Pros & Cons of Building Code Regulations:
Health & Safety vs. Time & Money
While building codes are in place to ensure safety and other standards, noncompliance, for various reasons, is a challenge in the housing and building industry. In fact, one of the most common consumer complaints across the country last year came from people's dealings with building contractors as a result of their noncompliance with building codes.
Home improvement-related complaints have ranked in the top five in the annual Consumer Complaint Survey for the last seven years. Noncompliance with building code requirements and other building-related issues were among the chief areas of dissent, according to a survey conducted by the National Association of Consumer Agency Administrators and the Consumer Federation of America.
While there are good reasons why the buildings that we occupy have safety and structural standards, the compliance process sometimes generates grumbling. Public health and safety are frequently at odds with time and money. Often, the fee structure attached to government regulations is seen as hindering housing affordability. While it has the potential to be an extremely divisive issue, at least locally this fee structure is reasonable. Dennis Davis, Nampa building official, says the fees are needed to compensate the city for infrastructure such as water, sewer and streets.
The Nampa Building Safety Division must rely on development fees because the department is not tax-based. "Our services are 100 percent supported by fees," Davis says. "We have a commitment in Nampa that development needs to pay its own way and not be a burden to taxpayers."
One example of how development pays its own way in Nampa is an $850 Regional Lift Station Fee charged on a new home in Crestwood Estates. The fee repays the city for investing about $6.6 million to extend the sewer main so that homes could be built in that part of town. The $850 fee can be compared with the $2,500 charge a home owner might pay to put in a septic system. And a $143 water line fee charged to the same home is substantially less expensive than the cost and red tape involved when a home owner drills a private well.
In the early '80s, Idaho was starving for growth, so local governments competed for it. For example, 23 new dwelling units were constructed in Nampa in 1982. More than 1,600 new dwelling units were built in the city in 2002.
The climate has changed. "We're no longer giving away infrastructure improvements to entice growth," Davis says. "We don't need to."
Nampa has been through an extensive review of its fees, and Davis says builders are not shy about challenging costs if they think the fees are out of line. Most builders and developers understand why fees are charged, he says.
"Housing will stop if there is no sewer to hook up to … and the development community realizes this partnership they have with local government needs to be supported with fees," Davis says.
But nationally, some developers are not as sold on fees, seeing them rather as a necessary evil - the cost of doing business. Typically, between streets, fire, water, sewer and irrigation, a developer often has to spend a great amount of time just lining up the necessary approvals.
"The concerns we have as builders have always been what fees are included in the permit … The fees are just a cost that we have to pass on to the consumer," says Rob Pilote, owner of Pyramid Construction and president of the Snake River Valley Building Contractors Association.
"We need to make sure that we're going to be able to absorb the fees enough that we're not going to see a huge increase in the market price of the house," Pilote says.
According to a 1998 National Association of Home Builders survey, those fees can result in a marked increase in the price of the home-10-20 percent.
The remedy may be a one-stop-shop approach, which more cities are moving toward, and Nampa has in place currently. Because Nampa City has jurisdiction over streets, water, pressurized irrigation, wastewater, and fire protection services, "it makes it easy for us to be a one-stop shop," says Davis. "Whether it's a new subdivision or a tenant improvement, permit applicants only have to stop at one department, and we'll route their plans to the necessary departments."
Nampa's approach has received favorable reviews so far from builders. "My experience with the City of Nampa has been a good one as far as getting my permits through," says Pilote.
Despite the recent statewide adoption of the 2000 International Codes, effective Jan. 1, 2003, the time it takes to get a project going in Nampa has not increased, says Davis. Although the name of the building codes changed, the process has not.
Now that the new code has been in effect statewide for more than a year, Davis believes the development community is "on the downside of the learning curve." Compared to what Nampa City already was enforcing, the new codes didn't bring many changes to the residential requirements.
