A forum on housing affordability hosted by the Real Estate & Building Industry Coalition in Charlotte highlighted the impact that zoning and land use policies have a significant impact on the housing affordability of any given metro area. The session began with a presentation by Wendell Cox, an urban planner, and then moved into a panel discussion featuring local experts from Charlotte. From a write-up about the meeting in the Charlotte Business Journal:
A lot of what dictates what makes housing affordable is the cost of land and what it’s zoned for — if a parcel of land gets rezoned for higher-density development, the value of that land increases, ultimately making it more expensive to develop there. Cox said the most unaffordable housing markets in the U.S. have designated urban growth boundaries, which planners implement to divert sprawl in growing metropolitan areas. But, Cox continued, urban growth boundaries automatically bump up the price of land within those bounds and, as a result, the cost to develop there.
“The idea of drawing lines around things is absolutely irrational from an economic standpoint,” Cox said. “It’s exactly why we have these terrible problems (relating to affordable housing).”…
“When you layer a multi-month zoning and permitting process, it starts to crush our ability to deliver deals or deliver them as efficiently as they could be,” said Dionne Nelson, president and CEO of Charlotte-based affordable-housing developer Laurel Street Residential. “The focus should be on increasing the amount of capital available and (devising) a way to improve the delivery process — permitting, approval and putting units on the ground.”…
The panel also addressed the challenges faced by market-rate developers who are being asked to address the affordability issue:
“I think the conversation comes up about market-rate developers — why they aren’t doing more,” Nelson said. “There is a financial constraint. You can’t deliver true affordable units (at 60% Area Median Income or less) without some form of subsidy.”
She added equity for residential development often seeks a 20% return or better. When 60% or even 80% AMI (considered workforce housing) gets added into the equation, it becomes even more difficult to underwrite that deal.