownership Act (H.R. 3899), in- another. Each regulation is adopted independenfly and, voduced by Rep. Rick Lazio (R-N.Y.), and The Af- by itself, might seem insignificant. But when 10 or 20 fordable Housing Barriers Removal Act (H.R. seemingly insigrrificant 2gulations are impwed on top 3435/5.1877) introduced by Rep. Tom Carnpbell (R- of one another, the cost implications and delays in- pact on housing affordablliry. As the home building industry knows only roo well, builders are often subject to a°layering effect" where numerous regulatlons are stacked on top of one herent in meeting those regulatory requirements can be considerable. In some heavily regulated markeis, the cosu and time delays involved in meetuig regula- tory requiremenu can add tens of thousands of dollars to the cost of buffding a modest single-famIly home. This review requirement should go a long way toward remedying this difficult problem and hopefully wIll make (awmakers more awaze of the secondary or un- intended effecis of regulation. "NAHB strongly supports enactment of ihis cru- cial legislaaon, wtrich would be a sigcuficant first step toward re-establishing housing as a national priority and removing obstacles to housing affordabllity and would set an important precedent fo� state and local govemment to follow," says associatlon President Don Marcin. °Trvs legislation would cut those excessive cosu that do little, if anything, to make hovsir�g safer, more comfortable or more desirable, and it would help make homeownersMp more affordable.' 'IZ A PU6LICATION OE THE NATIONAL ASSOCIATION OF HOME BUIL�ER$ ,-; to help curb unnecessary regulations and keep them from Calif.) and Sen. Ron Wyden (D-Ore.) would require a housing impact analysis of any proposed federal regu- lations to certify that they will have no significant un- qg �u A very vocal minority sometimes makes it appear to public ofFicials and the me- dia that most Americans oppose growth. In reality, mainstream opinion favors continued, well-planned growth as a cornerstone of economic welf-being. Recent nauonwide polts consisting of a com6ined 2,200 interviews reveal that contrary to convenllon- al wisdom, most Americans view growth in a posi- tive light. The polls were conducted by the Research Consorrium* in Raleigh, N.C; Puget Sound. Wash.; Franklin Counry, Ohio; and Maricopa Counry, Ari2. over ihe past two yeazs. For pu�poses of this report, the responses of ihose polled in the four metro areas were combined to arrive at a consensus opurion on growth issues. think govemment shoutd pass laws to stop growth. The surveys also found that most people do not approve of placing harsh resVictions on new home and business development as a means of improving vafFic flow. insiead, nearly three quarters of respondents believe that spending tax money to upgrade roads and bridges more effec[ively addresses Vaffic prob�ems. 'Research conduc[ed by the RFSea�ch Conwrtium. a partnership o! NAH6 and Compeutive Edge Research. Repnnred vnth rhe pertn�svon of Ne Building Snduscry Assecauon of Centai Oluo. lna. Masrer Budders Aaa�aoon oF King and Srrohomah Cowry, Home Bwiders.45senauon of Ce��ral Anwna. and Home Budders.�soaanon of Rale�gh and Wake Counry. N.C. The Truth About Regularory Barriers to Housing Affordability 13 More than half of [hose surveyed said government should encourage continued, well-pianned grow[h, whilej�st 18.1 percent think laws restric[ing grow[h should be irnplemented and more ihan 20 percent believe that government should allow people to use their land as they see fit. A marginal 2.9 percent Source Basetl on polt5 0! 2.200 householtls in four areas of the roun[ry. �1'q-�LS a� � sut � e csteacrar� _ �� ,�, > �k��'� �� ; ?� � �,� ,, v �' �� - . .v�i ,� ' ` � . 3 s��—�*� �7� r� �E�(ELQ�AQENT � � � EEESlCN -. � t -r, �,-'?„ °- �^ Rewairt�appucanbi -.�r ::� ,. ; __ _..��;:. �..-:.._ : � .1 y ;. H P� 14 41t .. . ._ ��na� , = � ._ yiiewhome:; ;:. ',° qs that'cla5e": . . x f v. _ �ed€obixi �ie€ions':;� � ' � i:: + ; `._— _ wi � S s a e � . • � ' Basetl on a fnced-rate. 30-year mortgageat7 pPtcentwith a'k0 pe�ceni downpaymen2 --- -__ ,- --_ 105,000 � 658 110.000� ., � 689 1�5,000 720 120.000�� - 757 125.00� 783 ; t36006 ,..,: ,814 135,000 845 746.OW ` :":..�877 '145,000 908 �'kS0.Q00 .� .-� 939 155.000 971 160.000' � � -. 1.002 165.000 1.033 t70,000 ,, 1.065 �75,000 1,096 186A00 1J27 185.000 1,158 19Q,OW � � ' t.190 195,000 1,221 200:Q00 � . : � � Y.252 205,000 1.284 � 21Ff;00Q w �.�1 375 215.000 � 1.346 ;220,�dQ „� :t�378 225.000 1.409 . 23E)AqQ . ,.' 235,000 1.472 :Z40,000� .' ��.�"I.503 245.000 1,534 zsaoaa , ,`>>;eae Scurce NAHB 12'I 779 33,374 57,100,587 56.5 .: - - 8l6 �..;:- 34964�=^'-=$4.870.693 543"�. K '133 853 35,553 � 52,955,534 52.4 .�. .e� ��139� �.�� 890 q 38t42:;� 51?47,274 566��. � 144 927 39,731 ~ 49,032,665 48.5 � :..; 150 ��. ��'. 964, ... �= 41 ; W 46800,919 463 .....,.> _.�!s.�° 156 1.00'I 42,910 � 44.978,483 44.5 , '�` 162 .. . '1 038 .,.�.; 44498 ��r 43�331,t74 k29 .��,� � 167 1,075 46.088 41,516.627 4'I.1 ;��.373 ' 47G78 r� 38662:398 -3�3��_ .. 179 1.150 49.267�� 37.998.223 37.6 . :."-185.- - 1t87 ,��50856 ,�`„38516.790 �36.„1,��*€p l90 � 1.224 � 52,445 � 34,854,516 34.5 .... 196;-„� .. 1261. �.....' S4035 'y:;[ 33.�8,6.583 32��,p,=��,.. 202 '1,298 55.624 31.613,967 31.3 -�-P08. � 1335 :;, �; �572"13';, 30;331,636 �O(};��;: 2l4 1,372 58.802 28,984,234 28.7 . �; ' 2'€9 .', ; - 7 409 �, .',: 6Q 392 : ,';: 27.590.689 � 2Z.3„':� ; � 225 1.446 J 61,981 26,359,629 26.1 �,��`"231. .>_ - 1 483 '��, t63570' �,: 2�255:t79_ 25.�tY;�;�'+: ... 237 1,520 65,'159 24,149.037 23.9 , �;�`i557 ,,�:_- 66744�,�'�304145D . ,.�2�8�;��"� � 248 1,595 68,338 27,933,863 21.7 v��a254 .., .,�. l 632` -��:; 63927 �: ;: 26826�275 sg�b�`�a�� 260 � 1.669 7'1,576 "19.844,906 19.6 ..,, �.` 266 , : � t 7CIE :".. z 73'106 '_ _ ..18�:�„ft�'�,e ..� 271 � 1.743 � 74.695 18,141,882 17.9 : ?�e := 178Q; '' � 76284 1729Q;370� tT1�e�,`�.�''' 283 1.817 77,873 16.553,768 16.4 _""2&4 _ = ' .. 1&54 ,,,: 79463 :'Y "F5959,�445 "IS.B��"` � $200 $ 3,q88 . :`.�.`. '.$},s84 '.s�: : :. ,_ ' � 4,a�s£=;i'.re 250 4.360 '1,743 6.103 306 . � � 5,232 ° �`.: - � : `a:2.R9'1 . . _ 7 323 . _ _' 350 6,104 2.440 8.554 � 40�0 �,.. . �'$976 "' . .<�,Z778 , ; � 9764 -�;;�;„`�„ 450 7.848 3.137 70,985 �500`, -� ':8720'' `�-; ` =' 3486 _'�;. -' , ". '12206 .�i:� 550 9,592 3,834 73,426 - 60Q .. - � 10464.�:- .. . ��E�A183 �� .. : = 5464� a�:s":�;�'��. 650 11.336 4.53'I 15,867 '70Q - �12.208:; ` „ `;4.680 '. ' . .. ; 17088 :'�_�,...;° 750 13.080 5.228 18,308 , SOQ � 13952 . _:. _,:�S,fi67 -� � � � - . , - _ - _ .. v ._. 19528 ...,.,r��.�:.�: 'COS[ per L000 �oard-feet of framing IumOer or 7,000 square feet of swcNral panels such as piywood Source:NAHB. If the price of the typical new home profiled in NAHB's survey could be Vimmed 10 percent from $226,680 to $204,120, an additional 4.8 million households would be eligible to purchase that home. Of those, an estimated 192,000 to 240,000 wouid be likely to buy a home. Lumber prices, which averaged about$2�� per 1,000 board-feet during the 1980s, have gyrated wildly in the 1990s, at times rising to more than 5500 per 1,00� board-feet. Such increases make new homes len affordable for buyers and can prevertt many families from achieving homeownership, The price increases were raused by a combination of factors, including severe government restrictions on timber harvesting in the Pacific Northwes[ and a quota on lumber imported from Canada which was imposed in 1996. The Truth About Regulatory Barriers to Housing Affordability 15 NAHB SENIOR OFFICERS uf}i�2ssLB D. ir'r";RT3ii P!2',SI()PI7( Albuqucryue, N.�/1. C:?; � *L�S t. ;ZUi�,A Pmsid��nhc7ect Columbus. OLio Rt7-'3Ert'a L. ��?G#iELL Vice President/Ti�easurer Rockville, Md. ;3Rt3G� SMi7}2 VicePresident/Sea�tary Walnut Creek, Calif. Et.IIACidELf'ES�Ci;S � Inm�ediate Past Pmsident � Tom's River N J. and Hilton Head Island. S.C. KENT V"d. Cf3L�0�{?E'd F,xecutive Vice President Washington. D.C. la5£3LS't' NAfi3 The National f\ssocia[iov of Home Buildeis (NA}I6), wiQ� more t}�an 195,000 rnember firms, is the roost iuflueutia( trade atsociation represe��ting the housing industry Worki��g in par[nership witl� more than 800 state and ]ocal builders associatio�is tY�roughout the country, d�e associatio�fs mission is to e�iliance 8�e dimate for housi��g and the building industry, and to promote policies that will re-establish housing as a nafional pGiority. Produced by the NAHB Public Affairs Division with the assistance of the Economics, Mocta ge Finat�ce and Housing Policy Divisiov�; tkie Goverinue�n Affairs Division; and the Re�ulatory and Legal Affairs Di��sion. Ken Klein, a builder/remndeler from Tulsa, Okla., and c6airman of NAH6's Public A[Cairs Committee, had genera] ovessight of t}ie project. — 7.II7 — �� Nnno� v. Assoc�nnon OP HONF $UII_DERS 1201 15th Street, N.W, Washi��gton. DC 20005 littp://www.nahb.mm 9 9 -d�►S From: Brian Sweeney To: STPAUL.IS.Council Date: 8l16/99 7:41 pm Subject: Housing Fees I wanted to let you know that as part of the Mayors budget address tonight he is going to include n � ��,,,000fl ar pi ot program o es 50%. The program will begin September 1, 19 9. The resolution fronf of the Cauncil Augusf 25fh. As y hEC�tnh2YfRharpTOp6S was to cut fees for city subsidized, affordable housing. Council member Lantry and others expressed an interest in expanding this incentive to include all housing fees. The Mayor called his department heads together and encouraged us to consider an across the board cut for all housing fees — if it made sense fiscally. After analyzing this proposal, we believe that given the type and number of new units that will be built in the coming years that even with a cut, we could actually increase income from housing fees. But we don't know for sure. That is why we are doing this as a one-year pilot program. There was an error in the Pioneer Press article on Saturday which suggested a possible one-year loss of $800,000 because of the cut. That is just simply not possible. The proposal also calis for the implementation of a streamlined approval process for housing and the preapproval of home designs. Your input and suggesiions on these issues is moving our city housing agenda forward and helping make Saint Paul a more attractive place to build housing. In addition to these proposals, we will be back to the Council in the coming weeks to discuss some of the other initiatives we outlined earlier in the summer including the Housing Resource Center and the urban homesteading initiative. CounCil File # RC � � I. g �, T'� � �� RESOLUTION CITY OF SAINT PAUL, MINNESOTA �3 Presented Referred To Committee: Date 2 WHEREAS, the City of Saint Paul has experienced a tremendous increase in construction activity the past three 3 yeazs arith double digit increases in the number of permits, inspections, construction valuations, and revenues 4 malang 1998 the single biggest year in terms of permits and ttte value of construction acfivity, toping the half billion 5 dollar mark for the first time in the City's history, and WHEREAS, new housing conshucrion has not kept pace with the overall increase in construction over the last five yeazs and the City of Saint Paul desires to stimulate a substantial increase in new housing construction, especially housing for low and moderate income people, and 10 1 I WHEREAS, the Office of License, Inspection, and Environmental Protecfion, and the Departments of Planning and 12Economic Development and Public Works have developed a pilot program to speed up the review and approval 13 process for all housing development and reduce fees for new housing developments for low and moderate income 14 residents, now, therefore be it 15 16RESOLVED, that the Council of the City of Saint Paul does hereby approve the program entitled "Pilot Program to 17 Reduce Costs and Speed Approvals for Housing Construction" in Saint Paul, which is described in the attached P 8 memorandum from Robert Kessler to Mayor Norm Coleman, dated August 6, 1999, and be it, 19 20FURTHER RESOLVED, that the following goals are established for the one year pilot program commencing 21 September 1, 1999 and ending August 31, 2000: Number of new housing units approved within 72 hours of receipt 22 of complete plans: 500 to 700. Nuxnber of new housing units designated for low and moderate income residents: Up 23 to 150 units, Amount of fee reduction for all housing units approved during the period 9-1-99 to 8-31-00: 50°/a. �� _ 27 3$Adopted by Council: Date ��-\ \� 39 (� � d.�Adoption Certified by Council Secre[ary 41 42sy: 43 44Approved M yor: D te � 4 � v/1 46ay: Requested by: Office of LIEP and the Department of Planning and Economic Development (PED) By: By: Approved by Director of Financial Services By: ��r�st-� .. e"�_(�"'C-zz.��i Form Approved by City A ey By: � C Approved by Mayor for Submission to Counci By: OFFICE OR L�EP � Au�st lo 1999 GREEN SHEET Department of PED Robert xessler NO . 