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Reducing Regulatory Barriers

Growth management is an ongoing concern for state and local elected officials in Colorado, and every community must determine which approach best serves its unique needs. For some, this may mean closely examining public policies used to guide the creation of transportation systems, water supply, open space, and housing. For others, it may mean adopting policies that growth should “pay its own way,” resulting in sometimes complex and confusing impact fee structures.

Even in an robust economy, wages do not always keep up with the cost of housing. Public policy should control direct development according to a community’s wishes. Public policies related to growth control direct development according to a community’s wishes. Sometimes, however, those tools inhibit housing that is affordable to current or prospective residents and may affect a community’s ability to attract an adequate workforce. It is important that a community examine its growth regulations to understand and lessen their impact on affordable housing. DOH has identified the types of land use regulations frequently cited as barriers to affordable housing.

ANNEXATION, SUBDIVISION AND ZONING POLICIES

Traditional land-use controls such as annexation and zoning ordinances which regulate the general placement and density of land uses in a community and subdivision regulations which govern site-specific development, can have significant impacts on the price of housing. Laws governing annexation and subdivision may increase time and costs of developing land adjacent to a municipality.

While zoning is generally intended to separate incompatible land uses, the use of exclusionary criteria in defining the term “incompatible” can lead to overly strict restrictions or prohibitions on housing types that are most likely to be affordable, including multi-family or manufactured housing. Other examples of zoning matters that affect housing affordability:

• Minimum house size, lot size, or yard size requirements.
• Prohibition of accessory dwelling units.
• Excessive subdivision standards.
• Restrictions on land zoned and available for multi-family housing or manufactured housing.

Regulations often present either a cost incurred by the development, or a lost opportunity to balance a community’s housing stock. The more regulations, the higher the cost to the community. Ultimately, development costs are passed on to the consumer, whether renter or homeowner, as a higher cost per square foot. The higher the cost per square foot, the less affordable the unit.

During times of economic recession, it becomes critical for state and local governments to provide housing opportunities for all income levels as a means to encourage new employment. Employment and housing are inextricably joined together. Across Colorado, more communities are acknowledging the linkage and reviewing their land use and subdivision regulations with a goal of increasing housing affordability.

DEVELOPMENT PERMIT PROCESSING AND BUILDING CODES

The cost of housing development and construction will also be affected by the local permitting process and building codes. In Colorado, the development permitting process and adopted building codes are approved and implemented at the local level to provide the community with safe and healthy neighborhoods and homes that meet specific design criteria.

Housing development permitting may include a number of permit types and activities, including but not limited to: site use and setbacks, utility connections, site drainage, neighborhood design criteria, and subdivision plans that are in place to preserve and protect the land use goals of the jurisdiction. The permitting approval process can be expensive and may involve multiple local government offices and independent reviews that create challenges and inefficiencies in the process. Local governments are encouraged to review their housing development permitting process to look for opportunities to eliminate redundancies and overlap between approval agencies, to reduce costs, and to speed up the overall approval process.

Building codes govern the use and installation of materials, and the design and construction standards for buildings. A locally adopted building code plays a vital role in protecting the health and safety of the occupants of a building, and the value and longevity of the building. A housing project may be subject to building code department fees for the issuance of valid building, electrical, plumbing, heating, and gas permits, as well as building plan review fees to ensure compliance with the locally adopted building code. In return for these fees, the local building department conducts on-site inspections of the building during construction to observe compliance with the adopted building code.

In Colorado, the total cost of permit and review fees vary between local communities and may run over $30,000 per single-family house depending on the specific local fees. The effect of permitting and review fees on the overall home price can be significant, as most of this cost is passed from the builder into the final sales price of the home, having a direct impact on the affordability of homes.

DECREASING THE COST OF REGULATION

Local governments can support affordable housing development through a variety of ways, including:

• A review of their permitting and review fees to consider fee deferrals or reductions in order to reduce the overall development cost of housing.
• Coordination of housing strategies between municipalities and counties in planning affordable units.
• Streamlining of the permit review process between agencies and jurisdictions for affordable housing projects.
• Building flexibility into local codes for design standards. There may be adequate but less expensive design alternatives that can reduce costs while still producing a quality product.

