Real Estate

Multifamily industry takes Capitol Hill for regulatory reform

NMHC, NAA, and industry heads met with Congress seeking regulatory, affordable housing crisis solutions

Multifamily industry heads met with members of Congress to hash out regulatory burdens and affordability last week.

The National Multifamily Housing Council, National Apartment Association, Gables Residential CEO Sue Ansel and other multifamily industry leaders gathered on Capitol Hill to seek solutions to regulatory burdens imposed at the local, state and federal levels, as well as potential solutions for the housing shortage fueling the affordability crisis.

Ansel told HousingWire that she was very impressed with the bipartisan nature of the committee and its receptiveness to the discussion.

A study commissioned by NMHC and the National Association of Home Builders released earlier this year revealed that regulatory costs make up about 32% of the average multifamily project’s building costs.

Much of this 32% comes from regulation at the local and state levels, but Ansel said two particular pain points can be addressed at the federal level, namely Occupational Safety and Health Administration regulations and constant changes in building codes.

These costs equate to about 2% and 7% of the cost of a multifamily build, respectively.

Reducing the amount of change in building codes can help developers build efficiently and save them from costly compliance issues, while the OSHA regulations 

According to Ansel, one of the multifamily pros who testified at the hearing said that if costs could come down by 5%, one way or another, it would meaningfully increase his company’s ability to build affordable homes, such that perhaps as much as 62% of its units could be affordable for people making 80% of the area median income.

“The challenge is I think most regulation is well intended, but broad-stroke regulations sometimes have unintended consequences that create additional paperwork, that don’t really serve to deliver the intent behind the law. So, we’d like to work with the federal government to help mitigate some of that, and then quite honestly, we think the federal government has a role in helping incentivize the local and state governments to create public-private partnerships,” Ansel said.

This was the second major topic broached at the hearing.

Ansel stressed the importance of public funding to incentivize private investment in communities and a rolling back of NIMBYism.

Some of the particular issues were the opening up of municipal-owned, unproductive urban tracts to private developers to help increase supply and take some of the upward pressure off of rents; improvement of and increased funding for the low-income housing tax credit; and the creation of the middle-income housing tax credit.

“What we heard from a lot of the members during the hearing was that they are looking at ways to incentivize states and localities to streamline the process both on the permitting and on the regulatory side and maybe tying federal dollars either through an infrastructure program or through some of the other programs,” NMHC Head of Government Affairs Cindy Chetti told HousingWire.

Ansel said that encouraging public-private partnerships could help the multifamily industry tackle the rising costs of construction and stem the shortage of housing in the U.S.

Ansel and Chetti both seemed hopeful that the meeting with Congress would yield meaningful change to the industry and bring about more harmony between the multifamily industry and the places they operate in.

“That 5% reduction in costs should be achievable if we take a holistic approach and eliminate unnecessary red tape and regulations,” Ansel said.

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