A study by NAHB and the National Multifamily Housing Council that details how regulations make up 32% of the cost of developing new multifamily properties has caught Congress’ attention.
The regulatory costs investigated in the study include a broad range of fees, standards, and other requirements imposed at different stages of the development and construction process. According to the study, 7% of regulatory costs come from building-code changes over the past 10 years, 5.9% is attributable to development requirements (such as streets, sidewalks, parking, landscaping, and architectural design) that go beyond what the developer would ordinarily provide, and 4.2% of the costs come from nonrefundable fees charged when site work begins.
Over 90% of developers surveyed in the research typically incur hard costs of paying fees to local jurisdictions, both when applying for zoning approval and again when local jurisdictions authorize the construction of buildings. The typical projects of almost all the respondents (98%) were subject to costs at the zoning-approval stage, costing an average 4.1% of the total development costs.
The report was the catalyst for the House Financial Services Subcommittee on Housing and Insurance in October to hold a hearing on regulatory burdens on multifamily housing development. The research shows that well over 90% of multifamily developers typically incur hard costs of fees paid to local governments, both when applying for zoning approval and again when local jurisdictions authorize the construction of buildings. Furthermore, state and federal governments are increasingly involved in the process and layering on additional levels of fees and regulations.
To help ease regulatory burdens and improve housing affordability, NAHB is urging policymakers to:
- Consider the cumulative effects of regulatory requirements to determine whether a new mandate is necessary to protect the health and safety of the public;
- Remove barriers to production of multifamily housing;
- Ensure that energy codes and standards are cost-effective and have a reasonable payback period;
- Enact common-sense updates to Davis-Bacon wage determination policies to help builders construct more affordable housing;
- Call on the Trump administration to resolve issues related to lumber and steel tariffs;
- Maintain and fund federal rental assistance and multifamily production programs for extremely low-income Americans.
