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Planning Laws & Housing Affordability in Connecticut

Planning Laws & Housing Affordability in Connecticut. 2007 Connecticut Housing Conference James Kowats Director of Acquisitions UniStar Properties, LLC. State Goals vs. Local Laws . Shortage of affordable housing in CT State initiatives to improve CT economy

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Planning Laws & Housing Affordability in Connecticut

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  1. Planning Laws & Housing Affordability in Connecticut 2007 Connecticut Housing Conference James Kowats Director of Acquisitions UniStar Properties, LLC

  2. State Goals vs. Local Laws • Shortage of affordable housing in CT • State initiatives to improve CT economy • Developers caught in struggle between State goals and local laws • Growth control areas associated with highest housing costs in the country, New Haven area second highest home prices* • Many local governments confusing “Smart Growth” with “No Growth” *Source: NAHB, “Growth Boundaries, Permit Caps Pushing up Building Costs”, Smith, 2006

  3. Affordability • Affordable home • Household pays less than 30% of income on housing • Not necessarily “low income”, “subsidized” • Need for affordable housing • Household earns 80% of area’s median income • Household spends 30% or more on housing • Many areas of the state reaching that threshold Source: www.HUD.gov

  4. Source: “New Perspectives on the Need for Affordable Housing Within Connecticut”, Klepper-Smith, 2005

  5. Connecticut Affordability • Since 2000, housing costs have risen 63.6%, wages increased only 18.5%* • 19%, or 1 in 6 households in need of affordable housing† • In 2004, median income couldn’t qualify for median sale price home in 102 of 169 municipalities* • In 2005, median income couldn’t qualify for median sale price home in 157 of 169 municipalities* Sources: * HOMEConnecticut.ORG and †National Association of Home Builders

  6. Impact of Affordability • 70% of CT Business & Industry Assoc. members say housing affordability problem makes attracting employees difficult* • 1990 to 2000, CT lost more 18-34 year olds than any other state* • 2000 to present, CT lost more 25-34 year olds than any other state† • Migration could cost CT up to $133 million annually in lost state income and sales tax* Sources: *HOMEConnecticut.ORG and †www.commercialrecord.com

  7. Local Planning & Zoning Laws • Communities are coming out against development • Towns structuring P&Z laws to limit growth as much as possible • Implications of poorly designed P&Z laws goes far beyond developer inconvenience • Connecticut: Green & Growing order to “build the capacity of municipal staff, boards and agencies to make complex land use decisions” * *Source: www.ct.gov

  8. The Cost of Zoning • Harvard Institute of Economic Research published “ The Impact of Zoning on Housing Affordability” • Looked at affordability in terms of home price relative to construction cost • Studied the time to go from subdivision application to permit issuance • Longer permit issuance lag increased home price • A single category increase in permit lag raises cost of construction $7/sq. ft. Source: HEIR, “The Impact of Zoning on Housing Affordability”, Glaeser & Gyourko, 2002

  9. The Cost of Zoning (Cont’d) • Permit Lag + Impact Fees + Growth Restrictions = Planning Penalties • Planning penalties increase home prices faster than income growth • American Dream Coalition estimates planning penalties add at least $100k to median home price • 12 states account for over 90% of all planning penalties in the U.S. (CA, NY, FL, NJ, MA, IL, WA, CT, AZ, CO, OR, MD) Source: American Dream Coalition, “How Smart Growth Makes Housing Unaffordable”, O’Toole, 2006

  10. Planning Penalties at Work • Eastern CT town in need of “workforce” housing • UniStar proposed single family subdivision, 36 homes in $200k range • Year and a half of resistance by town • Town wide decrease in density by more than half • Anticipated redraw expected to yield 17 homes in $450k plus price range

  11. Resistance to Growth • Growth is a sensitive issue in CT • “Fear” of sprawl puts political pressure on municipalities to halt development • NAHB survey of home buyers finds 49% of respondents find developers responsible for sprawl, 48% blame planning boards* • However, respondents purchasing preferences indicate they share some responsibility for sprawl *Source: National Association of Home Builders

  12. Possible Solutions • Be “smart” about growth • Exclusionary zoning contributes to sprawl • Allow wide mix of land use, alternative lot arrangements, increased density • Allow these things by right • Streamline the process & review laws • Laws and the review process should implement the Plan of Development • Audit for conflicting laws • Establish clear timelines for the approval process • State & municipal cooperation • Regional planning incentives • Funding to encourage responsible development • Training & educational resources available to municipalities

  13. Looking Ahead • Other factors related to affordability • Challenges: taxes, insurance, down payments, Not In My Back Yard (NIMBY) • Opportunities: public & private partnerships, Federal dollars available • Public, private & non-profit sectors must work together • Growth is inevitable, and “no growth” is not “smart growth”

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