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The White House Is Taking On NIMBYs With New Zoning Proposals

Housing policy is typically left up to cities, but the White House weighed in this week by releasing a series of sweeping recommendations aimed at removing barriers to housing development.

Stockton Williams Urban Land Institute

Restrictive local zoning regulations prevent housing supply from keeping up with rising demand, thereby pushing up rents and exacerbating inequality. That's the problem the administration hopes to solve.

While economists across the ideological spectrum agree on the harmful effects of many zoning regulations, Urban Land Institute Terwilliger Center for Housing executive director Stockton Williams tells Bisnow that neighborhood activists often stand in the way of removing them.

"Incumbent homeowners and other residents are often beneficiaries of those policies because they make their homes more valuable," Stockton, above with his son at a Washington Nationals game, says. "NIMBYs are very real, and often these constituencies are highly informed and able to mobilize effectively to stop development."

Acknowledging this dilemma at the heart of the problem, the White House's Housing Development Toolkit lays out a series of policies cities can adopt to improve their zoning laws and foster development. 

While the White House can't force cities to change their policies, it is proposing adding $300M to the Department of Housing and Urban Development's FY2017 budget to offer grants to cities that update their zoning laws.

To combat the undersupply of housing, the toolkit recommends enacting higher-density zoning, especially in transit zones, to allow for greater multifamily development. 

A spokesperson for the National Multifamily Housing Council, Jim Lapides, says the organization is incredibly pleased to see the administration promote higher-density development. 

"The fact that the Obama administration is explicitly calling for addition of multifamily zoning is tremendous," Jim tells Bisnow. "The cost of land is so high, and a lot of places beyond the urban infill, the cheaper land where some deals might work out, aren’t zoned for high density. If they were, you would have the ability to add a lot more density and provide a lot more homes at a lower cost." 

White House development toolkit graph

Rents have steadily risen over the last three decades while median household income has largely remained stagnant. The recommendations focus on creating more affordable housing by enacting inclusionary zoning, which requires new developments to include affordable units, and granting additional density for those developers to build market-rate units.

This approach has been tried by cities for decades, Stockton says, and it is most effective during a multifamily boom, when it is easier to offset the costs of creating affordable housing. 

"They work best when there is a sustained level of market-rate development activity," Stockton says. "As we might be near the top  of the current multifamily cycle in some markets, these approaches may be less effective, although still worthwhile." 

One of the more innovative policies the report recommends, Stockton says, is eliminating parking requirements for development. In addition to reducing the use of public transit, the report says that requiring developments to include parking wastes developable land and can drive up rents

"That’s a cutting-edge idea in some respects, because consumers and the capital sources that provide equity have a set of expectations regarding availability of parking," Stockton says. "Even as more of us come to understand that many urban projects have an excess of parking, that does drive up development costs."

A major impediment to growing housing supply that the toolkit identifies is vacant and abandoned property. The White House recommends taxing owners of vacant land to incentivize redevelopment, or donating tax-delinquent properties to nonprofit developers. 

The recommendations also aim to expedite the pre-development process by establishing by-right development, so projects can be approved administratively if they meet zoning requirements, and shortening permitting timelines

Michael Cusumano

California-based Cusumano Real Estate Group CEO Michael Cusumano, right, says he supports finding creative ways for cities to incentivize affordable housing. Even if cities change their policies, he acknowledged, developers creating high-density housing will still likely face opposition from neighborhood residents

"Certain local governments are going to embrace it and others won’t," Michael says. "In certain municipalities, there's a NIMBY mentality that exists and you’ll need to deal with that issue in concert with growing demand."

He says it is important for developers to anticipate these issues early on in the process. 

"It starts from the initial feasibility of a project," Michael says. "How is its location situated within the municipality you’re working in, and what sort of support or opposition are you likely to get from your local constituency?"