64 9 0 7 5 �� 266-9112 BPPRITffiTl DIRHCPOR �C ITY COUNCIL ,. TY ATR�RNSY ITY CLS2K �uw�a ust be on Council Agenda by: °°° � DIRBCitlR �:mxcx sa ce �cmR � SAP YOR (OR ASSISTPSTl) OTAL # OF SIGNATIIRE PAGES 1 (CLIP ALL LOCATIONS FOR SIGNATURE) CTION REQUESTED: Approval of a resolution to initiate a special one year ilot program to reduce costs and speed approvals for new housing construction COhSffiNDATIONS: APPROVS (A) OR RSJECT (R) �SONN• SffitVICB CONTR11CfS MUST ANSNSR THB FOLWiPZNG: PLANNIxG COMiAISSION CZVIL SERVICS COAflhISSiON 1. Ha9 the pezsonjfiYm evei workad llndes a contxact fox thia depaxtment? CIH COMMITTEE BUSINESS R&VIEW COUNCIL SSS NO STAPF _ Ha9 this person/fixm ever been a City employee? DIS7RICT Q�URT YES NO Doea this pereon/firm possess a skill not normally posaessed by any SUPPORTS WHICFS COUNCIL OHJECTIVS? Q�Trent City employee? YES NO lain all YBS aasrere on a aeparate eheet and attaeh. INITIATING PROBLEM, ISSUE, OPPORTUNITY (Who, What, When, Where, Why): The Mayor and City Council have set ambitious goals to produce up to 2500 new ousing units in the next two years. Speeding up the permit review process, adding a preliminary review component, approving standard designs, and reducing fees by 50% are actions intended to help the city to attain its ousing goals. VANTAGES IF APPROVED: ill provide incentives for the production of new housing during a one year trial period to gauge the overall effectiveness of such incentives to the roduction of new housing units. It is fully expected that these incentives ill be effective. ISADVANTAGES IF APPROVEDc verall revenue will increase, but whether it will cover expenses is not certain. The test period will help us determine the efficacy of continuing reduced fees beyond the test period, allow us time to calculate our exact costs, and to determine what the additional staffing needs will be. ISADVANTAGES IF I30T APPROVED: ew housing production will languish without effective stimulus from the City, and we will miss an opportunity to try some very innovative approaches to stimulate housing production. OTAL AMOUNT OF TRANSACTION: To be determined COST{REVENUE BUDGETED YES NO FiTi3DII3G SOURCE LIEP Special Fund & Public Works Sewer Maintenance Fund FINANCIAL INFORMATION: (EXPLAIN) (Background memo attached) �� #� !_1 AUG 1 7 189,9 i,�� CITY OF SAINT PAUL INTERDEPARTMENTALMEMORANDUM DATE: August 6, 1999 TO: Mayor Norm Coleman FR: Robert Kessler, LIEP Director � 11-&� RE: Pilot Program to Reduce Costs and Speed Approvals for Housing Construction This memorandum is in response to your request for creative thinking on ways to increase housing production in the City of Saint Paul. This proposal has been developed in cooperation with PED Director Brian Sweeney, his staff, and your Housing Roundtable. The pilot program is described in some detail, but there srill are details that need to be worked out. As you know, a recent study by the National Associarion of Home Builders (NAHB), states that govemment regulation of new housing construction can drive up the costs of new housing by as muclx as 10%.' The NAE3B's report (attached) says that "rising regulatory costs idenrified by NAHB are pushing millions of borderline home buyers out of the mazket..." and similarly, the cost of regulatory controls on multifamily housing developments makes rent levels beyond the means of working families. The regulations that affect housing producrion aze numerous and complex; they come from the federal, state, regional, and local levels. Besides the sheer volume of regulations, builders have repeatedly expressed concern about lengthy time delays associated with regulatory inefficiencies and stressed that the longer the reviews the more costly the pmject becomes. While many of the complaints about government regulation have to do with the various building codes, zoning, and subdivision regulations, plus the costs of providing off-site infrastructure improvements (roads, sewers, etc.), local government can positively and directly address the length of the reviews, the costs associated with local permits and inspections, and the identification, preparation and assembly of vacant sites for development. We propose to do the following to stimulate the development of housing, especially housing for low and moderate income residents: Reco�nmendat�ons To Reduce the Cost of Housing Production & Speed Approvals: 1. Start the review process at the preliminary project planning stage. Projects often require zoning variances, special use permits, etc. from the Plam�ing Commission and/or the Board of Zoning Appeals. Key representadves of the affected city departments must be involved with PED staff early in the project planning process to identify all approvals that need to be obtained for development. This will allow required notifications to be sent and hearings to be scheduled to reduce the time lag in the review and approval process. Special attention ' The Truth About Regulatory Barriers to Affordable Housing, National Association of Home Builders, Washington, D.C. 1998. Mayor Norm Coleman August 6, 1999 Page 2 �tg - �t5 should be paid to neighborhood and community concems about density, congestion, and other social factors associated with affordable housing. 2. Establish a special "ad hoc" interdepartmental review team, an adjunct to the current site plan review process. This designated group of City staff would have the eapertise and authority to approve new single and multifamily housing projects in 72 hours or less, usually through a single meeting, and immediate follow-up. The Office of LIEP will provide staffing to this group to facilitate timely review of all new housing proposals. 3e Reduce permit, sewer access, and review fees for publicly ass9sted low income mulhfamily housing and single or dupiez developments on scattered HRA owned lots. We are proposing a 50% reduced permit pricing schedule for all housing with pemuts approved between September 1, 1999, and August 31, 2000. 4. LIEP staff should pre-approve certain �°standard" single family designs that can be used interchangeably for the development of the approximate 100 "buildable" vacant single/double lots scattered throughout the City. Moreover, LIEP and PED staff should also work together to prepare an inventory of all buildable lots in the City to identify the zoning and subdivision regulations (lot coverage, set backs, height, width, etc.) that apply to the development of each parcel, so that required variances can be obtained in a timely fashion. Implementarion Steps � W e seek yow support and cooperation to approve this pilot program and Council Resolution to implement this proposal as a one year test. The resolution establishes the program, sets several specific measurable goals, a time period, and approves the 50% fee reduction in pernut and related fees. It also includes an evaluation component to determine whether the program should be continued or expanded beyond September of the yeaz 2000. • We aze also recommending the designafion of Roger Curtis, from the Office of LIEP, as the project coordinator to facilitate the streamlined interdepartmental review process in cooperation with Tom Beach, the staff person in charge of the site plan review process. Roger will also be responsible for getting the preliminary design pre approved, monitoring the pilot program and conducting the evaluation by October 1, 2000. c: Joe Reid, Financial Services Director Ivlayor's Housing Development Team Tom Eggum, Director of Public Works Bernie Bullert, Water Department General Manager Tom Beach, LIEP Dede Demko, Budget Analyst Tom Cran, Budget Analyst Proposed Reduced Fee Schedule For Affordable Multifamily Housing Current permit fees (plan review fees, building permit, electrical permits, excavarion, mechanical, plumbing, etc.) average between 1.5% and 2.0% of the total cost of the development. qa-�,s Here aze the rough appro�nations of current fees for your information and comparison, the proposal is to cut these fees in half: Current �ll Fee Eaample: $1,000,000 Mnitifamily Development Plan Review Fee Building & Excavation Pernut Electrical Permit Plumbing Pernut Mechanical Permit Variance State Surcharge * Site Plan Review Sewer Access Charge Storm Water Management 1'otal Current Fee Example: $114,000 Single-Family Dweliing Plan Review Fee Building & Excavation Pernut Electric Pernrit Pluxnbing Permit Mechanical Pernrit Variance State Surcharge* Site Plan Review Sewer Access Chazge Storm Water Management Totai $ 3,20Q $ 5,000 $ 1,800 $1,500 $ 2,200 $ 300 $ 500 $ 225 $ 840 $ ? $15,565 $ 646.00 837.00 200.00 410.00 161.00 225.00 63.00 N/A 900.00 52.00 $ 3,494.00 * State Surchazge Law Requires a$.50 fee per $1,000 in valuation f' TDt lTI..I IlRfl11T f�Grl ff flTflt}V RIlDt?I�RC to Housing AfFordability -� -� � .� � �� . �.� , �,�� `� ��-. ;, �� °, �.� - ��;�� - _ ; ,= � . .� ;� � � s a _ .�.�� id� 4 , � �"' ", ""�' - �.,v�"i: �.z. � ,} a ... 'a � " :y ..,e ` [�'i: > �� ` �� i'�. , .,, t * wW � �f� °`am.,� ...�.,,,.. � "� � . a-, � ;, i ` �*"+ � r �� ,_ ,.;(. - . �"` . ,. .. ,�__ `,'� . :r F. , �� . �� _ �. .�. ��,� � � R ��'� G�'. �� . 6 4 { i k� u� A Pubhcation of the Nat�onal Assoaation of Home B€�t� � � v _ v_ ,.,�.,A �w , A a x�a �� * + � � , '#`' .�ps .�S"�"" � �,'. � - s ^ s , .:�' " -- t � , ,--,-. �,... 2 �� -_ ; , � � � ; � �.n �� € ��, � ;; ,��cr,� . - �:; � `� � ._� �� . . ��s�t -� _ . -- " so-�� ;' L 7 a ��i �� v �i S R' d �� a ��` � ,�,��.- E � �.. .. �9%§��` � 5 �� ' . A ��. .._�._._.. � ry�. ( �Z �( £ �>Y `—� .� � � ...». � .. 5 �. yn � f ;� -��`: � . :. . � .. 4 �.�_. � .. °t � 4 ' • N t � y .. �! r '.�+ Iv. u � .. �: z .+ , ' g • i . , . _ ' , . " . . . . ,.- � a.z � " ' t�e.:. • 3 � A � . . .. .. _ �.v gs .. v . : � ta _. . . p _. . i `.^ . v } "� X _ f ` _. -.._ ..,..:. .b�b.- � . reach of millions of prospective home buyers. 2 A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS of the strong housing homeownership gains of A riptide of government regulatlons imposed at the local, state and federal levels conanls how housing is constructed, where it is bullt, development density, and ihe fees and taaces impased on buIlders to pay for roads, schools and other off-site public infcastruaure. Ultimately, these regulations can have a profound effect on the cost of a new home, driving it up 10 percent or more in a typical market. Based on a su�vey of home buIlders, this report examines the cast of government regulation as a shaze of the sales price ir� 42 mazkeu azound the country As part of llvs study. NAHB polled buffders and followed up with individual interviews to track their experiences in dealing with regularory au[hodties from ihe time they purchase land and submit subdivision plans until the sale of the home. The survey resvlts are very alarming, especially in the light of the nation's growing popula[ion and the resulting demand for new homes. The compiexities, numbe� of approvals, time delays and costs of ineeting regulatory requirements aze increasing rapidly Builders �' are being required to pay a larger share of the cost of a 3 providing off-site in&asiructure irnprovements such as a fr new schooLs, fire statlons, roads and other public facil- x = ities that benefit an entire community—not jusi peo- recent years and to drive the cost of housing—and homeownership—beyond the ��S NAHB's survey found that about'f0 pertent of the cost of building a typical new home can be atffibuted to excessive regulation. ple living in newly-constnicted homes. In years past, these casts were funded by the communiry at large through general ta� revenues. NAHB's survey found that about 10 percent of the cost of buffding a rypical new home can be attrib- uted to excessive regulation, needless red tape and reg- ulaxory delays. In some highly regula2ed mazkeu, the coss can tota120 percent or moze of the sales price of a typical home. And it is clear frorri TF�e indroidual buIlder interviews. e�aznples of wluch aze afso mdud ed in this report, that no relief is m s�ght In fact con` : ditions are worsening. The rising regulatory costs itYestitifie,cl by,L�FAHB are pushing millions of borderlute I�ome buyerscsut ti, , of the market. Peopie who aze attemphng to buy tfies ' 3 i, first home find that it is beyond the�r reach;`Llvst[end threatens to slow or reverse the recent�giawth irc the naaon's homeownership rate and greatlydimaiishes the chances of achieving the � an overall homeownership ra turn of the century. Further complicating the; folding debate over urban grocvC development pattems and inflati land still available for residential�i Prince William County, Va., descr typical of conditions in many parts of the countiy where the door to homeownership is being slamined in the faces of prospective home awners.. ClearIy, dia- logue on ways to sirnphCy and streaznline the regeila- tory and Iand use process goveming resideniiai de- velopment is essential. At NAHB's strong urging. Federal legislarion that would require a housing impact analysis before the gov- ernment could "unpose any new federal regularion is already moving through Congress. This legislauon would compel federal lawmake�s and regulators to con- sider the often unintended consequences of their ac- tions before new regulztions aze put on _the books. Conducting such an analy- _ is; in.o"ur view a good starf"and a : move thatshould be followed by every � state county and murucipality; in�the . counuy .,- , . ".;Dialogue, at all levefs is,paracu- : ,'larly3mportar�t,because studies `de- � .� scnbed��in tivspu6lication showthat' . the public suppores reasonabfe �welt- - managed growth and does noYfador highiy-restrictive �, poJ?cies. They also show fhat sveamlining the �,.regulatory process is absolutelycritical ta effores to s,.� � . � . eszpand fiomeownership oppoitunities. [ni�ld afford- able hou'suig and re-estaUlish housing as a[op nation- al pdoriry :As q✓ith �mast compTex,iss,ues, there is no simple `;.. ; solution.fn the` question of regiifation. It eammpasses concems ranqing from 6u�ldin�,codes, perreiittipg de- tays ancl `urequi5able fees w environmentat sestrictions. growth_contro7s��and more. However, it is,clear that . � without a serious effort to make sweeping changes in the way ihat conshvcaon of new homes is regulated, costs will continue to rise and homeowne�hip will corr tinue to be an elusive goal foc tens of thousands of families. ■ � � . The Tivth About Regulamry Barrie[s to Hovsing AffordabIIity 3 the sale price of a typical new home, according to a nationwide poll of home builders in 42 metropofitan markets. Conducted by the Natunal Association of Home price ff unnecessary goverrunent regulations, delays Builders in the summer of 1998, the survey asked buIlders [o provide a detailed breakdown of the cast of constiucting a 2,150-squaze-foot ho�se with 3 or 4 bedrooms on a 7,500- to 10,000-square-foot lot. The average sales pdce of a new home in the 42 markets eacample, an estimated 28.6 percent of the sales pdce was $226,680, and builders estimated that an average could be trimmed if the regulatory process was re- of 10 percent ($22,668) could be virnmed from the Tota1 construction cost Fi�ancmg eost - Overhead and general expenses .MarkeG�gcast; - . . .:� (nclr�e�ing home buyer financingF � Sales commission ,, . � �[O�[':a:S,a�.,_ �, � -' _._ . ;°� Totalsatesprice a< =' r . . .... � `.a_�..