Cracking the Housing Code

A Blueprint for Solving Central Ohio’s Affordable Housing Crisis

 

The housing crisis is a pressing issue that affects communities across the nation. At the BIA of Central Ohio, we are committed to finding solutions that can help alleviate this problem. In this blog post, we delve into the biggest obstacles to housing development in our state and explore potential solutions. 

Biggest Obstacles to Housing Development

Several factors contribute to the difficulty of building new housing. Here are some of the most significant challenges: 

• Length of Time for Zoning: The lengthy zoning approval process can significantly impact the cost of housing development. Delays can lead to increased carrying costs, financing costs, and opportunity costs. 

• Lot Sizes & Densities: Lot sizes and densities play a crucial role in determining the cost and feasibility of housing projects. Larger lot sizes can increase land acquisition costs and infrastructure costs, while higher densities can reduce per-unit costs. 

• Architectural Standards: Strict architectural standards can increase the cost of construction and development, as well as limit affordability. 

• Parking Minimums: Parking minimums can increase land and construction costs, reduce housing supply, and impact affordability. 

• Utility Access and Fees: Tap fees and impact fees can add to the upfront costs of development, reducing affordability and potentially limiting housing supply. 

Expert Insights on the Housing Crisis 

To gain a deeper understanding of the challenges facing the housing market and potential solutions, we spoke with industry experts Mike Reeves and Joe Thomas. 

In the following sections, you'll find their responses to key questions about the housing crisis, the biggest obstacles to development, and potential solutions. Their insights offer valuable perspectives and contribute to a more informed understanding of the complex issues surrounding housing affordability and availability. 

Mike Reeves, Vice President at Kimley-Horn and Co-chair of the BIA Builders and Developers Council, shared his insights on the current state of the housing crisis. Reeves offers a comprehensive perspective on the obstacles hindering development and potential strategies for overcoming them. 

BIA: How do these problems, regulations, processes affect housing development?
Mike: The problems, regulations and processes put in place by local governments have a significant impact on the industry’s ability to provide affordable housing. Whether it is the length of time to get through zoning, the cost of infrastructure spread out over a larger area and fewer houses or establishing requirements and fee structures that aren’t relevant with market demand, all of these things add up to increased costs to provide new residential units to the market. Cost of land, labor and materials continues to increase, but when local governments place undue burdens on home builders, it only exacerbates the affordability problem. 

BIA: Which of these issues is the biggest barrier with the greatest opportunity to alleviate the housing crisis? 
Mike: Larger minimum lot sizes and lower densities significantly impact the cost of providing new homes and have a negative environmental and quality of life impact on our communities. The Central Ohio Region continues to require densities that are lower than what can actually be supported by many developed properties. This leads to larger infrastructure costs and land prices that are spread out to less potential buyers or renters.  

These low-density developments do nothing to decrease the demand for housing in Central Ohio which means that developers have to acquire additional land for more building which leads to urban sprawl and less natural land. The farther out that development pushes, the more time that our residents spend driving to work, congesting traffic and creating air pollution. Central Ohio needs to push for more density within developments to reduce our environmental footprint and to provide more housing at an attainable price point.  

Joe Thomas, Director of Development at Metro Development and Co-chair of the BIA Multi-Families Council, provides perspective into the specific challenges faced by multi-family housing developers. Thomas's expertise in this area allows for a discussion on the unique factors impacting the development of apartments and other multi-family housing options. 

BIA: How do these problems affect the multi-family building industry? 

Joe: The multi-family building industry can be significantly impacted by the following problems: 

1. Carrying Cost: High carrying cost can reduce profitability, particularly if land remains undevelopable for extended periods waiting for approvals. Developers may be less inclined to invest in new projects if carrying costs are high. 
2. Finance Cost: Higher finance costs can lead to increased overall project costs, making it harder to achieve desired returns on investment. 
3. Opportunity Cost: In a dynamic market, investors might seek more lucrative opportunities, which can slow down investment in multi-family developments. 
4. Price Escalation: If price escalates beyond initial projections, it can lead to budget overruns and delayed timelines, potentially making projects less viable 
5. Regulatory Changes: Increased regulatory requirements, such as zoning laws, environmental assessments, and building codes can add to the complexity and cost of multi-family developments.  These changes can deter investment or lead to more expensive projects 
6. Market Fluctuations: Market fluctuations may lead to reduced investor interest or difficulty in securing financing for new projects. 
7. Investor Confidence: Low investor confidence can result in reduced capital flow into the industry, limiting new developments. 

BIA: Which of these issues is the biggest barrier with the greatest opportunity to alleviate the housing crisis? 

Joe: Determining the biggest barrier with the greatest opportunity to alleviate the housing crisis often depends on the specific context of a given market but generally speaking "regulatory changes" and "finance cost" tend to be significant barriers with substantial potential for improvement.

Addressing the Obstacles to Affordable Housing in Central Ohio 

The BIA is at the forefront of addressing the critical challenges hindering affordable housing development in Central Ohio. By focusing on the following key strategies, we aim to create a more equitable and accessible housing market: 

• Streamline Zoning Processes: Simplifying and speeding up zoning approvals can reduce costs and encourage development. 

• Rethink Lot Sizes and Densities: Explore zoning reforms that allow for higher densities in appropriate areas to increase housing supply and reduce costs. 

• Relax Architectural Standards: Consider relaxing certain architectural standards to allow for more affordable housing options. 

• Reduce Parking Minimums: Reevaluate parking requirements to reduce the burden on developers and increase affordability. 

• Reform Utility Fees: Work to reduce or eliminate excessive tap fees and impact fees to lower the cost of development.
   

The housing crisis is a complex issue with no easy solutions. By addressing the obstacles, we can create a more equitable and affordable housing market for everyone. The BIA is committed to advocacy and working with policymakers, housing developers, and community leaders to develop innovative solutions that will help meet the growing demand for housing in our state.