Not even the Legislature's adoption of the first energy codes to be required in Idaho - the 2000 International Energy Conservation Code - required Nampa's Building Safety Division to learn a lot of new rules. Nampa has enforced an energy code since 1988. Davis sees energy codes as a benefit. Saving energy saves money, allowing home owners to pay more toward their mortgage with the money they save. And, he says, an energy-efficient home adds to local residents' quality of life.
And that's the ultimate goal. There are a lot of divergent opinions on building codes and affordability, and a number of strategies for compliance. In the end, though, public health and safety must meet consumer acceptance and demand to drive the engine.
Building Approval Process Streamlined in Nampa
It's no accident that the buildings in which we live, work and play meet minimum safety and structural standards.
For the sake of public health and safety, local governments must review new subdivision plats and building plans proposed within their boundaries. The impact of developments upon a community's fire protection, road, water and wastewater systems also must be considered. How simple the process of securing approvals is depends on how many of the approving departments are under the local government's jurisdiction.
Nampa City has authority over streets, water, pressurized irrigation, wastewater and fire-protection services, allowing the city to develop a one-stop-shop for approval that builders say works well.
"The City of Nampa does have a good, streamlined process … and has worked to get the builders' input in doing that," says Jeff Wade, owner of Precision Builders and president of the Idaho Building Contractors Association.
When seeking approval for a subdivision in Nampa, the project plans go first to the Planning and Zoning Department for density review and preliminary plat approval. Then, the development and site plans are forwarded to the Fire Department for a look at street names and to the Engineering Department for a review of street widths, lighting and design, as well as stormwater drainage. The drinking water and wastewater plans are sent to the state Department of Environmental Quality. Once the final plat is approved, the building contractor can start pulling permits. Obtaining a building permit on already-platted property takes three to five working days, says Dennis Davis, building official for the city.
During the construction process, local governments also shoulder the responsibility of inspecting buildings to ensure they meet minimum safety standards. Davis says this responsibility has grown with the elimination of HUD's minimum property standards and FHA inspection program. Today, all federally insured mortgages and a majority of traditional lenders require a final inspection from a local government entity before closing on the loan.
While electrical, plumbing and mechanical contractors are required to be licensed, presently there is no licensure of general contractors in Idaho. "Your local building department might be the only protection afforded to the consumer in the construction of their home," Davis says.
Rob Pilote, owner of Pyramid Construction and president of the Snake River Valley Building Contractors Association, says his experiences with the City of Nampa's inspection process have been "relatively good."
"Once we know what exactly the city wants requirement-wise, it's pretty easy to follow suit and get in line with them," Pilote says.
One-Stop Shop Draws Development
Davis sees Nampa's one-stop shop process as an economic development tool for the community.
Before building in a county or city that does not own its own streets, water, sewer and irrigation, developers must obtain approvals all over town. For example, wells and septic tanks in the county must be approved through the state health department, and driveway approaches may need approval from the highway district. Some cities have contracted their water or wastewater services to the private sector.
"The permitting process is much more cumbersome within those jurisdictions," Davis says.
Nampa's tremendous growth over recent years has not caused delays for builders seeking permits. In fact, the amount of time needed for building permit approval hasn't changed much over the past 10 years, Davis says, because the mayor and city council have allowed the Building Safety Division to increase staffing levels to keep up with demand. Today, there are 14 people in the Building Department, compared to just a handful a decade ago.
"The process has changed in that the sheer volume has caused us to refine the process and gain efficiencies where we can along the way," Davis says.
"Local governments need to pay attention to the processes so as to not overly encumber housing development or affect the cost of the housing," he adds.
"The building contractors look forward to working together with Dennis Davis and the City of Nampa to keep the growth positive and financially feasible for everyone," Pilote says.
How the Government Can Save Affordable Housing
For the last several months, home building activity has continued to rise. Housing starts hit a 19-year high in November, with 2.07 million units (seasonally adjusted), as reported by the U.S. Department of Commerce. That's the best rate of activity since February of 1984. Builder confidence was high in November and December, and the National Association of Home Builders projected similar confidence in the early part of 2004, while expecting a bit of a slowdown in activity as market interest rates continue to rise from record-low levels nationwide.