�._�x` .,3,226;i .�. xs . _ 5.350 4.3 �?s�.-.` `��_,`.�.,.�'., -.,�:7£45'.;3 �.g..:.. 7318 59 ' . _, ...�..�:..;�'�...:`�fi69,= `38 ^:: .. Pavin 4859 91 �..�,: _ 1292 '10 -.- °�Wa*z�an6se.ver" _ . ,.a�4533 ._:,a86 �, HVAG.��-' , _ �:.:.'.� , �.__ .°`��, =5'I�FV's _ 41 '. . � Erosion anci sediment � t A76 Z p "?.: Insulation � 1,793 1.4 � Impac[arialysis .� . _-,- ?A$ .. - 'l 4 .. `' DryVValt �; . . -. �6.&Q7`�. � 5- 5.5 .. Water/electric hookup 1,260 2 4 � t pamnng 4,734 3.8 Lantl detlication or fee in tieu - 168 . 0 3 -� CaMnets, cbuntettops .�' - _ " 6,t67 . 5.6 Bonding/escrow fee 349 0.7 �.,� Appliances 1.675 1.3 , . . ..�_. _ . Financingms[ , 2,729 '-.� ° � 4A. �., :..`°,Sitesandrzryei .......:::. . _ .'..,.�.:r;. :F5.971 . � ... 4.8 Tree preservation and planUng 762 'f 4 � n Tnm ma[erial 3,861 3.7 . rA/eUand preservation - 235 : � : „�.0 4 .;-:e tandscaping and sodding '- . . rv , 2:250 � � '- t.8 . Value of unbudt land as green space & park 536 1.0 _-�' Wood deck or paLO 827 OJ , OFher costs �- � . - ' 845 ...: �� 1 5 . c:: AsPFrak:�,drivzway ' . . .. ,_ .'t:873 :,-", . , 1.5 and fees were eliminated. Amounts that could be saved varied consider- ably from market to market, and tended to be greatest in highly populated urban azeas. In San Francisco, for formed and streamlined; in Grand Rapids, Mich., the � :-:;, . ' i` ,.: . �-...� 124.276 54 8 °1,- lmpact fees 1 182 t0 _ :=.4 266 � � , si 9 Fs,��.,5^�atec;a2K7 sewer crispECtigti .. .... , . 'h �07r=�.'f', _ ^ �9 4 � -'" . 12.955 5 7 ;: ExcavaGOn, foundation, backfil 'I'1,952 9.6 . =� -., .�c SteeS : �. �. .,;..:,� '� 4f r } 4 :: . _., ,<. ....'.4 7R(5 :s. ��T�"4.. e,r�. °c, `�: c..�.,.�.,.. r. «e� ��,� �1.o�rF.,..� �c n5� �n � . �. l.l UL'1 Rav�el,otcost�.e��.` .. .., r :;$.;'=..3008'{; Development cosu .,�astof�proc`essiiigaPProvais': ` :°�t,79�,: Site preparaGOn 4.075 :'Site�mpco`v"ement . . - Totaf developmenc cosu S 23,434 Totalfrnsheiflot(raw+deveiopment)' ta53,515 E.>... 4'A PLfBL{CAY10N 6P TNE NATtONAC AISSOCIAFfC . e ' �r.,. -. 9 , . :.d. .;.`� 9.603 7.7 n eos({�`� - `#724 27B .. � ='100.0%a . 4 " r ' drive up the cost of constructing housing and add about 10 percent to "There are [oo many time consaming reviews and approvals,'said David Koskinen of Greenway De- velopment Co., Inc. in Montvale, NJ. On the opposite coasC San Diego builder Foagt &ehni concurred. ° 'Ihe bottom line is that there aze too many approvaLs and reviews for land development, ar�d many are repetitive or overlapping,' he said. ° We have to get as many as 15 to 20 sepazate approvals. Significantly, the majority of the builders who were sunreyed indicated that conditlons are worserring. Almost half (48.6 percent) said that the length of time to obtain a routine sir�gle-faznily project approval (wn- u�g and subdivision) increased considerably between 1987 and 1997 and another 24.3 percent said it in- creased somewhat. No change in the aznount of time required was reported by 16.2 percent, and 8.1 percent said it had shortened somewhat. None oF the bullders surveyed reported tha[ the time to get projec[ approval was considerably shorter than a decade earlier. Even more striking, more than three-quazters of the builders surveyed said that there was a significant increase in the number of state and fedecal regulations over the decade, and another 21.6 percent said there had been some increase. Only 2.7 percent said they were unsure if ihere had been a change. Builders also reported sigrtifican[ increases in the cost of developing a lot for construction. Ten pucent said that the cast of developing a lot increased by 100 percent or more between 1987 and 1997, and 23.3 percent said development costs ttad increased 50 to 99 percent. Another 23.3 pereent reported increases of 20 w 49 percent, and 43.4 peicent said costs had increased up to 19 percent. "Sewer and water pemut fees neady doubled this year." said Lee Kitson. abuilderfrom Grm�d Rapids. Mith.. while a Melboume, Fla. builder, Paul )oyal, noted �hat "the raw lot cos[ includes several [housand dolla� paid by the land seller for miagatlon of sciub jay habitat" Z7°k � : � "We need a more equitable means of paying for grow[h rather chan impact fees (which are anposed on new constiuctlon) said john Huh of Fagle Creek Prop- erties, Inc. in Naples, Fla. 'Impact fees should be spread over all home sale fransactlons, particularly school fees, because faznilies with kids move into older homes pre- viously occupied by empty nescers," said Jon Haycnan of the Hayman Companies in Bwlingame, Cal'rf. ° Com- mercial users should help pay for vatfic impacts, too," he added. The Truth About Regularory Barriers m Housing Affordability 5 - - _ -- - � 99 -8'!5 sales pace could be�ut by abaut 4 percent. _ �,�;,_ � „ $oyrce� NqH6'z Surveyaf BuJtlers in 42 meVO areas-1998 R9 -�1S �: lpercenc or raaF r.ro�7 �: �Ma�Ceflrig'cou_:7. ' �--�'Corsrtut6dnfu .9% ' ., ; 4ia 5irionms - 21.4% � . .....,. .,, ,.._,,.__..__, --__.__._.� 7 Yo tZ rtitttc»ths ZS°lo , --{. :_.,...m _ . _ ___......_....,,___.,,.. .;:t�mantluorioae� ' �. m�� -' 2� 14.3°k �-3 — 37.2% - - --� � . , ,t0ormore --..�... ^ 48.5% _ . .. Source NAHBS Survey of BuJOers m 42 meW areaz-1998. 6 A PUBLICATION OF THE NATIONAL ASSOCIATION OF HOME BUILDERS In all, the survey revealed, the finished lot ac- counted for 23.6 percent of [he sales pace of a new home while acmal conswction costs accounted for 54.8 percent Profit comprised 9.2 percent of the sales price, and overhead, consuucaon financing, marker ing and sales commissions accoun[ed for 12.4 percent of the total. Builders frequendy dte delays as a cornributlng factor in rising housing casts. and the survey showed that prolonged delays in receiving consuucuon ap- provaLs are commonplace nationwide. When it is necessary to get land rezoned in or- der to build, only 1 l.l percen[ of the builders report- ed a wait of six months or less to receive building per mits. Tltirty-seven pereent reporced a delay of 7 to 12 months, and 29.6 percent said they face a delay of 13 to 23 months. Another 22.2 percent reported a wait of 24 months or longer. It takes considerably less time to get building per- miu when zoning is already in place. Even so, more than 60 percent of the buIlders surveyed said it takes 7 mornhs or longer to get pemuts; about 40 percent of the builders surveyed said that it takes six months or less to ge[ buIlding pennits when zoning is in p1ace. "Unfortunately, in towns and citles across the na- tlon, the bureaucrau at the desk have the power to hold you up," said a builder from Southern California. "'Ihey're no[ accountable for the tlme delays they cause." Delays in the process were cited by many builders as a sigruficant problem, and 1 l.l percent said that 10 or more govemment approvals and reviews aze required before land can be developed. More than 44 percent reported 5 to 9 revievrs and approvals, and 44.4 per cent repoRed 2 to 4. Inspections during ihe home conshvcROn process can aLso cause substantial delays, the buIlders report- ed. Almost half (48.5 percent) said that 10 or more in- spections are required, and 372 percent said that 5 to 9 are required. Only 14.3 percent reported fewer than five inspections. Sourte NAHB's Survey of 9uiltlers in d2 �metro areas—t998 � � �^ interviews are representative of the remarks builders made and reveal several common themes among builders' concerns. For example, all of the buIlders quoted here saw the necessity for greater efCidenty in the permitting process. They tallced about the need for permi[ting agencies to coordinate their efforts, the need to set a specific time limit on the approval process, and the need ro keep new home buyers from having to shoulder the enure burden of cosu for off-site infrasvucture such as roads and schools Significandy, all the buIlde�s with whom we spoke I n the Pituburgh metro area. there are moce than 1001oca1 municipalitles, each of wMch has its own set of mles for buIlders to follow This complicates the permitting process, which can take arrywhere finm one to three years, says Murray Rust of Montgomery & Rust. were concemed about time delays associated with reg- Inc. His ideas for refo�rning the process are in line with ulamry inefficiencies, and mos[ stressed the point that those of Ms fellow builders. 'It would be great to be the longer the pecmitting process, the greater the wst co the home buyer. The five builders quoted here esti- ma[ed that if sigcuficant regulatory reforms were un- plemented in their markets, new home prices wuld be thousands of dollazs lower. a61e to go to a single desk for all necessary pecmits," he says, "and it would be good to have some cost-benefit requicement to mee2 before new regulaflons get pffed on top of old ones." In the 26 years he's been a home builder, Rust has seen the development process become infinitely more complicated. His company builds about 25 town- houses per year, pdced in the low $200,000 cange. Mast of those homes are sold to first-time buyels and emp- ry-nesters. If significant regulatory reforms were un- plemented, Montgomery & Rust, Inc. estimates buy- ers might save up to $ percent on the cost of its $220,000 homes. "It woutd be good to have some cost-benefit requirement to meet before new regulations get piled on top of old ones." The Truth Ahout Regutatpry Bazners to Housing Affordability 7 individual concerns about tocat regufations. Excerpts from five of these 99 -8'1S •"That buyer does�`t get to say wfiat he o� sfie is willing to help pay for, even though that buyer is the one who will see higher housing cosu as a result of the require- ments." I n the 36 years that Califomia archi[ect Mike Davis of the Hazold W. Smith Co. has been in the home I n Austin. Texas, it takes Clark Wilson Homes, Inc. 7 to 12 months to obtain a building permit afcer building business, he's seen the time it takes to get a applicauon for rezoning. Company eacecutive Nedda single-family building permit for a fuushed lot in Con- Brown has witnessed a great deal of 'passing the ba- ira Costa County go from a single day to one month or ton" among depar[ments, and says "it's not right that more. The county used to issue building pernrits from while one development gets approved, a sirnflar one a central depar[ment, but now each city has its own winds up snagged in the regiila[ory jungle." She em- permitting agency with which builders must comply phasizes the need For "consistent enf'o�cement and prw Like tvs fellow buffders, Davis wishes thece was a spe- cessing" in the pemritting arena. cific time limi[ for commenting on a projec[ and mak- ing recommendations for submitted plans. Davis also makes an important point about regulations and hous- ing affotdability. "The only person who doesn t get a say in what geu buil[ in a given residential area—what schools, roads, and parks must be provided—is the home buy- er, the one who will be living there," he notes. "That buyer doe.vit get to saywhathe or she is willing to hetp pay for, even though.thztbayei� is the one who will see higher �iousing co"sfs as a�result of the requiremenis." It's fiUSU�abng, Dauis continues, when buIlders are ac- cused�of not auilding "affordable' homes while re- quirements thac boost the cosf of housing aze beyorxi their cont[ol. �� "it's not right that while one development gets approved, a simiiar one winds up snagged in the regulatory jungie." Most concerning, says Brown, is the "constant nile-changing' that occurs. "Our city is committed to preserring some sectlons of the meun area for non-de- velopment," she explairvs. "The problem is that some of the land to be preserved was purchased before the preservation niles took effect, and while developers as- sumed itwould be'grandfathered; it's not. Now buildecs can't build ro the density they'd planr�ed. and it's cost- Builders in the $an Francisco Bay azea (the na- ing them." tion's most expensive housing market) used to count Clark Wilson sells homes in a vadety of price on about six mond�s t'or €he permitdng process for lot development, but now theywind up cazrying land for up to three years while the neeessary approvaLs are se- cvred. During that time, the builder who owns the lot is payuig ta�es on the land and his costs aze going up. If cegulawry reforms could sigitificanfly reduce the �me it takes to ga through Fhe development process, Davis says buyers mightsee up to a 10 percent reduction in the cost of a$600,�OQ home on a$250.000 lot. ranges, from below $100,000 up to $350,000. The company targers primarily second-time and move-up buyers. though about 20 percent of its customers are first-time buyers. Brown estimates that if significant regulatory ceforms were implemented—and especial- ly if those refornvs could speed up the process—homes her company sells in the $140,000 range could sell from a thousand dollars to several thousand dollars less. 8 A PUBLIGATION OF THE NATIONAL ASSOCIATIpN Oi HOME BWLDERS q9 -8'�5 B akimore-area builder Tom Brown says his com- pany, American Builder Sen+ices Inc., often buys firushed lots within established subdivisions in order to avoid problems associated wiih ]and development. According to him, fIluaiion requirements are one factor driving home prices upwazd in the Baltimore region. "We have many ueas that are near dvers and stceams around here and many wedand properties," Brown explains. "Builde� are therefore required to do percolation tests, and related cosis can get as high as $7,000." Brown would like to see a sunplified waiver process ihat wouid, for exaznple, allow small landown- ers to subdivide property ihey