FINANCING PUBLIC IMPROVEMENTS

Local comprehensive land use and capital construction plans solidify a community’s long-term vision. In the face of tremendous growth, planning ensures that a community can handle new business opportunities and accommodate future residential development. In times of slower growth, planning enables local jurisdictions to allocate scarce resources in an efficient and consistent manner. Local governments have begun to charge for many of the services they provide, using a “pay-as-you-go” plan to recoup infrastructure costs. These development charges include fees in lieu of payment, impact fees, administrative processing fees, and plant investment fees to pay for service expansion.

While increasing revenues to pay for growth, these fees become increased costs for renters and homebuyers. A community may recoup the cost of its infrastructure, but the result may be a reduction in housing affordability. A lack of adequate workforce housing can discourage new potential employers from establishing operations in the community. The best approach is to find a balance that maintains the integrity of a community’s infrastructure but eases regulatory cost burdens by incorporating waivers, deferral, or off-set of fees for affordable housing.

EFFECT OF ENVIRONMENTAL AND CULTURAL PROTECTIONS ON AFFORDABLE HOUSING

Resource protection statutes have a potentially large impact on housing construction. Implementation of some of these major federal laws require significant amounts of time and money for compliance. They may also lack any standard dispute resolution process, other than federal courts.

Clean Water Act (CWA)

CWA is the nation’s primary water quality protection statute and affects planning and development for housing construction in a number of ways. It contains strict prohibitions on any construction activity potentially affecting wetlands, and it also controls stormwater runoff and nonpoint source discharges, which can impose additional strict requirements on housing construction.

Endangered Species Act (ESA)

The ESA protects endangered and threatened species and their habitat. Listing a species as endangered or threatened can in rare circumstances remove thousands of acres from development. In recent years, developers and local governments have begun working cooperatively to avoid standoffs by designing and implementing habitat conservation plans.

National Environmental Policy Act (NEPA)

NEPA requires environmental impact statements (EIS) to be prepared prior to construction for certain projects involving federal funding or approvals. Preparation of an EIS may take months to complete, depending on the size and complexity of the proposed project and the development site.

CREATING A COMMUNITY HOUSING TRUST FUND (HTF)

An HTF is a flexible, community-based tool that allows local governments to respond to affordable housing or workforce housing opportunities on a case-by-case basis. HTFs generally have a committed, ongoing source of funding such as a dedicated portion of a sales tax or other revenue, or they may be funded from the sale of surplus property or through an annual commitment of general fund dollars. A local jurisdiction may set aside monies for future participation in affordable housing, provide dollars to housing non-profit organizations, or use the dollars to prevent the loss of affordable housing stock.

REGULATORY BARRIERS CLEARINGHOUSE

The U.S. Department of Housing and Urban Development’s (HUD’s) Office of Policy Development and Research (PD&R) established the Regulatory Barriers Clearinghouse to collect, process, assemble and disseminate information on the barriers faced in the creation and maintenance of affordable housing. You can submit your experiences using their online form, to give them a better understanding of the issues facing developers of affordable housing.

The Three “R”s

• Reinvest in your community’s housing stock to help develop affordable housing for local families.
• Reform community development policies to help achieve a housing balance.
• Renew community housing partnerships that help produce affordable multi-family units for working families.

EXAMPLES THAT BALANCE LAND USE

Mixed Use

Allows housing to exist above retail shops or other commercial development.

Overlay Districts

Allow for flexibility of zoning and development standards and could include such things as small building setbacks, garages placed in the rear of homes, narrow streets to calm traffic, and vertical mixed uses.

EXAMINE YOUR REGULATION

• Review your cultural and environmental policies and regulations to ensure their reasonability.
• Review historic preservation ordinances.
• Allow adaptive reuse or conversion of surplus buildings.