We have discussed the challenges that government controls and regulations create in terms of housing affordability. Certainly, affordability and home-building activity are tied together, so what can be done to ease some of the impacts of these regulations? To answer this question, the National Housing Institute studied the effective partnerships between government, state and local authorities, including many community-based organizations. The report, called Saving Affordable Housing (available at www.nhi.org/online/issues/sf90.html) looks at a handful of these successful partnerships (two in Denver, two in Boston and one each in Chicago and New York City) in an effort to guide future efforts in affordability. Specifically, urban and inner-city solutions were explored in depth.
The answer was that it requires more than simply targeting home-building techniques, joblessness, inadequate education and poor housing. Increasingly, it involves strengthening community and the institutions that form a civil society. The solution involves strengthening families, neighborhoods and communities. From FDR's New Deal through the mid-1990s, the federal government played a big role in national housing policy, which was centered on the belief that "the feds" could help solve our housing problems. The Reagan administration began to scale back federal housing subsidies in the 1980s, and the federal government has maintained a diminished role since.
The answer seems to lie in a combination of local initiatives, leadership and creativity, joined with an active and effective federal role. The housing examples studied in the report exist in areas where private development is absent, where a commitment to service exists, as does the ideal of social justice and service and an abiding faith that the activities of the individuals involved "make a difference."
Necessity, motivation and leadership-and the government-are equally important in the mix.
Government's Impact on Housing Affordability: An Unintended Quagmire
Although government controls and regulations on housing and development are intended to ensure safety and quality, and are typically made for sound and solid reasons, they can have a negative impact on affordability.
Myriad government controls and regulations are at work in many areas, from urban growth boundaries and impact fees to sensitive area and wetland ordinances, and complex, prolonged permitting issues. The result is not only increased prices for new home construction, but also for buying existing homes. A 1998 survey by the National Association of Home Builders showed a 10-20 percent jump in the sales prices for homes as a result of government regulations, fees and delays. This is not always the case, however, such as in Nampa, where the various fees charged on a $111,000 home represent less than 2.5 percent of the construction cost.
Urban growth boundaries also can be a contributor to the discontent over government regulations. By reducing the stock of available land and increasing its price, developers have to build more housing units on the same amount of land to mitigate those up-front costs. The result, unintended by decision-makers, is often that more houses get built on an amount of land: overcrowding.
Another possible effect is that urban growth boundaries, which can be too tightly drawn, can bestow "an unfair and unearned excess value of owners who happen to be within the boundary," displacing lower-income households and contributing directly to increased homelessness, according to Dr. Richard Morrill of the University of Washington Department of Geography.
Home ownership takes a hit when this occurs. Although in Idaho it is often easier to get single-family lots approved than multi-family ones, overall the tighter restrictions on land use and availability generally result in an increase in multi-family developments. As developers try to find ways to house more people on less land, they build apartment complexes.
Affordability also can take a hit as the growth boundaries restrict the supply of land and inhibit new additions to urban housing stock. The Puget Sound area of Washington passed an urban growth boundary mandate in 1990, and a Freddie Mac Housing Price Index study showed a 45 percent increase in Seattle urban area housing prices in 2000 compared to 1995, using the same houses as barometers.
The permitting process also is a culprit. The average time from permit application until approval is 13 months in many western states, according to the Urban Land Institute. In Nampa, the permitting process is quite reasonable, at three-to-five days for building permit approval on already platted property. But it can be downright outrageous in some cases, like the 36-months-or-longer wait in King County, Wash., in 1999. Los Angeles County has had more than 30,000 housing units in this regulatory limbo for more than a decade, despite the fact that state officials in California have been saying for several years now that 50,000 more units need to be built each year just to keep up with population growth.
