The pinch on affordable housing has been attributed to many factors: increased material costs, rising land values, investors scooping up affordable housing, and an overall inflationary economy. While each of these factors contribute to the affordable housing crisis, several other factors are also at work here.
Zoning Ordinances
Zoning ordinances have existed in some form or fashion in America for the past century. While zoning ordinances have their positive attributes, they can also act as a barrier to the supply of affordable housing. Before that farmland can be developed into a residential neighborhood, the zoning must be changed from agricultural to residential through a process known as entitlement. Getting there, however, can be a challenge. Many municipalities decide whether to rezone a property for residential use based on subject criteria such as the number of proposed homes to be built, their square footage, architectural renderings, exterior finishes, and the projected average sales prices. Even if the land is successfully zoned residential, the proposed development still must meet requirements set out by the municipalities within the “residential” tag. The entitlement process requires a significant amount of time and resources and is often an arduous process to navigate for would be builders.
Comprehensive Plans
Comprehensive plans dictate and guide the future land use of a community. While well intended, they are not living, breathing documents that pivot to the realities of an ever-changing landscape. A comprehensive plan adopted 20 years ago might not have anticipated, or be easily adapted to, a growing community. Areas of the comprehensive plan designated as rural are often delineated from sub-urban areas by an arbitrary demarcation line on a map. Over the course of 20 years if the sub-urban area has experienced tremendous growth and needs additional housing, the plan does not allow it. For example, when the light industrial park only a few miles away from the rural designated zone adds large distribution centers with 5,000 new jobs and a new regional hospital is constructed nearby, new homes cannot be constructed to meet the communities’ growing needs. Amending the plan is the logical solution, but revisions are likened to an Act of Congress. They must be thoroughly vetted through numerous, lengthy meetings fraught with boards, lawyers, and community charrettes and come with no guaranteed outcome.
Environmental Permits
While no one disputes the need to protect our waterways, greenspaces, and natural resources, obtaining environmental permits can be a lengthy and cost prohibitive process. For example, when a piece of land is developed, the developer is required to have an official with the US Army Corp. of Engineers (“USACE”) inspect the site to ensure that no waters of the U.S. are being impacted by the proposed development. If the USACE determines that waterways will be reasonably impacted, then substantial costs in the form of mitigation credits must be purchased from a local mitigation bank to offset the impact of the proposed development. Mitigation credits are used to preserve land in a conservation area. Often, mitigation credits costs hundreds of thousands of dollars to mitigate less than an acre. Further complicating things is that mitigation credits must be available in your area. If there are no mitigation credits available in the area, a builder must wait for the USACE to release additional credits. Unfortunately, there is no monetary cap or timeline for how quickly this inspection, subsequent permitting, and credit purchasing process must be completed.
At Terramoor we have over twenty years of experience navigating these entitlement issues. We regularly work with municipalities and other government agencies to bring your land to its fullest and best use. Contact us for any of your land and development needs.