On September 5th, the House Financial Services Committee, Housing and Insurance Subcommittee held a hearing entitled “The Cost of Regulation on Affordable Multifamily Development”. The purpose of the hearing was for Members of the Committee to hear from representatives of the affordable housing industry to identify regulatory barriers which have inhibited the ability of developers to produce more units of affordable housing, help assess the overall impact on the cost of building and maintaining affordable housing, and to allow the industry representatives to offer potential public policy remedies. The hearing was chaired by Subcommittee Chairman Sean P. Duffy (R-WI), and the witnesses were Ms. Sue Ansel, President and Chief Executive Officer, Gables Residential, on behalf of the National Multifamily Housing Council; Mr. Steven E. Lawson, Chairman, The Lawson Companies, on behalf of the National Association of Home Builders; Ms. Erika Poethig, Vice President and Chief Innovation Officer, The Urban Institute; and Mr. James H. Schloemer, Chief Executive Officer, Continental Properties Company, Inc.

During his opening statement, Chairman Duffy, citing a recent article in The Wall Street Journal, noted that despite the current state of the economy, there remains an inadequate supply of affordable housing for America’s workers. The Chairman also expressed alarm at the fact that, according to studies published by the industry, regulation from all levels of government, on average, accounts for 32.1% of all development costs, thus increasing the overall cost of the housing. Additionally, Chairman Duffy stated that while most costs came from the local level, he is willing to work to find ways to decrease the overall regulatory burden. The Chairman made clear that he understands the importance of building codes, but is ready to reexamine the Federal government’s role in regulating multifamily development, as well as look at how Federal policy might be able to shape regulations at the state and local levels.

On the other side of the aisle, Ranking Member Emanuel Cleaver (D-MO) and Representative Brad Sherman (D-CA), in their opening statements, suggested that the Subcommittee find ways to strengthen existing HUD programs as a way to increase nationwide multifamily affordable housing stock, citing the successes of HOME and CDBG. Additionally, both Democrats echoed the Chairman’s desire to see what can be done at the Federal level to impact regulations at the state and local levels.

Full hearing