And even newer research seems to bolster the argument that permitting and land-use regulation does indeed push up housing prices. The Impact of Zoning on Housing Affordability, by the Harvard Institute of Economic Research, looks at how permits influence prices. Using the average length of time required to obtain a building permit as the dependent variable, the Harvard study finds that "measures of zoning strictness are highly correlated with high prices. While our evidence is suggestive, not definitive, it seems to suggest that this form of government regulation is responsible for high housing costs where they exist."
In short, nationwide government controls and regulations can dampen enthusiasm that developers may have to build and add to the housing stock of a city or state, and they may even result in higher housing costs and lower home ownership rates.
Working Through The Maze: LCA Town Planning & Architecture
LCA Town Planning & Architecture, a national firm founded in 1994 and based in Portland, Ore., specializes in the development and repair of urban, suburban and small-town communities.
LCA's offerings include planning, research, public involvement, design work and plan implementation. LCA completes projects for both public and private clients. Public clientele include cities, counties, and state or local departments and organizations. Private clients range from national developers to smaller developers and landowners.
LCA designs streets, parks, gardens, and buildings. The firm plans downtowns, main streets, neighborhoods, and transit-oriented development for a variety of communities that aspire to improve their quality of life. Along the way, LCA has gained a national and regional reputation as one of the top design firms in the Pacific Northwest. The firm has won numerous awards for these various endeavors, including the American Planning Association National award, the State of Oregon Governor's Livability award, Builder Magazine's Golden Nugget award recognizing the "Best in the West" Community Plan Under 100 Acres, and the "Best in American Living" Award from Professional Builders Magazine and National Association of Home Builders as "Best Smart Growth Community in U.S." for Fairview Village in Fairview, Ore.
"There are three different kinds of opposition generally faced with these projects," says LCA co-founder Steve Coyle. "The first are government or jurisdictional restraints. Small lots keep housing costs down, but often zoning laws prohibit lots under a certain size, even when a smaller lot would be more than adequate for more affordable units. Second are financial constraints. In the investment and debt financing of development banks and developers may, unless forced by regulation, reject the lower rate of return when you eliminate some market-rate apartments in favor of affordability. Some type of private and/or public subsidy is required to write down the cost of the affordable units. Third, and sometimes the most formidable depending on the area, are political obstructions."
Two affordable neighborhoods LCA recently designed in Teton County in Wyoming illustrated some of these barriers. Teton County, Coyle says, has some of the highest housing costs In the nation but Includes a substantial moderate- or lower-income population base. Despite this, some of the area's residents were not in favor of the idea of subsidizing housing, he says, though the affordable units would be mixed seamlessly with market-rate homes. "In many communities, lower-income housing has been introduced as projects stigmatized by institutional design, limited income diversity, and relative physical isolation that forces auto reliance."
One of LCA's main challenges is defeating misplaced NIMBYism. In Teton County, LCA was approached by the local housing authority to design two new neighborhoods that would provide affordable housing to the neighboring residents. About 75 percent of the units were to be affordable by area median income designation, Coyle says.
LCA's first order of business was to garner public input and opinion, conducting two days of interviews and follow-up meetings with those both for and against the concept. "At the end of the day, it is very difficult to get someone to buy in to your project if they are not allowed to help participate in this type of project's design and development, providing them an authentic stake or authorship in the planning process," Coyle explains.
Coyle says facilitating a public collaborative process, like the multi-day charrette (collaborative design process) is LCA's usual strategy to overcoming, or working through, the three levels of barriers he mentioned earlier. Most of these charrette meetings have lasted for up to a week by the time everyone's input is gathered. "The plan is definitely secondary to the process," he says. "It is easily our greatest single tool." Coyle found that chain of events so effective, in fact, that two years ago he co-founded a nonprofit company called the National Charrette Institute to educate and train other planners in the art of the public participation process.
As the LCA example shows, there are ways to expedite the process. Giving those who will be most impacted by any new development a voice in the planning process is a very effective tool.