own without having to go through the same process as a company putting in a lazge development. American BuIlder Services buIlds "Streamlining the regulatory process could save home buyers at least $4,000 per single-family unit." be[ween 12 and 15 homes per year with prices start- ing azound $ I50,000 [plus lar�dJ. "Streamlining the reg- ulatory process." says Brown, "could save home buy- ers at least $4,000 per single-famIly unit" In the nearly five decades he's been a home builder. Brown estimates the development process has become 200 to 300 per- cent more complicated and time consuming. C hesapeake Homes, in Norfolk and Virginia Beach, Va., avoids some regulatory hassles by buying ready-io-go lots from a land development com- pany Yet execuave Bill Ganzenmuller faces many of the sazne problems as other buIlders in obtaining con- stcuctlon approvals—especially lack of coord"utation aznong pemutting agencies. Wltile he declines ta esti- mate how much less his homes might sell for if regu- latory refomis were irnplemented—he doesn't do land development—he affirms that housing would be more affordable. "tf you could reduce lot and uffiity costs," he reasons. ° you could reduce the final cost.' Among the difficulties he faces, "It's aetually de- partmental paper flow thats the problem. One agency in chazge of an inspection doesnt mmmunicate with another, and this causes delays," he says. Ganzerunuller "If you could reduce lot and utility �CO5Y5, you could reduce the final cost." also cites the lack of uniformity in local building codes , and regula[ions. The result, he says, is that two com- ��' _ mvrrities just five miles apart require widely c�ivergent � � pre-conshvction fees. . - ' ` - . "The actual difference is around $4;706," he � says, "and thafs ridiculous." In the more �pensive ama, "it cwt5 over $5,000 per lot even before bu}�ng a build- ing permit. Keep in mind that $5,000 is a'hard' cost in tenns of the home. We can't absorb it, so home buyers wind up paying it, and it has no value to them. They already pay monihly fees for services " Ganzenmuller aLso makes another point about how regulatlons affect affordabfliry. "In some countles t}�ere's a virtually ur�tapped market for singlefanuly hom� in the $100.000-range,' he says. "The reason is that af- ter all the costs from regulatlons and utilitles, it's eco- nomically unfeasible to build lowerpaced homes. In my mind, this is the biggest pmblem facing home buyeis to- day" Chesapeake Homes builds 200 to 250 homes per year, mast of them in the $120,000-$140,000 range. The Truth About Regulatory Barrien ro Housing Affordability 9 s part of one of this country's fastest grow- ing metropolitan regions and an area in which severe restrictions have recently been imposed on residentlal buIlding, Prince Williazn County. Va. is a houpot in the natlonwide debate on regulatory barriers to growth. Pnnce William is one link in a chain of subur- ban counties enciccling Washington, D.C., and whats happening there is representative of situations arising in the outskirts of high-growth metropolitan areas na- nonwide. Census Bureau figures indicate the counry's lots even without thousands of e�a dollazs tacked on for impact fees. Only the wealtrries[ people would be able to afford a home in the westem half of Prince Williarn, raising the questlon of why ihe county has cho- sen to e�cclude buyers in orher income brackets. "The argument is that residential development doesnt pay its way," says Roy O. Beckner, president of the Prince William Chapter of the Northem Virginia BuIlding Indusiry Association. "Supposedly, it cosu the county more to provide services for a home and its in- habitants than the home generates in revenue for the population increased 18 percent between 1990 and county. But to say a$200.000 house doesn't pay its 1997, a double-digit growth rate typical of the Wash- way, whffe a bigger house will, is eliasm. It's saying the ington area. Pop�latlon forecasts for P�ince Williarn re- counry only wanrs a certain kind of people." veal the counry is expected to see a 67 pucent increase in its resident base benveen 1995 and 2020. Believing the growth rate is too fast, munty otfi- cials adopted a plan for reducing the number oE po- tential homes on five-year plarv�ing maps by 27,000. One section of the slow-growth initiative, dubbed the "curai crescent plan," sets aside about 8�,0�0 acres— nearly half of the county—for farms and subdivisions with lots no smaller than 10 aaes. It atso quintuples impact fees required of developers to as much as $15,000 pu house. Unequal Treatment In the targeted area, the plar� will virtually eliminate new home purchases by middle- and lower-income buyers, who woulddt be able to afford homes buIlt on 10-acre The Economic Impact of Building Clauns that residentlal building doesn't "pay iu way' aze based on the a�sumpuon that property taees paid by home owneis dont generate enough revenue to pay for seivices like roads and schools those home owners require. Unforcunatety, these assumptioas ignore the fact that buIlding acuvity generates other types of rev- enue for the jurisdicuon and is a driving factor behind any thriving area's economic base. Findings of a 1998 report, "The Impact of the Building Industry on the Washingcon Area Economy" by Stephen Fuller, Ph.D., of George Mason University, strongly discount the idea that buIlding activity of all kinds does not "pay its way' In fact, the Washington metro amas overall buffding industry accounted for 14.8 �O A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS percent of Gross Regional Product, or $26.7 billion, in 1997. D'uect income generated by the building indus- try aznounted to $15.7 billion, and totaljobs support- ed regiornvide by the building indumy reached 432,844, or 17.6 percent of all privarejohs in and around Wash- ington. Such figures should settle any doubis �as to whether residendal development—as a component of all building—pays iu way in Prince William. Like Squeezing a Balloon "For a counry in one of this country's fastest growing regions to enaci such rigorous restricGOns on residen- llal bullding is dearly a big mistake," says Gary Gar companies will hire will be able to afford the houses czynski, a Northern Virginia home builder. `Think about it this way—the Washington metro area is like a partially inflated balloon. When it gets squeezed in one place, it expands somewhere else. Imposing slow- growth mandates wont take away ihe demand for new housing, it will only tause people to move further ouc ronically. regulations imposed under the guise of preserving quality of life car� reduce homeowner- ship opportunitles and housing choices. That's what happened in Pordand. Ore., where 25 years ago the government established an urban growth boundary (UGB) beyond which new development would be prohibited. qq.r►s or to neighboring counties in hopes of achieving the American Dream. Housing Variety = Jobs Beyond denying homeownership to many faznilies and corrtributing to leapfrog develapmern, Prince William's slow-growth plan could darnage the county itself. The BIAs Beckner poinu out that Washington metro azea counGes have been vying to lure high-tech and bio- tech compazues for some time now "Everybody wanu these clean businesses that pay high salaries," he says, "but the fact is, not all of the people the Fortune 500 that are being bullc You have to understand that com- panies scouting the area are looking for a variety of housing types, so all of their employees can live neaz- by Otherwise, they wouldn't be looking to move in the first place. Prince William County is making the wrong irnpression." fourth least affordable metro azea, according tn NAHB's second quarter 1998 Housing Opportuniry Index. Lot sizes have declined dramatically, and some residenis have rebelled against the kind of krigh-densi- ty development encouraged by the UGB. According to Kelly Ross, D'uector of Govemment Affairs at the Home Builders Associatlon of Metro Portland,'Any other azea The so-called "Wall of Portland" is having severe considering this type of model has to be aware of the but predictable consequences as the supply of devel- irade-offs and casu—it's not an easy road. Be prepared opable land cuns low Once known as one of the narions for higher housing cosis, more traffic congestion and mast affordable housing mazkeu, PorHand is now the increased densities in established neighbofioods." The Tcu[h About Regulatory Bazriers to Housing Afforda6ilicy 11 driving housing costs beyond the reach of young people and other first-time buyers who are disproportionately affected by higher costs caused by multiple layers of regulations. 'Ihe Americar� Homeownership Act (H.R. 3899), in- another. Each regulation is adopted independenfly and, voduced by Rep. Rick Lazio (R-N.Y.), and The Af- by itself, might seem insignificant. But when 10 or 20 fordable Housing Barriers Removal Act (H.R. seemingly insigrrificant 2gulations are impwed on top 3435/5.1877) introduced by Rep. Tom Carnpbell (R- of one another, the cost implications and delays in- pact on housing affordablliry. As the home building industry knows only roo well, builders are often subject to a°layering effect" where numerous regulatlons are stacked on top of one herent in meeting those regulatory requirements can be considerable. In some heavily regulated markeis, the cosu and time delays involved in meetuig regula- tory requiremenu can add tens of thousands of dollars to the cost of buffding a modest single-famIly home. This review requirement should go a long way toward remedying this difficult problem and hopefully wIll make (awmakers more awaze of the secondary or un- intended effecis of regulation. "NAHB strongly supports enactment of ihis cru- cial legislaaon, wtrich would be a sigcuficant first step toward re-establishing housing as a national priority and removing obstacles to housing affordabllity and would set an important precedent fo� state and local govemment to follow," says associatlon President Don Marcin. °Trvs legislation would cut those excessive cosu that do little, if anything, to make hovsir�g safer, more comfortable or more desirable, and it would help make homeownersMp more affordable.' 'IZ A PU6LICATION OE THE NATIONAL ASSOCIATION OF HOME BUIL�ER$ ,-; to help curb unnecessary regulations and keep them from Calif.) and Sen. Ron Wyden (D-Ore.) would require a housing impact analysis of any proposed federal regu- lations to certify that they will have no significant un- qg �u A very vocal minority sometimes makes it appear to public ofFicials and the me- dia that most Americans oppose growth. In reality, mainstream opinion favors continued, well-planned growth as a cornerstone of economic welf-being. Recent nauonwide polts consisting of a com6ined 2,200 interviews reveal that contrary to convenllon- al wisdom, most Americans view growth in a posi- tive light. The polls were conducted by the Research Consorrium* in Raleigh, N.C; Puget Sound. Wash.; Franklin Counry, Ohio; and Maricopa Counry, Ari2. over ihe past two yeazs. For pu�poses of this report, the responses of ihose polled in the four metro areas were combined to arrive at a consensus opurion on growth issues. think govemment shoutd pass laws to stop growth. The surveys also found that most people do not approve of placing harsh resVictions on new home and business development as a means of improving vafFic flow. insiead, nearly three quarters of respondents believe that spending tax money to upgrade roads and bridges more effec[ively addresses Vaffic prob�ems. 'Research conduc[ed by the RFSea�ch Conwrtium. a partnership o! NAH6 and Compeutive Edge Research. Repnnred vnth rhe pertn�svon of Ne Building Snduscry Assecauon of Centai Oluo. lna. Masrer Budders Aaa�aoon oF King and Srrohomah Cowry, Home Bwiders.45senauon of Ce��ral Anwna. and Home Budders.�soaanon of Rale�gh and Wake Counry. N.C. The Truth About Regularory Barriers to Housing Affordability 13 More than half of [hose surveyed said government should encourage continued, well-pianned grow[h, whilej�st 18.1 percent think laws restric[ing grow[h should be irnplemented and more ihan 20 percent believe that government should allow people to use their land as they see fit. A marginal 2.9 percent Source Basetl on polt5 0! 2.200 householtls in four areas of the roun[ry. �1'q-�LS a� � sut � e csteacrar� _ �� ,�, > �k��'� �� ; ?� � �,� ,, v �' �� - . .v�i ,� ' ` � . 3 s��—�*� �7� r� �E�(ELQ�AQENT � � � EEESlCN -. � t -r, �,-'?„ °- �^ Rewairt�appucanbi -.�r ::� ,. ; __ _..��;:. �..-:.._ : � .1 y ;. H P� 14 41t .. . ._ ��na� , = � ._ yiiewhome:; ;:. ',° qs that'cla5e": . . x f v. _ �ed€obixi �ie€ions':;� � ' � i:: + ; `._— _ wi � S s a e � . • � ' Basetl on a fnced-rate. 30-year mortgageat7 pPtcentwith a'k0 pe�ceni downpaymen2 --- -__ ,- --_ 105,000 � 658 110.000� ., � 689 1�5,000 720 120.000�� - 757 125.00� 783 ; t36006 ,..,: ,814 135,000 845 746.OW ` :":..�877 '145,000 908 �'kS0.Q00 .� .-� 939 155.000 971 160.000' � � -. 1.002 165.000 1.033 t70,000 ,, 1.065 �75,000 1,096 186A00 1J27 185.000 1,158 19Q,OW � � ' t.190 195,000 1,221 200:Q00 � . : � � Y.252 205,000 1.284 � 21Ff;00Q w �.�1 375 215.000 � 1.346 ;220,�dQ „� :t�378 225.000 1.409 . 23E)AqQ . ,.' 235,000 1.472 :Z40,000� .' ��.�"I.503 245.000 1,534 zsaoaa , ,`>>;eae Scurce NAHB 12'I 779 33,374 57,100,587 56.5 .: - - 8l6 �..;:- 34964�=^'-=$4.870.693 543"�. K '133 853 35,553 � 52,955,534 52.4 .�. .e� ��139� �.�� 890 q 38t42:;� 51?47,274 566��. � 144 927 39,731 ~ 49,032,665 48.5 � :..; 150 ��. ��'. 964, ... �= 41 ; W 46800,919 463 .....,.> _.�!s.�° 156 1.00'I 42,910 � 44.978,483 44.5 , '�` 162 .. . '1 038 .,.�.; 44498 ��r 43�331,t74 k29 .��,� � 167 1,075 46.088 41,516.627 4'I.1 ;��.373 ' 47G78 r� 38662:398 -3�3��_ .. 179 1.150 49.267�� 37.998.223 37.6 . :."-185.- - 1t87 ,��50856 ,�`„38516.790 �36.„1,��*€p l90 � 1.224 � 52,445 � 34,854,516 34.5 .... 196;-„� .. 1261. �.....' S4035 'y:;[ 33.�8,6.583 32��,p,=��,.. 