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Home Owners Exploiting Political Process to Block New Housing, HUD Conference Hears

Home owners who are latching on to environmental and other laws to boost the value of their properties by blocking residential construction in their neighborhoods were identified by panelists at a recent Department of Housing and Urban Development conference as a major force behind today’s proliferation of regulatory impediments to affordably priced housing.

Brookings Institution Senior Fellow Tony Downs told HUD’s April 22 Conference on Regulatory Barriers to Affordable Housing that there are 18,000 governments in the country with zoning powers, providing ample opportunity for local citizens to keep out working families who are easily priced out of the market.

“Any regulation can be a barrier, even if it serves an admirable purpose,” said Downs. And the two-thirds of households across the nation who own their homes “want to maintain the highest possible value of their house” and are opposed to anything they think will decrease that value.

NAHB President Bobby Rayburn provided a first-hand account of what builders are running into when they try to deliver housing to communities that need it. Even with the support of the mayor and city council, he saw his plans to build a 10-unit rental in Walnut Grove, MS, population 450, thwarted when local citizens filled the city hall parking lot and weighed in against the project at a public hearing.

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“We were getting ready to put $850,000 into that community and help families,” many of whom were living in beat-up trailers, said Rayburn. But the public response to the prospect of new housing was, “We just don’t want it here.”

Using the Political Process

“With the house the most sizeable part of their net worth, home owners are conscious of things that might diminish the value of their home,” said Ron Utt, senior research fellow at the Heritage Foundation. “But many home owners are moving beyond that. They are finding out that they can use the political process to enhance their net worth by limiting growth” and they regard growth restrictions as part of their portfolio management.

“We are suffering from regulation that’s giving people in the community what they want,” Utt added. “People don’t move into sprawling suburbs and big lots looking for more people to move in. There is no point of negotiation; they’ve achieved what they want,” and there seem to be ways of discouraging growth no matter what the law. In Virginia, for example, where no impact fees are allowed, downzoning is used and five- to 10-acre minimum lots are capping growth.

“The political market is working,” added Utt. “What matters in elections in fast-growing communities is your position on growth….Local government may be behaving irresponsibly, but not for existing residents.”

Extremely Low Densities

Downs cited Contra Costa County, CA, in the San Francisco Bay area as an example of how extremely low densities are constraining housing growth. The county had a population of 963,000 in 2000, he said, but could have supported a population of 12 million if it had the same density as San Francisco.

More intensive use of the land in such areas can work, Downs said. For example, the county could raise density by allowing multifamily housing in a small area, leaving 90% of existing neighborhoods unaffected.

“You have a responsibility towards making lower-income people able to live in your community,” he said.

While regulatory barriers are a formidable, and growing, impediment to building affordable housing, panelists offered a number of approaches to remedying this problem:

  • Jobs provide leverage, said Downs, and a compelling message for localities is that if they don’t have affordable housing, new employers won’t move in and existing employers may move out. However, he voiced skepticism that this issue should be left in the hands of the local government. “In a democracy,” he added, “when the majority finds ways to exploit a minority, it’s hard to get them to give it up, which is a fundamental problem for our entire society.”
  • In order to receive Community Development Block Grants and other “carrots,” cities and counties should be required to get rid of some of their barriers, Rayburn suggested. Another approach is picking four or five especially egregious regulations and going after them “year after year,” he said.
  • Non-profits need to join with for-profits to make home building more efficient, said Sheila Maith, managing director for the Fannie Mae Foundation, and communities need to focus on reducing permit processing time. And much more work needs to be done to build a constituency for affordable housing for working families earning $25,000-$40,000, she said. “With recent growth in housing values, there is the perception that the housing market is working for us,” said Maith, "but we have 30-year-old kids living in the basement.”
  • One of the biggest obstacles is the public’s perception of the term “affordable housing,” said Angelo Kyle, president-elect of the National Association of Counties, who finds that “homeownership opportunities” receives a better public reception. Rayburn added that NAHB is putting a face on the people in need of workforce housing, who include teachers, police, fire fighters and others serving the community.

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