Reform of Local Regulations Urged

SACRAMENTO —  Regulatory reform, which its proponents claim would hold down the costs of buying and renting homes and apartments, was the oft-repeated theme at a conference here co-sponsored by the U.S. Department of Housing and Urban Development and the California building industry and apartment associations.

Shirley McVay Wiseman, vice president/secretary of the National Assn. of Home Builders, told about 600 builders, apartment house owners, government and association officials that regulatory reform is the key in the “elimination of impact fees being indiscriminately placed on new subdivisions, whether they (the projects) impact on (local) services or not.”

Wiseman, the first woman officer of NAHB, said, “Every time a home price is increased by $1,000 (due to infrastructure fees that the builder passes along to the buyer), 300,000 people are priced out of the market.”

Wiseman, a home builder from Lexington, Ky., said that many restrictions “are archaic.”

Cites Outdated Requirement

She said cul-de-sacs are still required in many new subdivisions “even though the reason (they) were created was because fire trucks didn’t have reverse (gear). Now, we’ve had reverse for a long time, but the cul-de-sac requirements (calling for 60-, 80- and 100-foot turnaround spaces) are still with us.”

Wiseman--along with National Apartment Assn. President Robert Sherman and Clark Harshfield, president of the Retired Housing Foundation--joined HUD officials in endorsing the concept of an affordable-housing campaign that urges local officials and builders to create task forces committed to streamlining municipal regulations for construction.

As Deborah Gore Dean, executive assistant to HUD Secretary Samuel R. Pierce Jr., described the country-wide program, the intent is three-fold:

--HUD is sponsoring “demonstration projects” to show how joint venturing can reduce housing costs.

--The development of local coalitions of “civil and public interest groups to work for the adoption of affordable housing approaches in their communities” is being encouraged.

--Results of each project are being shared “with all levels of government and the private sector” so the approaches can be implemented nationally.

Regulatory reform is desperately needed, Dean and several other speakers contended, because home ownership is still out of the financial reach of too many would-be first-time buyers.

“We all know how much buying a home costs today,” Dean said, “and many who believed that a good education, hard work and savings would automatically entitle them to become (homeowners) have had a rude awakening. . . . They may never be able to afford (to buy) one unless we do something about it soon.

“In 1955, the median price for a new home was $13,400; by 1986, that price had risen to over $92,000. “In 1973, the average 30-year-old male needed to pay only 21% of his income for the mortgage on (a) medium-sized house. By 1984, that had jumped to 44%.

A relatively new message at the meeting was that of regulatory reform, since it involved one governmental agency (HUD) taking swipes at others (cities, counties and states).

But, Dean maintained, “this is (specifically) a local problem, not one for the federal government. Local policies define the type of housing and the cost of housing that will be built in any community. These local factors (include) . . . ever-more restrictive zoning ordinances, elaborate and time-consuming building permit processes, land use restrictions, regulations on the cost of labor and materials, and other measures that limit growth and can add years to the time it takes to build housing--if it ever gets built at all.”

Robert Sherman, president of the National Apartment Assn., blamed the federal tax reform legislation for increasing rental costs across the country. “The income of a renter,” Sherman said, “is about half of a homeowner’s. But the way tax reform may be enacted very soon, the people who build or invest in rental housing will have no choice (but to) raise rents.”

Sherman said that of the three incentives that have traditionally inspired investors to eye the rental housing market--cash flow, inflation hedging and tax benefits--only the first two would remain once the new tax law is implemented. “That means rents will go up,” he said, “because investors will have to keep money coming in (from) somewhere.”

Elimination of tax benefits for apartment house owners/investors, coupled with increased occupancy rates that will slowly erase the effects of a national “overbuilding boom” of rental units, will likely raise rents “by 40% over the next few years,” Sherman said. “On the other hand, the prices of apartment houses themselves will probably decrease by 10% to 20% in 1987 because the only real incentive left (to invest in them) will be cash flow.”