Carson noted the rule is “ironic” since it “is actually suffocating investment in some of our most distressed neighborhoods that need our investment the most.”
Secretary of Housing and Urban Development (HUD) Ben Carson announced on Monday that he wants to revise housing regulations from President Barack Obama’s administration to address zoning regulations. Burdensome zoning laws have caused housing costs to skyrocket in many parts of the country.
HUD published a final rule to the Affirmatively Furthering Fair Housing (AFFH) in July 2015 that provided “HUD program participants with a revised planning approach to assist them in meeting their legal obligation to affirmatively further fair housing.” This rule “sought to combat housing segregation by requiring local governments to perform extensive (and expensive) reviews on how concentrated their neighborhoods were along class and racial lines, and then to develop action plans to create more ‘balanced and integrated living patterns.'”
HUD has decided that this rule “proved ineffective, highly prescriptive, and effectively discouraged the production of affordable housing” and last January told local governments they no longer had an obligation “to file plans under the regulation.” Carson released this statement:
“HUD believes very deeply in the purposes of the Fair Housing Act and that states, local governments, and public housing authorities further fair housing choice,” said HUD Secretary Ben Carson. “HUD’s 2015 rule often dictated unworkable requirements and actually impeded the development and rehabilitation of affordable housing.”
“It’s ironic that the current AFFH rule, which was designed to expand affordable housing choices, is actually suffocating investment in some of our most distressed neighborhoods that need our investment the most,” Carson continued. “We do not have to abandon communities in need. Instead we believe we can craft a new, fairer rule that creates choices for quality housing across all communities.”
“Today we begin the formal process of examining how we can get this regulation right by first listening and learning from those who must put these rules to work and live with its impact,” Carson concluded.
That process includes asking the public for any comment “on changes that will: (1) minimize regulatory burden while more effectively aiding program participants to meet their statutory obligations, (2) create a process focused primarily on accomplishing positive results, rather than on analysis, (3) provide for greater local control and innovation, (4) seek to encourage actions that increase housing choice, including through greater housing supply, and (5) more efficiently utilize HUD resources.”
Carson expanded on this idea to The Wall Street Journal and pointed to Los Angeles, the country’s second largest city whose zoning laws “stymie housing developments.” The article continued:
He said a large majority of the city’s parcels of land are eligible only for single-family home development, not larger projects that could house more people and help moderate price growth. “Of course you’re going to have skyrocketing prices that no one can afford,” he said.
Policy makers have long puzzled over how to create incentives for cities and towns to build more housing. Local officials are often in a difficult political position because the loudest voices among their constituents tend to be those objecting to development. At the same time, federal and state governments have limited control over local zoning.
Vanessa Brown Calder, Cato Institute’s housing policy expert, spoke to Reason about Carson’s idea:
“I do think that shift in attitude at HUD is huge, and I hope that it translates into educating local municipalities that these things are related, zoning restrictions and housing affordability,” says Calder. “It does sound like there is going to be some attempt made to connect HUD subsidies to relaxing or reforming zoning regulations, so that I think that could be really important.”
That this might come in conjunction with a paring back of the Obama-era AFFH rule is heartening as well, says Calder, given both the costs and shaky legal foundations of the 2015 regulation.
Calder also described the legal basis for the 2015 AFFH rule, “which is based on the 1968 Fair Housing Act,” as thin:
The 1968 law, she notes, is focused on eliminating racial discrimination by landlords, not on creating a delicate racial and income balance across whole cities, as is called for in the Obama administration’s 2015 rule
“Zero times in the Fair Housing Act do they talk about segregation. That seems kind of damning considering that’s what [the AFFH rule] is all about,” Calder tells Reason.
Other Cities and Analysis
It’s about time someone brought up the ridiculous zoning laws across the nation. Carson didn’t mention Seattle, but that’s another city whose zoning regulations have caused major problems.
Seattle has a huge homeless problem and the city council wanted to place a tax on jobs to offset costs. It didn’t last long as major companies like Starbucks and Amazon pressured the council members to scrap it.
I blogged about this situation and found that the high minimum wage and cumbersome regulations were major contributors to Seattle’s homeless problem. Seattle has a 685-page residential building code and a building code that’s 745 pages:
If you want to build apartments, you better hire lawyers and “fixers” to keep you on the right side of the rules.
Seattle’s rules insist that “Welded splices shall be of ASTM A706 steel” and “foam plastic signs shall not be greater than 1/2 inch” thick.
On the majority of Seattle’s land, building any high-rise is illegal; zoning rules say only single-family houses may be built.
Want to run a cheap flophouse with single rooms? Seattle’s rules make that just about impossible.
A landlord “must pay each of his tenants $3,000 in relocation costs” if he wants “to take a building off the market.”
Jeff Pelletier at Board and Vellum Architects explained that the permits they need are “one of the main drivers in the rise of housing in Seattle.” Yes, it’s great to be thorough on projects, but the builders “are seeing tremendous cost and schedule increases from local building departments.”
Seattle should scrap the rule that only allows single-family homes. On a plot that would hold three or four of those homes, “the city could allow developers to build projects that house more than 100 people, getting much more bang for the buck in land use.”
Just last week, Jenny Schuetz at the Brookings Institute urged better housing policy by leveling the playing field. The biggest way to this “is eliminating preferences for homeownership in the federal tax code, namely the mortgage interest deduction and the capital gains exclusion for owner-occupied housing.” She wrote:
At the local level, cities and towns should revise their land use regulation and development process to be neutral to structure type. For instance, land zoned to allow by-right development of three-story single-family homes (without requiring special reviews or conditions) should also allow by-right development of three-story apartment buildings. Requiring conditional use permits or other procedural hurdles for multifamily development but not single-family houses—a zoning trend that emerged in the 1970s—essentially discriminates against renters.
Schuetz also suggested that places in well-functioning housing markets stop denying “supply in high-demand locations” like California and the northeast:
Excess zoning increases housing prices by limiting the quantity of new housing and by making the development process longer, more complex, and more costly. High prices are especially tough on younger families, who earn less at the start of their careers. Because of persistent income and wealth gaps, high housing costs disproportionately hurt people of color. Excess zoning is especially prevalent in some of our most productive regions, which hurts U.S. economic growth. When housing costs rise, individual businesses have difficulty attracting and retaining workers.
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