202 '1,298 55.624 31.613,967 31.3 -�-P08. � 1335 :;, �; �572"13';, 30;331,636 �O(};��;: 2l4 1,372 58.802 28,984,234 28.7 . �; ' 2'€9 .', ; - 7 409 �, .',: 6Q 392 : ,';: 27.590.689 � 2Z.3„':� ; � 225 1.446 J 61,981 26,359,629 26.1 �,��`"231. .>_ - 1 483 '��, t63570' �,: 2�255:t79_ 25.�tY;�;�'+: ... 237 1,520 65,'159 24,149.037 23.9 , �;�`i557 ,,�:_- 66744�,�'�304145D . ,.�2�8�;��"� � 248 1,595 68,338 27,933,863 21.7 v��a254 .., .,�. l 632` -��:; 63927 �: ;: 26826�275 sg�b�`�a�� 260 � 1.669 7'1,576 "19.844,906 19.6 ..,, �.` 266 , : � t 7CIE :".. z 73'106 '_ _ ..18�:�„ft�'�,e ..� 271 � 1.743 � 74.695 18,141,882 17.9 : ?�e := 178Q; '' � 76284 1729Q;370� tT1�e�,`�.�''' 283 1.817 77,873 16.553,768 16.4 _""2&4 _ = ' .. 1&54 ,,,: 79463 :'Y "F5959,�445 "IS.B��"` � $200 $ 3,q88 . :`.�.`. '.$},s84 '.s�: : :. ,_ ' � 4,a�s£=;i'.re 250 4.360 '1,743 6.103 306 . � � 5,232 ° �`.: - � : `a:2.R9'1 . . _ 7 323 . _ _' 350 6,104 2.440 8.554 � 40�0 �,.. . �'$976 "' . .<�,Z778 , ; � 9764 -�;;�;„`�„ 450 7.848 3.137 70,985 �500`, -� ':8720'' `�-; ` =' 3486 _'�;. -' , ". '12206 .�i:� 550 9,592 3,834 73,426 - 60Q .. - � 10464.�:- .. . ��E�A183 �� .. : = 5464� a�:s":�;�'��. 650 11.336 4.53'I 15,867 '70Q - �12.208:; ` „ `;4.680 '. ' . .. ; 17088 :'�_�,...;° 750 13.080 5.228 18,308 , SOQ � 13952 . _:. _,:�S,fi67 -� � � � - . , - _ - _ .. v ._. 19528 ...,.,r��.�:.�: 'COS[ per L000 �oard-feet of framing IumOer or 7,000 square feet of swcNral panels such as piywood Source:NAHB. If the price of the typical new home profiled in NAHB's survey could be Vimmed 10 percent from $226,680 to $204,120, an additional 4.8 million households would be eligible to purchase that home. Of those, an estimated 192,000 to 240,000 wouid be likely to buy a home. Lumber prices, which averaged about$2�� per 1,000 board-feet during the 1980s, have gyrated wildly in the 1990s, at times rising to more than 5500 per 1,00� board-feet. Such increases make new homes len affordable for buyers and can prevertt many families from achieving homeownership, The price increases were raused by a combination of factors, including severe government restrictions on timber harvesting in the Pacific Northwes[ and a quota on lumber imported from Canada which was imposed in 1996. The Truth About Regulatory Barriers to Housing Affordability 15 NAHB SENIOR OFFICERS uf}i�2ssLB D. ir'r";RT3ii P!2',SI()PI7( Albuqucryue, N.�/1. C:?; � *L�S t. ;ZUi�,A Pmsid��nhc7ect Columbus. OLio Rt7-'3Ert'a L. ��?G#iELL Vice President/Ti�easurer Rockville, Md. ;3Rt3G� SMi7}2 VicePresident/Sea�tary Walnut Creek, Calif. Et.IIACidELf'ES�Ci;S � Inm�ediate Past Pmsident � Tom's River N J. and Hilton Head Island. S.C. KENT V"d. Cf3L�0�{?E'd F,xecutive Vice President Washington. D.C. la5£3LS't' NAfi3 The National f\ssocia[iov of Home Buildeis (NA}I6), wiQ� more t}�an 195,000 rnember firms, is the roost iuflueutia( trade atsociation represe��ting the housing industry Worki��g in par[nership witl� more than 800 state and ]ocal builders associatio�is tY�roughout the country, d�e associatio�fs mission is to e�iliance 8�e dimate for housi��g and the building industry, and to promote policies that will re-establish housing as a nafional pGiority. Produced by the NAHB Public Affairs Division with the assistance of the Economics, Mocta ge Finat�ce and Housing Policy Divisiov�; tkie Goverinue�n Affairs Division; and the Re�ulatory and Legal Affairs Di��sion. Ken Klein, a builder/remndeler from Tulsa, Okla., and c6airman of NAH6's Public A[Cairs Committee, had genera] ovessight of t}ie project. — 7.II7 — �� Nnno� v. Assoc�nnon OP HONF $UII_DERS 1201 15th Street, N.W, Washi��gton. DC 20005 littp://www.nahb.mm 9 9 -d�►S From: Brian Sweeney To: STPAUL.IS.Council Date: 8l16/99 7:41 pm Subject: Housing Fees I wanted to let you know that as part of the Mayors budget address tonight he is going to include n � ��,,,000fl ar pi ot program o es 50%. The program will begin September 1, 19 9. The resolution fronf of the Cauncil Augusf 25fh. As y hEC�tnh2YfRharpTOp6S was to cut fees for city subsidized, affordable housing. Council member Lantry and others expressed an interest in expanding this incentive to include all housing fees. The Mayor called his department heads together and encouraged us to consider an across the board cut for all housing fees — if it made sense fiscally. After analyzing this proposal, we believe that given the type and number of new units that will be built in the coming years that even with a cut, we could actually increase income from housing fees. But we don't know for sure. That is why we are doing this as a one-year pilot program. There was an error in the Pioneer Press article on Saturday which suggested a possible one-year loss of $800,000 because of the cut. That is just simply not possible. The proposal also calis for the implementation of a streamlined approval process for housing and the preapproval of home designs. Your input and suggesiions on these issues is moving our city housing agenda forward and helping make Saint Paul a more attractive place to build housing. In addition to these proposals, we will be back to the Council in the coming weeks to discuss some of the other initiatives we outlined earlier in the summer including the Housing Resource Center and the urban homesteading initiative. CounCil File # RC � � I. g �, T'� � �� RESOLUTION CITY OF SAINT PAUL, MINNESOTA �3 Presented Referred To Committee: Date 2 WHEREAS, the City of Saint Paul has experienced a tremendous increase in construction activity the past three 3 yeazs arith double digit increases in the number of permits, inspections, construction valuations, and revenues 4 malang 1998 the single biggest year in terms of permits and ttte value of construction acfivity, toping the half billion 5 dollar mark for the first time in the City's history, and WHEREAS, new housing conshucrion has not kept pace with the overall increase in construction over the last five yeazs and the City of Saint Paul desires to stimulate a substantial increase in new housing construction, especially housing for low and moderate income people, and 10 1 I WHEREAS, the Office of License, Inspection, and Environmental Protecfion, and the Departments of Planning and 12Economic Development and Public Works have developed a pilot program to speed up the review and approval 13 process for all housing development and reduce fees for new housing developments for low and moderate income 14 residents, now, therefore be it 15 16RESOLVED, that the Council of the City of Saint Paul does hereby approve the program entitled "Pilot Program to 17 Reduce Costs and Speed Approvals for Housing Construction" in Saint Paul, which is described in the attached P 8 memorandum from Robert Kessler to Mayor Norm Coleman, dated August 6, 1999, and be it, 19 20FURTHER RESOLVED, that the following goals are established for the one year pilot program commencing 21 September 1, 1999 and ending August 31, 2000: Number of new housing units approved within 72 hours of receipt 22 of complete plans: 500 to 700. Nuxnber of new housing units designated for low and moderate income residents: Up 23 to 150 units, Amount of fee reduction for all housing units approved during the period 9-1-99 to 8-31-00: 50°/a. �� _ 27 3$Adopted by Council: Date ��-\ \� 39 (� � d.�Adoption Certified by Council Secre[ary 41 42sy: 43 44Approved M yor: D te � 4 � v/1 46ay: Requested by: Office of LIEP and the Department of Planning and Economic Development (PED) By: By: Approved by Director of Financial Services By: ��r�st-� .. e"�_(�"'C-zz.��i Form Approved by City A ey By: � C Approved by Mayor for Submission to Counci By: OFFICE OR L�EP � Au�st lo 1999 GREEN SHEET Department of PED Robert xessler NO . 64 9 0 7 5 �� 266-9112 BPPRITffiTl DIRHCPOR �C ITY COUNCIL ,. TY ATR�RNSY ITY CLS2K �uw�a ust be on Council Agenda by: °°° � DIRBCitlR �:mxcx sa ce �cmR � SAP YOR (OR ASSISTPSTl) OTAL # OF SIGNATIIRE PAGES 1 (CLIP ALL LOCATIONS FOR SIGNATURE) CTION REQUESTED: Approval of a resolution to initiate a special one year ilot program to reduce costs and speed approvals for new housing construction COhSffiNDATIONS: APPROVS (A) OR RSJECT (R) �SONN• SffitVICB CONTR11CfS MUST ANSNSR THB FOLWiPZNG: PLANNIxG COMiAISSION CZVIL SERVICS COAflhISSiON 1. Ha9 the pezsonjfiYm evei workad llndes a contxact fox thia depaxtment? CIH COMMITTEE BUSINESS R&VIEW COUNCIL SSS NO STAPF _ Ha9 this person/fixm ever been a City employee? DIS7RICT Q�URT YES NO Doea this pereon/firm possess a skill not normally posaessed by any SUPPORTS WHICFS COUNCIL OHJECTIVS? Q�Trent City employee? YES NO lain all YBS aasrere on a aeparate eheet and attaeh. INITIATING PROBLEM, ISSUE, OPPORTUNITY (Who, What, When, Where, Why): The Mayor and City Council have set ambitious goals to produce up to 2500 new ousing units in the next two years. Speeding up the permit review process, adding a preliminary review component, approving standard designs, and reducing fees by 50% are actions intended to help the city to attain its ousing goals. VANTAGES IF APPROVED: ill provide incentives for the production of new housing during a one year trial period to gauge the overall effectiveness of such incentives to the roduction of new housing units. It is fully expected that these incentives ill be effective. ISADVANTAGES IF APPROVEDc verall revenue will increase, but whether it will cover expenses is not certain. The test period will help us determine the efficacy of continuing reduced fees beyond the test period, allow us time to calculate our exact costs, and to determine what the additional staffing needs will be. ISADVANTAGES IF I30T APPROVED: ew housing production will languish without effective stimulus from the City, and we will miss an opportunity to try some very innovative approaches to stimulate housing production. OTAL AMOUNT OF TRANSACTION: To be determined COST{REVENUE BUDGETED YES NO FiTi3DII3G SOURCE LIEP Special Fund & Public Works Sewer Maintenance Fund FINANCIAL INFORMATION: (EXPLAIN) (Background memo attached) �� #� !_1 AUG 1 7 189,9 i,�� CITY OF SAINT PAUL INTERDEPARTMENTALMEMORANDUM DATE: August 6, 1999 TO: Mayor Norm Coleman FR: Robert Kessler, LIEP Director � 11-&� RE: Pilot Program to Reduce Costs and Speed Approvals for Housing Construction This memorandum is in response to your request for creative thinking on ways to increase housing production in the City of Saint Paul. This proposal has been developed in cooperation with PED Director Brian Sweeney, his staff, and your Housing Roundtable. The pilot program is described in some detail, but there srill are details that need to be worked out. As you know, a recent study by the National Associarion of Home Builders (NAHB), states that govemment regulation of new housing construction can drive up the costs of new housing by as muclx as 10%.' The NAE3B's report (attached) says that "rising regulatory costs idenrified by NAHB are pushing millions of borderline home buyers out of the mazket..." and similarly, the cost of regulatory controls on multifamily housing developments makes rent levels beyond the means of working families. The regulations that affect housing producrion aze numerous and complex; they come from the federal, state, regional, and local levels. Besides the sheer volume of regulations, builders have repeatedly expressed concern about lengthy time delays associated with regulatory inefficiencies and stressed that the longer the reviews the more costly the pmject becomes. While many of the complaints about government regulation have to do with the various building codes, zoning, and subdivision regulations, plus the costs of providing off-site infrastructure improvements (roads, sewers, etc.), local government can positively and directly address the length of the reviews, the costs associated with local permits and inspections, and the identification, preparation and assembly of vacant sites for development. We propose to do the following to stimulate the development of housing, especially housing for low and moderate income residents: Reco�nmendat�ons To Reduce the Cost of Housing Production & Speed Approvals: 1. Start the review process at the preliminary project planning stage. Projects often require zoning variances, special use permits, etc. from the Plam�ing Commission and/or the Board of Zoning Appeals. Key representadves of the affected city departments must be involved with PED staff early in the project planning process to identify all approvals that need to be obtained for development. This will allow required notifications to be sent and hearings to be scheduled to reduce the time lag in the review and approval process. Special attention ' The Truth About Regulatory Barriers to Affordable Housing, National Association of Home Builders, Washington, D.C. 1998. Mayor Norm Coleman August 6, 1999 Page 2 �tg - �t5 should be paid to neighborhood and community concems about density, congestion, and other social factors associated with affordable housing. 2. Establish a special "ad hoc" interdepartmental review team, an adjunct to the current site plan review process. This designated group of City staff would have the eapertise and authority to approve new single and multifamily housing projects in 72 hours or less, usually through a single meeting, and immediate follow-up. The Office of LIEP will provide staffing to this group to facilitate timely review of all new housing proposals. 3e Reduce permit, sewer access, and review fees for publicly ass9sted low income mulhfamily housing and single or dupiez developments on scattered HRA owned lots. We are proposing a 50% reduced permit pricing schedule for all housing with pemuts approved between September 1, 1999, and August 31, 2000. 