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Red Tape and Housing Costs: How Regulation Affects New Residential Development
Author:
Michael Luger
Publisher:
Routledge
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Books / Politics
Year:
2018
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Red Tape and Housing Costs

First published 2000 by the Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy

Published 2017 by Routledge

2 Park Square, Milton Park, Abingdon, Oxon 0X14 4RN

711 Third Avenue, New York, NY 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:

Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Library of Congress Cataloging-in-Publication Data

Luger, Michael I. (Michael Ian)

Red tape and housing costs : how regulation affects new residential development / Michael I. Luger and Kenneth Temkin.

p. cm.

Includes bibliographical references and index.

ISBN 0-88285-168-3 (alk. paper)

I. HousingLaw and legislationCompliance costsUnited States. 2. Housing developmentNew JerseyCosts. 3. Bureaucracy. I. Temkin, Kenneth M. II. Title. KF5730.L84 2000

333.33822O973dc21

00-034042

CIP

Cover design: Helene Berinsky

Interior design/typesetting: Arlene Pashman

ISBN 13: 978-0-88285-168-6 (hbk)

To Charles Luger

who passed away during the research for this book

County Commissioner, state legislator, community leader, social service visionary, he inspired his family, friends, and constituents to expect the very best from government

He would have endorsed the books major conclusion:

There are good regulations that help protect the health, safety, and welfare of the public and bad regulations that are wasteful and unnecessary

1
Matrix of Costs

2
A Developers Decision Calculus

3
General Flow in Approval Process

4
Development Proposal Review ProcedureTown of Chapel Hill, North Carolina

5
New Jerseys Regional Regulatory Authorities

Housing Starts in New Jersey, 1960s-1990s

Differences between New Jersey and North Carolina

Regulators Responses: Frequency of Requests for Waivers or Variances

Regulators Responses: lime Allowed for Applicable Ordinances

Reasons for Delay in Acting on Subdivision Applications

Reasons for Delay in Acting on Zoning Relief

Reasons for Delay in Granting Environmental Permits

Number of Approvals and Length of Time Needed for Environmental Permits in New Jersey

Is Complexity a Reason for Delays?

Necessity of Multiple Reviews

Itemized Effects of Subdivision Requirements in New Jersey

Itemized Effects of Zoning Regulations in New Jersey

Itemized Effects of Environmental Regulations in New Jersey

Permit Review Times in New Jersey

New Jersey: Application and Compliance Cost Summary

Home Sales Prices: Mean Values

Cost of Approvals and Improvements

Incidence of Regulatory Costs in New Jersey

Variables Expected to Account for Differences in Authorized New Housing Units

Restrictiveness Scores

Regression Results

Everyone knows about red tape. And common sense tells us that gov-ernment regulation affects the cost of a new house. Indeed, a prominent federal advisory commission reported in 1991 that too many American families cannot find a house they can afford because

[t]he cost of housing is being driven up by an increasingly expensive and time-consuming permit-approval process, by exclusionary zoning, and by well-intentioned laws aimed at protecting the environment and other features of modern-day life. (U.S. Department of Housing and Urban Development 1991)

But what exactly is the cost of regulation in new housing development? And who pays these costs? Is it the homebuyer, or is it the builder or land developer, or even the seller of the raw land? And if some of the regulation is excessive, how can the housing development regulatory system be reformed?

In the mid-1990s, the New Jersey Department of Community Affairs posed these important public policy question to Housing New Jersey, Inc., a nonprofit organization dedicated to promoting the production and maintenance of sound, secure housing in safe community environments at affordable prices for New Jersey families and individuals. This book provides the answers, based on extensive, multifaceted research in New Jersey and North Carolina. Funded by the State of New Jersey, the study was undertaken by a team led by Professor Michael I. Luger of the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill.

While scholars in previous decades examined the relationship of government regulations and housing costs (Seidel 1978; Lowry and Ferguson 1992), this is the first book to both quantify the actual, detailed costs of excessive regulation and examine the incidence of regulationthat is, who pays? The distribution of these costs is critical to housing affordability as price increases push new housing beyond the price range of more and more households. At the same time, developers shift to building housing for consumers to whom they can readily pass on the increasing costs of regulation.

State and local governments across America have the power to cut through the housing development red tape and make housing more affordable to more households, but do they have the political will? New Jersey has a growing tradition of housing development policy innovation fueled by pragmatic research, particularly the statewide, mandatory Resi-dential Site Improvement Standards adopted in 1997 and the Rehabilitation Subcode adopted in 1998. Yet the study behind this book was never proudly released. Leaked to New Jerseys largest daily newspaper, its essential finding was headlined on a slow news days front page: Excessive permit fees put homes out of reach; Jersey builders face layers of regulation (Star-Ledger 1999).

The unprecedented national economic expansion of the late 1990s and the beginning of the twenty-first century mask for many the deeply entrenched, costly, underlying regulatory morass that governs how and where new housing is built. Luger and Temkin have provided policymakers and housing advocates with hard facts and reasoned explanations about the link between excessive regulations and spiraling housing costs. This information forms the springboard from which policymakers can launch efforts to untangle some of this red tape and create responsible housing development regulatory systems.

D AVID N. K INSEY

Kinsey & Hand, Princeton, New Jersey

Visiting Lecturer in Public and International Affairs

Princeton University

We received research assistance and collegial advice from many stu-dents and faculty members at the University of North Carolina at Chapel Hill (UNC). Professors Edward J. Kaiser and David R. Godschalk, widely regarded as among the nations leading experts on land-use plan-ning, helped us design the study in the early stages. Professor William M. Rohe, director of the Center for Urban and Regional Studies at UNC, en-abled us to use the good offices of his center as a home base. Spence Cowan, a doctoral student in the Department of City and Regional Planning and a licensed attorney, drafted and helped us understand legal issues. Rob Padgett, a masters degree student in the same department, performed general research assistance.

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