Fifty Years of Efforts to Reduce Regulatory Barriers

Fifty Years of Efforts to Reduce Regulatory Barriers
Pamela M. Blumenthal, Social Science Analyst, Office of Policy Development and Research (2009-2014, 2019-present)

Over the last fifty years, the federal government has undertaken efforts to understand the extent and effects of regulatory barriers and encourage state and local governments to reduce zoning and other land use regulations, which can impede housing development and erode overall housing affordability.

Land use regulations are implemented locally, under authority given to municipalities by their state government. It is generally accepted that the federal government has limited ability to influence local land use regulations. Nevertheless, over the past 50 years, the federal government has sought to understand the extent and effects of regulatory barriers and encourage state and local governments to reduce the zoning and other land use regulations that have prevented jurisdictions across the country from providing adequate and affordable housing for current and future residents. This article discusses PD&R's role as part of those federal regulatory activities.

The 1970s

As PD&R was being formed, HUD Secretary James Lynn issued Housing in the Seventies: A Report of the National Housing Policy Review. The 1974 report focused primarily on the federal government's role in housing but also included housing activities of state and local governments, with a short discussion of land use controls. As with most other federal reports, it noted local communities were using zoning to exclude new building activity and to avoid additional congestion, adverse environmental effects, and the need for new municipal facilities and increased taxes. Municipalities were particularly reluctant to permit the development of multifamily and subsidized housing and imposed large minimum lot sizes and extensive offsite improvements. Although the "inherent inadequacy of local controls in meeting regional and statewide needs has encouraged increased State activity," the report identified no significant state action other than some assertion of authority to preserve the environment.

The 1980s

Site plans from The Park development in Lacey, Washington show how innovation and flexibility resulted in more units at one of the JVAH affordable housing demonstrations.

Between 1974 and 1980, home loan interest rates increased from 9.5 percent to 16 percent. The United States had entered a period of economic instability, and the American people were feeling the strain of increasing house prices as high interest rates combined with 14 percent inflation. President Reagan, believing "our citizens should have a real opportunity to live in decent, affordable housing," created the President's Commission on Housing in June 1981 to recommend options for developing a national housing policy and to advise on the role and objectives of the federal government in the future of housing. Section IV of the report addressed local, state, and federal regulatory barriers to housing and outlined a plan for identifying and ameliorating these barriers. The commission found that:

Unnecessary regulation of land use and buildings has increased so much over the past two decades that Americans have begun to feel the undesirable consequences: Fewer housing choices, limited production, high costs, and lower productivity in residential construction.

The 1982 report recommended the government substantially cut back its regulations to allow the market to provide the housing needed for current and future residents. Federal regulations to be reconsidered included environmental rules, real estate and mortgage disclosure laws, and the Davis Bacon Act, among others. For state and local governments, the commission recommended a program of "land-use deregulation."

In response to the White House's prioritization of removing regulatory barriers, HUD established a new Joint Venture for Affordable Housing program. This program was designed as a private-public partnership to discover ways to promote housing affordability through regulatory reform. The partnership involved HUD and the American Planning Association, Council of State Community Affairs Agencies, International City Management Association, National Association of Counties, National Conference of State Legislators, National Governors' Association, Urban Land Institute, National Association of Home Builders (NAHB), and NAHB National Research Center.

The program's main feature was demonstrations at over 20 sites around the country. Builders worked with local officials to develop subdivisions built without federal subsidy that were sold on the market. These sites exemplified how "the cooperative efforts of builders, developers, and local officials [can] show how regulatory reform can cut housing costs." Drawing on the lessons from the Joint Venture for Affordable Housing program, PD&R published a series of resources for local governments, developers, and home builders, along with case studies of the demonstration sites. Although often overlooked in works on regulatory barriers, this demonstration's results deserve more attention. Forty years later, these reports continue to offer important insights for developing housing at lower cost and faster production while addressing valid local concerns.

The 1990s

Interest rates were declining in the early 1990s (below 10% by January 1990), but the housing supply continued to fail to meet demand. In 1990, HUD Secretary Jack Kemp, at the request of President Bush, convened an Advisory Commission on Regulatory Barriers to Affordable Housing to address the increasingly complex regulatory environment. The report, titled "Not in My Back Yard," explored how to remove barriers to affordable housing perpetuated by exclusionary practices and greater regulatory complexity at all levels of government. Recognizing the efforts of many earlier federal task forces and commissions, this group focused on developing implementation strategies for each recommendation while reassuring governments that "the recommendations do not propose inappropriate Federal intrusion into State and local decision making."

The Kemp Commission report included several recommendations for the federal government. One of these was the establishment of a regulatory reform information clearinghouse. A related recommendation was for HUD to provide educational and technical information to assist local regulatory reform efforts, serving as a resource for state and local regulatory reform efforts. To implement these regulations, the Housing and Community Development Act of 1992 included Title XII, which required HUD to establish a regulatory clearinghouse to receive, collect, process, and assemble information on state and local laws, policies, activities, and strategies and plans to remove or ameliorate the negative effects of regulatory barriers.