4. LIEP staff should pre-approve certain �°standard" single family designs that can be used interchangeably for the development of the approximate 100 "buildable" vacant single/double lots scattered throughout the City. Moreover, LIEP and PED staff should also work together to prepare an inventory of all buildable lots in the City to identify the zoning and subdivision regulations (lot coverage, set backs, height, width, etc.) that apply to the development of each parcel, so that required variances can be obtained in a timely fashion. Implementarion Steps � W e seek yow support and cooperation to approve this pilot program and Council Resolution to implement this proposal as a one year test. The resolution establishes the program, sets several specific measurable goals, a time period, and approves the 50% fee reduction in pernut and related fees. It also includes an evaluation component to determine whether the program should be continued or expanded beyond September of the yeaz 2000. • We aze also recommending the designafion of Roger Curtis, from the Office of LIEP, as the project coordinator to facilitate the streamlined interdepartmental review process in cooperation with Tom Beach, the staff person in charge of the site plan review process. Roger will also be responsible for getting the preliminary design pre approved, monitoring the pilot program and conducting the evaluation by October 1, 2000. c: Joe Reid, Financial Services Director Ivlayor's Housing Development Team Tom Eggum, Director of Public Works Bernie Bullert, Water Department General Manager Tom Beach, LIEP Dede Demko, Budget Analyst Tom Cran, Budget Analyst Proposed Reduced Fee Schedule For Affordable Multifamily Housing Current permit fees (plan review fees, building permit, electrical permits, excavarion, mechanical, plumbing, etc.) average between 1.5% and 2.0% of the total cost of the development. qa-�,s Here aze the rough appro�nations of current fees for your information and comparison, the proposal is to cut these fees in half: Current �ll Fee Eaample: $1,000,000 Mnitifamily Development Plan Review Fee Building & Excavation Pernut Electrical Permit Plumbing Pernut Mechanical Permit Variance State Surcharge * Site Plan Review Sewer Access Charge Storm Water Management 1'otal Current Fee Example: $114,000 Single-Family Dweliing Plan Review Fee Building & Excavation Pernut Electric Pernrit Pluxnbing Permit Mechanical Pernrit Variance State Surcharge* Site Plan Review Sewer Access Chazge Storm Water Management Totai $ 3,20Q $ 5,000 $ 1,800 $1,500 $ 2,200 $ 300 $ 500 $ 225 $ 840 $ ? $15,565 $ 646.00 837.00 200.00 410.00 161.00 225.00 63.00 N/A 900.00 52.00 $ 3,494.00 * State Surchazge Law Requires a$.50 fee per $1,000 in valuation f' TDt lTI..I IlRfl11T f�Grl ff flTflt}V RIlDt?I�RC to Housing AfFordability -� -� � .� � �� . �.� , �,�� `� ��-. ;, �� °, �.� - ��;�� - _ ; ,= � . .� ;� � � s a _ .�.�� id� 4 , � �"' ", ""�' - �.,v�"i: �.z. � ,} a ... 'a � " :y ..,e ` [�'i: > �� ` �� i'�. , .,, t * wW � �f� °`am.,� ...�.,,,.. � "� � . a-, � ;, i ` �*"+ � r �� ,_ ,.;(. - . �"` . ,. .. ,�__ `,'� . :r F. , �� . �� _ �. .�. ��,� � � R ��'� G�'. �� . 6 4 { i k� u� A Pubhcation of the Nat�onal Assoaation of Home B€�t� � � v _ v_ ,.,�.,A �w , A a x�a �� * + � � , '#`' .�ps .�S"�"" � �,'. � - s ^ s , .:�' " -- t � , ,--,-. �,... 2 �� -_ ; , � � � ; � �.n �� € ��, � ;; ,��cr,� . - �:; � `� � ._� �� . . ��s�t -� _ . -- " so-�� ;' L 7 a ��i �� v �i S R' d �� a ��` � ,�,��.- E � �.. .. �9%§��` � 5 �� ' . A ��. .._�._._.. � ry�. ( �Z �( £ �>Y `—� .� � � ...». � .. 5 �. yn � f ;� -��`: � . :. . � .. 4 �.�_. � .. °t � 4 ' • N t � y .. �! r '.�+ Iv. u � .. �: z .+ , ' g • i . , . _ ' , . " . . . . ,.- � a.z � " ' t�e.:. • 3 � A � . . .. .. _ �.v gs .. v . : � ta _. . . p _. . i `.^ . v } "� X _ f ` _. -.._ ..,..:. .b�b.- � . reach of millions of prospective home buyers. 2 A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS of the strong housing homeownership gains of A riptide of government regulatlons imposed at the local, state and federal levels conanls how housing is constructed, where it is bullt, development density, and ihe fees and taaces impased on buIlders to pay for roads, schools and other off-site public infcastruaure. Ultimately, these regulations can have a profound effect on the cost of a new home, driving it up 10 percent or more in a typical market. Based on a su�vey of home buIlders, this report examines the cast of government regulation as a shaze of the sales price ir� 42 mazkeu azound the country As part of llvs study. NAHB polled buffders and followed up with individual interviews to track their experiences in dealing with regularory au[hodties from ihe time they purchase land and submit subdivision plans until the sale of the home. The survey resvlts are very alarming, especially in the light of the nation's growing popula[ion and the resulting demand for new homes. The compiexities, numbe� of approvals, time delays and costs of ineeting regulatory requirements aze increasing rapidly Builders �' are being required to pay a larger share of the cost of a 3 providing off-site in&asiructure irnprovements such as a fr new schooLs, fire statlons, roads and other public facil- x = ities that benefit an entire community—not jusi peo- recent years and to drive the cost of housing—and homeownership—beyond the ��S NAHB's survey found that about'f0 pertent of the cost of building a typical new home can be atffibuted to excessive regulation. ple living in newly-constnicted homes. In years past, these casts were funded by the communiry at large through general ta� revenues. NAHB's survey found that about 10 percent of the cost of buffding a rypical new home can be attrib- uted to excessive regulation, needless red tape and reg- ulaxory delays. In some highly regula2ed mazkeu, the coss can tota120 percent or moze of the sales price of a typical home. And it is clear frorri TF�e indroidual buIlder interviews. e�aznples of wluch aze afso mdud ed in this report, that no relief is m s�ght In fact con` : ditions are worsening. The rising regulatory costs itYestitifie,cl by,L�FAHB are pushing millions of borderlute I�ome buyerscsut ti, , of the market. Peopie who aze attemphng to buy tfies ' 3 i, first home find that it is beyond the�r reach;`Llvst[end threatens to slow or reverse the recent�giawth irc the naaon's homeownership rate and greatlydimaiishes the chances of achieving the � an overall homeownership ra turn of the century. Further complicating the; folding debate over urban grocvC development pattems and inflati land still available for residential�i Prince William County, Va., descr typical of conditions in many parts of the countiy where the door to homeownership is being slamined in the faces of prospective home awners.. ClearIy, dia- logue on ways to sirnphCy and streaznline the regeila- tory and Iand use process goveming resideniiai de- velopment is essential. At NAHB's strong urging. Federal legislarion that would require a housing impact analysis before the gov- ernment could "unpose any new federal regularion is already moving through Congress. This legislauon would compel federal lawmake�s and regulators to con- sider the often unintended consequences of their ac- tions before new regulztions aze put on _the books. Conducting such an analy- _ is; in.o"ur view a good starf"and a : move thatshould be followed by every � state county and murucipality; in�the . counuy .,- , . ".;Dialogue, at all levefs is,paracu- : ,'larly3mportar�t,because studies `de- � .� scnbed��in tivspu6lication showthat' . the public suppores reasonabfe �welt- - managed growth and does noYfador highiy-restrictive �, poJ?cies. They also show fhat sveamlining the �,.regulatory process is absolutelycritical ta effores to s,.� � . � . eszpand fiomeownership oppoitunities. [ni�ld afford- able hou'suig and re-estaUlish housing as a[op nation- al pdoriry :As q✓ith �mast compTex,iss,ues, there is no simple `;.. ; solution.fn the` question of regiifation. It eammpasses concems ranqing from 6u�ldin�,codes, perreiittipg de- tays ancl `urequi5able fees w environmentat sestrictions. growth_contro7s��and more. However, it is,clear that . � without a serious effort to make sweeping changes in the way ihat conshvcaon of new homes is regulated, costs will continue to rise and homeowne�hip will corr tinue to be an elusive goal foc tens of thousands of families. ■ � � . The Tivth About Regulamry Barrie[s to Hovsing AffordabIIity 3 the sale price of a typical new home, according to a nationwide poll of home builders in 42 metropofitan markets. Conducted by the Natunal Association of Home price ff unnecessary goverrunent regulations, delays Builders in the summer of 1998, the survey asked buIlders [o provide a detailed breakdown of the cast of constiucting a 2,150-squaze-foot ho�se with 3 or 4 bedrooms on a 7,500- to 10,000-square-foot lot. The average sales pdce of a new home in the 42 markets eacample, an estimated 28.6 percent of the sales pdce was $226,680, and builders estimated that an average could be trimmed if the regulatory process was re- of 10 percent ($22,668) could be virnmed from the Tota1 construction cost Fi�ancmg eost - Overhead and general expenses .MarkeG�gcast; - . . .:� (nclr�e�ing home buyer financingF � Sales commission ,, . � �[O�[':a:S,a�.,_ �, � -' _._ . ;°� Totalsatesprice a< =' r . . .... � `.a_�..�._�x` .,3,226;i .�. xs . _ 5.350 4.3 �?s�.-.` `��_,`.�.,.�'., -.,�:7£45'.;3 �.g..:.. 7318 59 ' . _, ...�..�:..;�'�...:`�fi69,= `38 ^:: .. Pavin 4859 91 �..�,: _ 1292 '10 -.- °�Wa*z�an6se.ver" _ . ,.a�4533 ._:,a86 �, HVAG.��-' , _ �:.:.'.� , �.__ .°`��, =5'I�FV's _ 41 '. . � Erosion anci sediment � t A76 Z p "?.: Insulation � 1,793 1.4 � Impac[arialysis .� . _-,- ?A$ .. - 'l 4 .. `' DryVValt �; . . -. �6.&Q7`�. � 5- 5.5 .. Water/electric hookup 1,260 2 4 � t pamnng 4,734 3.8 Lantl detlication or fee in tieu - 168 . 0 3 -� CaMnets, cbuntettops .�' - _ " 6,t67 . 5.6 Bonding/escrow fee 349 0.7 �.,� Appliances 1.675 1.3 , . . ..�_. _ . Financingms[ , 2,729 '-.� ° � 4A. �., :..`°,Sitesandrzryei .......:::. . _ .'..,.�.:r;. :F5.971 . � ... 4.8 Tree preservation and planUng 762 'f 4 � n Tnm ma[erial 3,861 3.7 . rA/eUand preservation - 235 : � : „�.0 4 .;-:e tandscaping and sodding '- . . rv , 2:250 � � '- t.8 . Value of unbudt land as green space & park 536 1.0 _-�' Wood deck or paLO 827 OJ , OFher costs �- � . - ' 845 ...: �� 1 5 . c:: AsPFrak:�,drivzway ' . . .. ,_ .'t:873 :,-", . , 1.5 and fees were eliminated. Amounts that could be saved varied consider- ably from market to market, and tended to be greatest in highly populated urban azeas. In San Francisco, for formed and streamlined; in Grand Rapids, Mich., the � :-:;, . ' i` ,.: . �-...� 124.276 54 8 °1,- lmpact fees 1 182 t0 _ :=.4 266 � � , si 9 Fs,��.,5^�atec;a2K7 sewer crispECtigti .. .... , . 'h �07r=�.'f', _ ^ �9 4 � -'" . 12.955 5 7 ;: ExcavaGOn, foundation, backfil 'I'1,952 9.6 . =� -., .�c SteeS : �. �. .,;..:,� '� 4f r } 4 :: . _., ,<. ....'.4 7R(5 :s. ��T�"4.. e,r�. °c, `�: c..�.,.�.,.. r. «e� ��,� �1.o�rF.,..� �c n5� �n � . �. l.l UL'1 Rav�el,otcost�.e��.` .. .., r :;$.;'=..3008'{; Development cosu .,�astof�proc`essiiigaPProvais': ` :°�t,79�,: Site preparaGOn 4.075 :'Site�mpco`v"ement . . - Totaf developmenc cosu S 23,434 Totalfrnsheiflot(raw+deveiopment)' ta53,515 E.>... 4'A PLfBL{CAY10N 6P TNE NATtONAC AISSOCIAFfC . e ' �r.,. -. 9 , . :.d. .;.`� 9.603 7.7 n eos({�`� - `#724 27B .. � ='100.0%a . 4 " r ' drive up the cost of constructing housing and add about 10 percent to "There are [oo many time consaming reviews and approvals,'said David Koskinen of Greenway De- velopment Co., Inc. in Montvale, NJ. On the opposite coasC San Diego builder Foagt &ehni concurred. ° 'Ihe bottom line is that there aze too many approvaLs and reviews for land development, ar�d many are repetitive or overlapping,' he said. ° We have to get as many as 15 to 20 sepazate approvals. Significantly, the majority of the builders who were sunreyed indicated that conditlons are worserring. Almost half (48.6 percent) said that the length of time to obtain a routine sir�gle-faznily project approval (wn- u�g and subdivision) increased considerably between 1987 and 1997 and another 24.3 percent said it in- creased somewhat. No change in the aznount of time required was reported by 16.2 percent, and 8.1 percent said it had shortened somewhat. None oF the bullders surveyed reported tha[ the time to get projec[ approval was considerably shorter than a decade earlier. Even more striking, more than three-quazters of the builders surveyed said that there was a significant increase in the number of state and fedecal regulations over the decade, and another 21.6 percent said there had been some increase. Only 2.7 percent said they were unsure if ihere had been a change. Builders also reported sigrtifican[ increases in the cost of developing a lot for construction. Ten pucent said that the cast of developing a lot increased by 100 percent or more between 1987 and 1997, and 23.3 percent said development costs ttad increased 50 to 99 percent. Another 23.3 pereent reported increases of 20 w 49 percent, and 43.4 peicent said costs had increased up to 19 percent. "Sewer and water pemut fees neady doubled this year." said Lee Kitson. abuilderfrom Grm�d Rapids. Mith.. while a Melboume, Fla. builder, Paul )oyal, noted �hat "the raw lot cos[ includes several [housand dolla� paid by the land seller for miagatlon of sciub jay habitat" Z7°k � : � "We need a more equitable means of paying for grow[h rather chan impact fees (which are anposed on new constiuctlon) said john Huh of Fagle Creek Prop- erties, Inc. in Naples, Fla. 'Impact fees should be spread over all home sale fransactlons, particularly school fees, because faznilies with kids move into older homes pre- viously occupied by empty nescers," said Jon Haycnan of the Hayman Companies in Bwlingame, Cal'rf. ° Com- mercial users should help pay for vatfic impacts, too," he added. The Truth About Regularory Barriers m Housing Affordability 5 - - _ -- - � 99 -8'!5 sales pace could be�ut by abaut 4 percent. _ �,�;,_ � „ $oyrce� NqH6'z Surveyaf BuJtlers in 42 meVO areas-1998 R9 -�1S �: lpercenc or raaF r.ro�7 �: �Ma�Ceflrig'cou_:7. ' �--�'Corsrtut6dnfu .9% ' ., ; 4ia 5irionms - 21.4% � . .....,. .,, ,.._,,.__..__, --__.__._.� 7 Yo tZ rtitttc»ths ZS°lo , --{. :_.,...m _ . _ ___......_....,,___.,,.. .;:t�mantluorioae� ' �. m�� -' 2� 14.3°k �-3 — 37.2% - - --� � . , ,t0ormore --..�... ^ 48.5% _ . .. Source NAHBS Survey of BuJOers m 42 meW areaz-1998. 6 A PUBLICATION OF THE NATIONAL ASSOCIATION OF HOME BUILDERS In all, the survey revealed, the finished lot ac- counted for 23.6 percent of [he sales pace of a new home while acmal conswction costs accounted for 54.8 percent Profit comprised 9.2 percent of the sales price, and overhead, consuucaon financing, marker ing and sales commissions accoun[ed for 12.4 percent of the total. Builders frequendy dte delays as a cornributlng factor in rising housing casts. and the survey showed that prolonged delays in receiving consuucuon ap- provaLs are commonplace nationwide. When it is necessary to get land rezoned in or- der to build, only 1 l.l percen[ of the builders report- ed a wait of six months or less to receive building per mits. Tltirty-seven pereent reporced a delay of 7 to 12 months, and 29.6 percent said they face a delay of 13 to 23 months. Another 22.2 percent reported a wait of 24 months or longer. It takes considerably less time to get building per- miu when zoning is already in place. Even so, more than 60 percent of the buIlders surveyed said it takes 7 mornhs or longer to get pemuts; about 40 percent of the builders surveyed said that it takes six months or less to ge[ buIlding pennits when zoning is in p1ace. "Unfortunately, in towns and citles across the na- tlon, the bureaucrau at the desk have the power to hold you up," said a builder from Southern California. "'Ihey're no[ accountable for the tlme delays they cause." Delays in the process were cited by many builders as a sigruficant problem, and 1 l.l percent said that 10 or more govemment approvals and reviews aze required before land can be developed. More than 44 percent reported 5 to 9 revievrs and approvals, and 44.4 per cent repoRed 2 to 4. Inspections during ihe home conshvcROn process can aLso cause substantial delays, the buIlders report- ed. Almost half (48.5 percent) said that 10 or more in- spections are required, and 372 percent said that 5 to 9 are required. Only 14.3 percent reported fewer than five inspections. Sourte NAHB's Survey of 9uiltlers in d2 �metro areas—t998 � � �^ interviews are representative of the remarks builders made and reveal several common themes among builders' concerns. For example, all of the buIlders quoted here saw the necessity for greater efCidenty in the permitting process. They tallced about the need for permi[ting agencies to coordinate their efforts, the need to set a specific time limit on the approval process, and the need ro keep new home buyers from having to shoulder the enure burden of cosu for off-site infrasvucture such as roads and schools Significandy, all the buIlde�s with whom we spoke I n the Pituburgh metro area. there are moce than 1001oca1 municipalitles, each of wMch has its own set of mles for buIlders to follow This complicates the permitting process, which can take arrywhere finm one to three years, says Murray Rust of Montgomery & Rust. were concemed about time delays associated with reg- Inc. His ideas for refo�rning the process are in line with ulamry inefficiencies, and mos[ stressed the point that those of Ms fellow builders. 'It would be great to be the longer the pecmitting process, the greater the wst co the home buyer. The five builders quoted here esti- ma[ed that if sigcuficant regulatory reforms were un- plemented in their markets, new home prices wuld be thousands of dollazs lower. a61e to go to a single desk for all necessary pecmits," he says, "and it would be good to have some cost-benefit requicement to mee2 before new regulaflons get pffed on top of old ones." In the 26 years he's been a home builder, Rust has seen the development process become infinitely more complicated. His company builds about 25 town- houses per year, pdced in the low $200,000 cange. Mast of those homes are sold to first-time buyels and emp- ry-nesters. If significant regulatory reforms were un- plemented, Montgomery & Rust, Inc. estimates buy- ers might save up to $ percent on the cost of its $220,000 homes. "It woutd be good to have some cost-benefit requirement to meet before new regulations get piled on top of old ones." The Truth Ahout Regutatpry Bazners to Housing Affordability 7 individual concerns about tocat regufations. Excerpts from five of these 99 -8'1S •"That buyer does�`t get to say wfiat he o� sfie is willing to help pay for, even though that buyer is the one who will see higher housing cosu as a result of the require- ments." I n the 36 years that Califomia archi[ect Mike Davis of the Hazold W. Smith Co. has been in the home I n Austin. Texas, it takes Clark Wilson Homes, Inc. 7 to 12 months to obtain a building permit afcer building business, he's seen the time it takes to get a applicauon for rezoning. Company eacecutive Nedda single-family building permit for a fuushed lot in Con- Brown has witnessed a great deal of 'passing the ba- ira Costa County go from a single day to one month or ton" among depar[ments, and says "it's not right that more. The county used to issue building pernrits from while one development gets approved, a sirnflar one a central depar[ment, but now each city has its own winds up snagged in the regiila[ory jungle." She em- permitting agency with which builders must comply phasizes the need For "consistent enf'o�cement and prw Like tvs fellow buffders, Davis wishes thece was a spe- cessing" in the pemritting arena. cific time limi[ for commenting on a projec[ and mak- ing recommendations for submitted plans. Davis also makes an important point about regulations and hous- ing affotdability. "The only person who doesn t get a say in what geu buil[ in a given residential area—what schools, roads, and parks must be provided—is the home buy- er, the one who will be living there," he notes. "That buyer doe.vit get to saywhathe or she is willing to hetp pay for, even though.thztbayei� is the one who will see higher �iousing co"sfs as a�result of the requiremenis." It's fiUSU�abng, Dauis continues, when buIlders are ac- cused�of not auilding "affordable' homes while re- quirements thac boost the cosf of housing aze beyorxi their cont[ol. �� "it's not right that while one development gets approved, a simiiar one winds up snagged in the regulatory jungie." Most concerning, says Brown, is the "constant nile-changing' that occurs. "Our city is committed to preserring some sectlons of the meun area for non-de- velopment," she explairvs. "The problem is that some of the land to be preserved was purchased before the preservation niles took effect, and while developers as- sumed itwould be'grandfathered; it's not. Now buildecs can't build ro the density they'd planr�ed. and it's cost- Builders in the $an Francisco Bay azea (the na- ing them." tion's most expensive housing market) used to count Clark Wilson sells homes in a vadety of price on about six mond�s t'or €he permitdng process for lot development, but now theywind up cazrying land for up to three years while the neeessary approvaLs are se- cvred. During that time, the builder who owns the lot is payuig ta�es on the land and his costs aze going up. If cegulawry reforms could sigitificanfly reduce the �me it takes to ga through Fhe development process, Davis says buyers mightsee up to a 10 percent reduction in the cost of a$600,�OQ home on a$250.000 lot. ranges, from below $100,000 up to $350,000. The company targers primarily second-time and move-up buyers. though about 20 percent of its customers are first-time buyers. Brown estimates that if significant regulatory ceforms were implemented—and especial- ly if those refornvs could speed up the process—homes her company sells in the $140,000 range could sell from a thousand dollars to several thousand dollars less. 8 A PUBLIGATION OF THE NATIONAL ASSOCIATIpN Oi HOME BWLDERS q9 -8'�5 B akimore-area builder Tom Brown says his com- pany, American Builder Sen+ices Inc., often buys firushed lots within established subdivisions in order to avoid problems associated wiih ]and development. According to him, fIluaiion requirements are one factor driving home prices upwazd in the Baltimore region. "We have many ueas that are near dvers and stceams around here and many wedand properties," Brown explains. "Builde� are therefore required to do percolation tests, and related cosis can get as high as $7,000." Brown would like to see a sunplified waiver process ihat wouid, for exaznple, allow small landown- ers to subdivide property ihey own without having to go through the same process as a company putting in a lazge development. American BuIlder Services buIlds "Streamlining the regulatory process could save home buyers at least $4,000 per single-family unit." be[ween 12 and 15 homes per year with prices start- ing azound $ I50,000 [plus lar�dJ. "Streamlining the reg- ulatory process." says Brown, "could save home buy- ers at least $4,000 per single-famIly unit" In the nearly five decades he's been a home builder. Brown estimates the development process has become 200 to 300 per- cent more complicated and time consuming. C hesapeake Homes, in Norfolk and Virginia Beach, Va., avoids some regulatory hassles by buying ready-io-go lots from a land development com- pany Yet execuave Bill Ganzenmuller faces many of the sazne problems as other buIlders in obtaining con- stcuctlon approvals—especially lack of coord"utation aznong pemutting agencies. Wltile he declines ta esti- mate how much less his homes might sell for if regu- latory refomis were irnplemented—he doesn't do land development—he affirms that housing would be more affordable. "tf you could reduce lot and uffiity costs," he reasons. ° you could reduce the final cost.' Among the difficulties he faces, "It's aetually de- partmental paper flow thats the problem. One agency in chazge of an inspection doesnt mmmunicate with another, and this causes delays," he says. Ganzerunuller "If you could reduce lot and utility �CO5Y5, you could reduce the final cost." also cites the lack of uniformity in local building codes , and regula[ions. The result, he says, is that two com- ��' _ mvrrities just five miles apart require widely c�ivergent � � pre-conshvction fees. . - ' ` - . "The actual difference is around $4;706," he � says, "and thafs ridiculous." In the more �pensive ama, "it cwt5 over $5,000 per lot even before bu}�ng a build- ing permit. Keep in mind that $5,000 is a'hard' cost in tenns of the home. We can't absorb it, so home buyers wind up paying it, and it has no value to them. They already pay monihly fees for services " Ganzenmuller aLso makes another point about how regulatlons affect affordabfliry. "In some countles t}�ere's a virtually ur�tapped market for singlefanuly hom� in the $100.000-range,' he says. "The reason is that af- ter all the costs from regulatlons and utilitles, it's eco- nomically unfeasible to build lowerpaced homes. In my mind, this is the biggest pmblem facing home buyeis to- day" Chesapeake Homes builds 200 to 250 homes per year, mast of them in the $120,000-$140,000 range. The Truth About Regulatory Barrien ro Housing Affordability 9 s part of one of this country's fastest grow- ing metropolitan regions and an area in which severe restrictions have recently been imposed on residentlal buIlding, Prince Williazn County. Va. is a houpot in the natlonwide debate on regulatory barriers to growth. Pnnce William is one link in a chain of subur- ban counties enciccling Washington, D.C., and whats happening there is representative of situations arising in the outskirts of high-growth metropolitan areas na- nonwide. Census Bureau figures indicate the counry's lots even without thousands of e�a dollazs tacked on for impact fees. Only the wealtrries[ people would be able to afford a home in the westem half of Prince Williarn, raising the questlon of why ihe county has cho- sen to e�cclude buyers in orher income brackets. "The argument is that residential development doesnt pay its way," says Roy O. Beckner, president of the Prince William Chapter of the Northem Virginia BuIlding Indusiry Association. "Supposedly, it cosu the county more to provide services for a home and its in- habitants than the home generates in revenue for the population increased 18 percent between 1990 and county. But to say a$200.000 house doesn't pay its 1997, a double-digit growth rate typical of the Wash- way, whffe a bigger house will, is eliasm. It's saying the ington area. Pop�latlon forecasts for P�ince Williarn re- counry only wanrs a certain kind of people." veal the counry is expected to see a 67 pucent increase in its resident base benveen 1995 and 2020. Believing the growth rate is too fast, munty otfi- cials adopted a plan for reducing the number oE po- tential homes on five-year plarv�ing maps by 27,000. One section of the slow-growth initiative, dubbed the "curai crescent plan," sets aside about 8�,0�0 acres— nearly half of the county—for farms and subdivisions with lots no smaller than 10 aaes. It atso quintuples impact fees required of developers to as much as $15,000 pu house. Unequal Treatment In the targeted area, the plar� will virtually eliminate new home purchases by middle- and lower-income buyers, who woulddt be able to afford homes buIlt on 10-acre The Economic Impact of Building Clauns that residentlal building doesn't "pay iu way' aze based on the a�sumpuon that property taees paid by home owneis dont generate enough revenue to pay for seivices like roads and schools those home owners require. Unforcunatety, these assumptioas ignore the fact that buIlding acuvity generates other types of rev- enue for the jurisdicuon and is a driving factor behind any thriving area's economic base. Findings of a 1998 report, "The Impact of the Building Industry on the Washingcon