The 2000s

America's Affordable Communities Initiative brochure was one tool to inform and encourage local governments to identify solutions to regulatory barriers that unnecessarily drive up the cost of housing in their communities.

The 2000s were an active time for HUD and PD&R as they continued to implement the recommendations of the Kemp Commission, particularly regarding educational and technical activities.

In 2000, the American Homeownership and Economic Opportunity Act of 2000 assigned PD&R responsibility to revitalize and maintain the Regulatory Barriers Clearinghouse; these efforts, begun in August 2002, continue today, ensuring the Clearinghouse remains a useful resource to stakeholders interested in regulatory reforms.

In June 2003, HUD Secretary Mel Martinez launched America's Affordable Communities Initiative (AACI), a department-wide effort to work with state and local public-private partnerships to find ways to reduce regulatory impediments to the availability of affordable housing for America's working families. AACI was a multi-pronged approach. It involved an education campaign, producing brochures and other resources easily accessible to the public. Through AACI, HUD created the national Robert L. Woodson, Jr. Award program in 2005, named in memory of HUD's former chief of staff, recognizing outstanding state and local efforts that successfully reduced regulatory barriers. The Robert L. Woodson, Jr. Award was another way the federal government encouraged dialogue and action around reducing regulatory barriers at all levels of government. For example, Austin, Texas, received the award for taking action to address a "crisis level" lack of affordable housing due to regulatory barriers, cumbersome and costly review processes, and resident opposition. Municipalities like Carolina, Puerto Rico, combined regulatory reform with innovative financing and other incentives to increase affordable housing construction from 400 units between 1992 and 2000, to 1000 units between 2001 and 2004. By highlighting how cities, states, and municipalities were addressing barriers, the Woodson Award helped bring awareness to efforts around the country. The initiative included publication of an update to the 1991 Kemp Commission report titled, "Why Not in Our Community? Removing Barriers to Affordable Housing," detailing HUD's actions to implement the commission's recommendations and identifying recent state and local efforts to reduce regulatory barriers.

In 2007, HUD issued a National Call to Action to further encourage local communities to revisit their regulatory landscape and reduce or eliminate barriers to affordable housing. More than 140 state and local governments committed to actively seek to reduce the negative influences of regulations on the cost of housing.

In connection with these activities, PD&R was tasked with coordinating a large research effort to better understand the impacts of regulatory barriers and assess the success of strategies to reduce them. PD&R hosted a research conference in 2004 on Regulatory Barriers to Affordable Housing. The papers prepared for that conference were published in Cityscape, PD&R's journal for policy development and research, in 2005.

One of the recommendations from the research conference was to initiate the creation of a national database of state and local land use regulatory practices, which would be a vital resource for research on this issue. PD&R collaborated with graduate programs in law and planning across the country to develop and test a prototypical data-collection instrument. Around 12,000 municipalities completed the field instrument online. Focus groups were conducted in five cities chosen to represent different land use cultures: New Brunswick, Atlanta, Boston, Minneapolis-St. Paul, and Portland. The final report, A national survey of local land-use regulations: Steps toward a beginning, was issued in 2008 and captures the results of the year-long development, implementation, and evaluation of the survey. The study concluded that:

Land-use policies and cultures vary widely across the United States. As a result, it was difficult to (1) produce a questionnaire that is easily understood and can be responded to nationwide without misinterpretation; (2) adequately proportion questions about zoning, subdivision, control, planning, growth management, and so on; and (3) understand the controversy over land use nationwide, which will likely affect the willingness of local jurisdictions to respond to information gathering by the federal government.

Although considered worthwhile, significant unresolved issues and new policy priorities related to the Great Recession kept PD&R from the opportunity to continue this research.

The 2010s

The Obama Administration came into office during the Great Recession focused on stabilizing housing markets and helping people keep their homes. By 2015, the market was recovering. In November 2015, Jason Furman, Chairman, Council of Economic Advisers, made remarks highlighting: "how excessive or unnecessary land use or zoning regulations have consequences that go beyond the housing market to impede mobility and thus contribute to rising inequality and declining productivity growth." He concluded by noting: "Land use regulations are largely, and legitimately, in the jurisdiction of State and local governments. But we can provide information, incentives, and expanded access to credit that can lead to increased pressure to reform and reverse the most problematic land use restrictions."

Following these comments, in 2016, the White House published a Housing Development Toolkit to address regulatory barriers and highlight actions localities can take to promote healthy, responsive, and high-opportunity housing markets. Promising tools included establishing by-right development; taxing or donating vacant land to nonprofit developers; streamlining or shortening permitting processes; eliminating off-street parking requirements; and enacting inclusionary zoning practices and other policies that encourage higher density.

During this time, PD&R was focused on some of the more tangible components of producing affordable housing, including innovations in factory-built housing and the regulatory barriers to implementing those innovative solutions. The first Innovative Housing Showcase, a PD&R initiative in cooperation with NAHB, was held in June 2019. The showcase was designed to highlight housing technologies that could be quickly integrated into residential construction to improve availability, performance, and affordability. Located on the National Mall, it brought leaders from Congress, the administration, and industry together to see and discuss challenges facing the use of new technologies in the residential construction industry.

At the close of the decade, the Trump Administration established the White House Council on Eliminating Regulatory Barriers to Affordable Housing, chaired by HUD Secretary Ben Carson. The Council focused on the need for changes to regulatory systems at all levels of government, obtaining information from other federal agencies as well as from the public through a Request for Information. The Council had a year to issue a report to the President, crossing into 2020.

The 2020s

The 2020s had a rough start. While staff in PD&R were drafting the report for the Council on Eliminating Regulatory Barriers to Affordable Housing, office work was disrupted by the COVID-19 pandemic. As a result, Council activities were limited. In the end, HUD issued a report in 2021 that compiled recommendations, opportunities, and actions at the federal, state, and local levels.

In 2021, PD&R staff, Regina Gray and Mark Reardon, were guest editors for an issue of Cityscape: Regulatory Reform and Affordable Housing: Thirty-Years After the Kemp Commission's Report on Regulatory Barriers. The articles used a variety of data sources and methods to evaluate land use restrictions and various housing variables. They provided new insights, while also serving as a reminder that regulatory barriers continue to reduce housing options.

In 2022, the Biden Administration issued its Housing Supply Action Plan. A key component of the plan is providing incentives for land use and zoning reforms and reducing regulatory barriers as well as rewarding jurisdictions that have reformed zoning and land use policies. These activities are being encouraged in competitive funding programs across the government. HUD recently previewed its Notice of Funding Opportunity for Pathways to Removing Obstacles to Housing (PRO Housing), $85 million in competitive grant funding for the identification and removal of barriers to affordable housing production and preservation.

PD&R continues to support state and local governments in removing regulatory barriers through research and information sharing. The inaugural issue of a new publication, Policy and Practice, in April 2023, focused on land use reforms. Through its research partnership program, PD&R is funding the National Zoning Atlas (NZA) to expand its coverage. The NZA, housed at the Cornell University Legal Constructs Lab, is a nationwide collaborative of researchers who use a uniform process to analyze zoning codes in municipalities throughout the United States and map the information. By providing a way for people to understand zoning codes visually, the NZA is an important tool for identifying areas that would benefit from zoning reform, narrowing the information gap, and highlighting inequities exacerbated by restrictive zoning codes. The tool has been effective in driving policy change at the state and local levels. For example, the Frontier Institute in Montana developed a zoning atlas that showed the implications of current zoning rules. The information was used by a coalition to influence legislative changes that support greater density in Montana’s cities. While the zoning atlas captures only zoning codes and not the process requirements that play an important role in how long it takes for housing to be built, it may be a more promising approach than the 2008 national survey of local land use regulations, given the many challenges to that effort.

Research on offsite housing production, which includes manufactured housing, modular homes, and prefabricated structural components and has the potential to increase housing supply at a lower cost, continues to be an important area of study for PD&R. In 2022, PD&R published the Offsite Construction for Housing Research Roadmap. That was followed by the publication of a Notice of Funding Opportunity in June 2023 for up to $4 million to (1) assess the potential for offsite construction methods to increase housing supply, lower the cost of construction, and/or reduce housing expenses for low- and moderate-income owners and renters; and (2) study how reforms to local zoning and other land use regulations can increase the supply of quality, affordable housing and expand housing choices and opportunities for low- and moderate-income households.

PD&R continued to host the Innovative Housing Showcase in 2022 and 2023, featuring new building technologies and housing solutions that make housing more resilient and affordable for American families. The Showcase featured full-sized prototype homes displaying innovative building technologies that address affordability, resilience, and the future of housing. Plans have already begun for 2024. HUD is partnering with the Terner Housing Innovation Labs at UC Berkeley to convene an event series focused on the implications of new technologies for housing supply, access, equity, and affordability. The series will highlight emerging technological innovations and the challenges new technologies present, and ways public- and private-sector leaders can work together to accelerate progress and mitigate risks. Events in this series will be held in locations across the country throughout the year, culminating with a convening that will take place as part of the 2024 Innovative Housing Showcase.

Over the past 50 years, PD&R has supported federal efforts to reduce state and local regulatory barriers by conducting research and sharing promising practices. The last few years have seen encouraging legislative changes in states as diverse as Utah, Montana, California, Washington, Vermont, and Rhode Island. Municipalities are revising local rules on gentle density, parking, approval processes, and other components of housing development. PD&R looks forward to sharing these and other promising practices while continuing to support research that will lead to a healthier, more responsive housing market that enables households to rent or buy safe, affordable, and accessible housing in the communities where they want to live.

Special thanks to Sophie McAdara for her research assistance and to Gary Hanes for sharing stories and resources from HUD's earlier activities, including introducing me to the Joint Venture for Affordable Housing program.