Area Economy" by Stephen Fuller, Ph.D., of George Mason University, strongly discount the idea that buIlding activity of all kinds does not "pay its way' In fact, the Washington metro amas overall buffding industry accounted for 14.8 �O A PUBLICATION OF THE NATIONAI ASSOCIATION OF HOME BUILDERS percent of Gross Regional Product, or $26.7 billion, in 1997. D'uect income generated by the building indus- try aznounted to $15.7 billion, and totaljobs support- ed regiornvide by the building indumy reached 432,844, or 17.6 percent of all privarejohs in and around Wash- ington. Such figures should settle any doubis �as to whether residendal development—as a component of all building—pays iu way in Prince William. Like Squeezing a Balloon "For a counry in one of this country's fastest growing regions to enaci such rigorous restricGOns on residen- llal bullding is dearly a big mistake," says Gary Gar companies will hire will be able to afford the houses czynski, a Northern Virginia home builder. `Think about it this way—the Washington metro area is like a partially inflated balloon. When it gets squeezed in one place, it expands somewhere else. Imposing slow- growth mandates wont take away ihe demand for new housing, it will only tause people to move further ouc ronically. regulations imposed under the guise of preserving quality of life car� reduce homeowner- ship opportunitles and housing choices. That's what happened in Pordand. Ore., where 25 years ago the government established an urban growth boundary (UGB) beyond which new development would be prohibited. qq.r►s or to neighboring counties in hopes of achieving the American Dream. Housing Variety = Jobs Beyond denying homeownership to many faznilies and corrtributing to leapfrog develapmern, Prince William's slow-growth plan could darnage the county itself. The BIAs Beckner poinu out that Washington metro azea counGes have been vying to lure high-tech and bio- tech compazues for some time now "Everybody wanu these clean businesses that pay high salaries," he says, "but the fact is, not all of the people the Fortune 500 that are being bullc You have to understand that com- panies scouting the area are looking for a variety of housing types, so all of their employees can live neaz- by Otherwise, they wouldn't be looking to move in the first place. Prince William County is making the wrong irnpression." fourth least affordable metro azea, according tn NAHB's second quarter 1998 Housing Opportuniry Index. Lot sizes have declined dramatically, and some residenis have rebelled against the kind of krigh-densi- ty development encouraged by the UGB. According to Kelly Ross, D'uector of Govemment Affairs at the Home Builders Associatlon of Metro Portland,'Any other azea The so-called "Wall of Portland" is having severe considering this type of model has to be aware of the but predictable consequences as the supply of devel- irade-offs and casu—it's not an easy road. Be prepared opable land cuns low Once known as one of the narions for higher housing cosis, more traffic congestion and mast affordable housing mazkeu, PorHand is now the increased densities in established neighbofioods." The Tcu[h About Regulatory Bazriers to Housing Afforda6ilicy 11 driving housing costs beyond the reach of young people and other first-time buyers who are disproportionately affected by higher costs caused by multiple layers of regulations. 'Ihe Americar� Homeownership Act (H.R. 3899), in- another. Each regulation is adopted independenfly and, voduced by Rep. Rick Lazio (R-N.Y.), and The Af- by itself, might seem insignificant. But when 10 or 20 fordable Housing Barriers Removal Act (H.R. seemingly insigrrificant 2gulations are impwed on top 3435/5.1877) introduced by Rep. Tom Carnpbell (R- of one another, the cost implications and delays in- pact on housing affordablliry. As the home building industry knows only roo well, builders are often subject to a°layering effect" where numerous regulatlons are stacked on top of one herent in meeting those regulatory requirements can be considerable. In some heavily regulated markeis, the cosu and time delays involved in meetuig regula- tory requiremenu can add tens of thousands of dollars to the cost of buffding a modest single-famIly home. This review requirement should go a long way toward remedying this difficult problem and hopefully wIll make (awmakers more awaze of the secondary or un- intended effecis of regulation. "NAHB strongly supports enactment of ihis cru- cial legislaaon, wtrich would be a sigcuficant first step toward re-establishing housing as a national priority and removing obstacles to housing affordabllity and would set an important precedent fo� state and local govemment to follow," says associatlon President Don Marcin. °Trvs legislation would cut those excessive cosu that do little, if anything, to make hovsir�g safer, more comfortable or more desirable, and it would help make homeownersMp more affordable.' 'IZ A PU6LICATION OE THE NATIONAL ASSOCIATION OF HOME BUIL�ER$ ,-; to help curb unnecessary regulations and keep them from Calif.) and Sen. Ron Wyden (D-Ore.) would require a housing impact analysis of any proposed federal regu- lations to certify that they will have no significant un- qg �u A very vocal minority sometimes makes it appear to public ofFicials and the me- dia that most Americans oppose growth. In reality, mainstream opinion favors continued, well-planned growth as a cornerstone of economic welf-being. Recent nauonwide polts consisting of a com6ined 2,200 interviews reveal that contrary to convenllon- al wisdom, most Americans view growth in a posi- tive light. The polls were conducted by the Research Consorrium* in Raleigh, N.C; Puget Sound. Wash.; Franklin Counry, Ohio; and Maricopa Counry, Ari2. over ihe past two yeazs. For pu�poses of this report, the responses of ihose polled in the four metro areas were combined to arrive at a consensus opurion on growth issues. think govemment shoutd pass laws to stop growth. The surveys also found that most people do not approve of placing harsh resVictions on new home and business development as a means of improving vafFic flow. insiead, nearly three quarters of respondents believe that spending tax money to upgrade roads and bridges more effec[ively addresses Vaffic prob�ems. 'Research conduc[ed by the RFSea�ch Conwrtium. a partnership o! NAH6 and Compeutive Edge Research. Repnnred vnth rhe pertn�svon of Ne Building Snduscry Assecauon of Centai Oluo. lna. Masrer Budders Aaa�aoon oF King and Srrohomah Cowry, Home Bwiders.45senauon of Ce��ral Anwna. and Home Budders.�soaanon of Rale�gh and Wake Counry. N.C. The Truth About Regularory Barriers to Housing Affordability 13 More than half of [hose surveyed said government should encourage continued, well-pianned grow[h, whilej�st 18.1 percent think laws restric[ing grow[h should be irnplemented and more ihan 20 percent believe that government should allow people to use their land as they see fit. A marginal 2.9 percent Source Basetl on polt5 0! 2.200 householtls in four areas of the roun[ry. �1'q-�LS a� � sut � e csteacrar� _ �� ,�, > �k��'� �� ; ?� � �,� ,, v �' �� - . .v�i ,� ' ` � . 3 s��—�*� �7� r� �E�(ELQ�AQENT � � � EEESlCN -. � t -r, �,-'?„ °- �^ Rewairt�appucanbi -.�r ::� ,. ; __ _..��;:. �..-:.._ : � .1 y ;. H P� 14 41t .. . ._ ��na� , = � ._ yiiewhome:; ;:. ',° qs that'cla5e": . . x f v. _ �ed€obixi �ie€ions':;� � ' � i:: + ; `._— _ wi � S s a e � . • � ' Basetl on a fnced-rate. 30-year mortgageat7 pPtcentwith a'k0 pe�ceni downpaymen2 --- -__ ,- --_ 105,000 � 658 110.000� ., � 689 1�5,000 720 120.000�� - 757 125.00� 783 ; t36006 ,..,: ,814 135,000 845 746.OW ` :":..�877 '145,000 908 �'kS0.Q00 .� .-� 939 155.000 971 160.000' � � -. 1.002 165.000 1.033 t70,000 ,, 1.065 �75,000 1,096 186A00 1J27 185.000 1,158 19Q,OW � � ' t.190 195,000 1,221 200:Q00 � . : � � Y.252 205,000 1.284 � 21Ff;00Q w �.�1 375 215.000 � 1.346 ;220,�dQ „� :t�378 225.000 1.409 . 23E)AqQ . ,.' 235,000 1.472 :Z40,000� .' ��.�"I.503 245.000 1,534 zsaoaa , ,`>>;eae Scurce NAHB 12'I 779 33,374 57,100,587 56.5 .: - - 8l6 �..;:- 34964�=^'-=$4.870.693 543"�. K '133 853 35,553 � 52,955,534 52.4 .�. .e� ��139� �.�� 890 q 38t42:;� 51?47,274 566��. � 144 927 39,731 ~ 49,032,665 48.5 � :..; 150 ��. ��'. 964, ... �= 41 ; W 46800,919 463 .....,.> _.�!s.�° 156 1.00'I 42,910 � 44.978,483 44.5 , '�` 162 .. . '1 038 .,.�.; 44498 ��r 43�331,t74 k29 .��,� � 167 1,075 46.088 41,516.627 4'I.1 ;��.373 ' 47G78 r� 38662:398 -3�3��_ .. 179 1.150 49.267�� 37.998.223 37.6 . :."-185.- - 1t87 ,��50856 ,�`„38516.790 �36.„1,��*€p l90 � 1.224 � 52,445 � 34,854,516 34.5 .... 196;-„� .. 1261. �.....' S4035 'y:;[ 33.�8,6.583 32��,p,=��,.. 202 '1,298 55.624 31.613,967 31.3 -�-P08. � 1335 :;, �; �572"13';, 30;331,636 �O(};��;: 2l4 1,372 58.802 28,984,234 28.7 . �; ' 2'€9 .', ; - 7 409 �, .',: 6Q 392 : ,';: 27.590.689 � 2Z.3„':� ; � 225 1.446 J 61,981 26,359,629 26.1 �,��`"231. .>_ - 1 483 '��, t63570' �,: 2�255:t79_ 25.�tY;�;�'+: ... 237 1,520 65,'159 24,149.037 23.9 , �;�`i557 ,,�:_- 66744�,�'�304145D . ,.�2�8�;��"� � 248 1,595 68,338 27,933,863 21.7 v��a254 .., .,�. l 632` -��:; 63927 �: ;: 26826�275 sg�b�`�a�� 260 � 1.669 7'1,576 "19.844,906 19.6 ..,, �.` 266 , : � t 7CIE :".. z 73'106 '_ _ ..18�:�„ft�'�,e ..� 271 � 1.743 � 74.695 18,141,882 17.9 : ?�e := 178Q; '' � 76284 1729Q;370� tT1�e�,`�.�''' 283 1.817 77,873 16.553,768 16.4 _""2&4 _ = ' .. 1&54 ,,,: 79463 :'Y "F5959,�445 "IS.B��"` � $200 $ 3,q88 . :`.�.`. '.$},s84 '.s�: : :. ,_ ' � 4,a�s£=;i'.re 250 4.360 '1,743 6.103 306 . � � 5,232 ° �`.: - � : `a:2.R9'1 . . _ 7 323 . _ _' 350 6,104 2.440 8.554 � 40�0 �,.. . �'$976 "' . .<�,Z778 , ; � 9764 -�;;�;„`�„ 450 7.848 3.137 70,985 �500`, -� ':8720'' `�-; ` =' 3486 _'�;. -' , ". '12206 .�i:� 550 9,592 3,834 73,426 - 60Q .. - � 10464.�:- .. . ��E�A183 �� .. : = 5464� a�:s":�;�'��. 650 11.336 4.53'I 15,867 '70Q - �12.208:; ` „ `;4.680 '. ' . .. ; 17088 :'�_�,...;° 750 13.080 5.228 18,308 , SOQ � 13952 . _:. _,:�S,fi67 -� � � � - . , - _ - _ .. v ._. 19528 ...,.,r��.�:.�: 'COS[ per L000 �oard-feet of framing IumOer or 7,000 square feet of swcNral panels such as piywood Source:NAHB. If the price of the typical new home profiled in NAHB's survey could be Vimmed 10 percent from $226,680 to $204,120, an additional 4.8 million households would be eligible to purchase that home. Of those, an estimated 192,000 to 240,000 wouid be likely to buy a home. Lumber prices, which averaged about$2�� per 1,000 board-feet during the 1980s, have gyrated wildly in the 1990s, at times rising to more than 5500 per 1,00� board-feet. Such increases make new homes len affordable for buyers and can prevertt many families from achieving homeownership, The price increases were raused by a combination of factors, including severe government restrictions on timber harvesting in the Pacific Northwes[ and a quota on lumber imported from Canada which was imposed in 1996. The Truth About Regulatory Barriers to Housing Affordability 15 NAHB SENIOR OFFICERS uf}i�2ssLB D. ir'r";RT3ii P!2',SI()PI7( Albuqucryue, N.�/1. C:?; � *L�S t. ;ZUi�,A Pmsid��nhc7ect Columbus. OLio Rt7-'3Ert'a L. ��?G#iELL Vice President/Ti�easurer Rockville, Md. ;3Rt3G� SMi7}2 VicePresident/Sea�tary Walnut Creek, Calif. Et.IIACidELf'ES�Ci;S � Inm�ediate Past Pmsident � Tom's River N J. and Hilton Head Island. S.C. KENT V"d. Cf3L�0�{?E'd F,xecutive Vice President Washington. D.C. la5£3LS't' NAfi3 The National f\ssocia[iov of Home Buildeis (NA}I6), wiQ� more t}�an 195,000 rnember firms, is the roost iuflueutia( trade atsociation represe��ting the housing industry Worki��g in par[nership witl� more than 800 state and ]ocal builders associatio�is tY�roughout the country, d�e associatio�fs mission is to e�iliance 8�e dimate for housi��g and the building industry, and to promote policies that will re-establish housing as a nafional pGiority. Produced by the NAHB Public Affairs Division with the assistance of the Economics, Mocta ge Finat�ce and Housing Policy Divisiov�; tkie Goverinue�n Affairs Division; and the Re�ulatory and Legal Affairs Di��sion. Ken Klein, a builder/remndeler from Tulsa, Okla., and c6airman of NAH6's Public A[Cairs Committee, had genera] ovessight of t}ie project. — 7.II7 — �� Nnno� v. Assoc�nnon OP HONF $UII_DERS 1201 15th Street, N.W, Washi��gton. DC 20005 littp://www.nahb.mm 9 9 -d�►S From: Brian Sweeney To: STPAUL.IS.Council Date: 8l16/99 7:41 pm Subject: Housing Fees I wanted to let you know that as part of the Mayors budget address tonight he is going to include n � ��,,,000fl ar pi ot program o es 50%. The program will begin September 1, 19 9. The resolution fronf of the Cauncil Augusf 25fh. As y hEC�tnh2YfRharpTOp6S was to cut fees for city subsidized, affordable housing. Council member Lantry and others expressed an interest in expanding this incentive to include all housing fees. The Mayor called his department heads together and encouraged us to consider an across the board cut for all housing fees — if it made sense fiscally. After analyzing this proposal, we believe that given the type and number of new units that will be built in the coming years that even with a cut, we could actually increase income from housing fees. But we don't know for sure. That is why we are doing this as a one-year pilot program. There was an error in the Pioneer Press article on Saturday which suggested a possible one-year loss of $800,000 because of the cut. That is just simply not possible. The proposal also calis for the implementation of a streamlined approval process for housing and the preapproval of home designs. Your input and suggesiions on these issues is moving our city housing agenda forward and helping make Saint Paul a more attractive place to build housing. In addition to these proposals, we will be back to the Council in the coming weeks to discuss some of the other initiatives we outlined earlier in the summer including the Housing Resource Center and the urban homesteading initiative.