Charlie Harper: Local Governments Building Barriers To The American Dream
Monday, February 27th, 2023
In recent weeks I’ve been taking a look at Georgia’s lack of affordable housing. The problem, articulated by Governor Kemp and the state’s Economist Dr. Jeffrey Dorfman, is that Georgia does not have enough housing units for the workforce we currently have, much less for the employees we expect to add with economic development wins. This has become especially acute in rural Georgia, where much of our recent business recruiting activity has been focused.
Though we lack quality rental options for workforce housing throughout the state – housing that is often the first step in household formation or introduction to a new area – I’ve chosen specifically to focus on owner occupied housing for working Georgians. These are homes that would be attainable for teachers, police, nurses, and would also fall in the range that those who work in the newest and biggest manufacturing facilities would be able to afford.
This brings us to the conflict that is handled on the local level, community by community. An influx of new residents brings change. Each community has a different perspective on how they wish to grow, or even if they want to grow.
New residents bring new ideas with them, and often question why things that “have always been done this way” are still being done this way. Those invested in and prospering from the status quo often don’t like having to answer these questions, even if the local economic pie is growing.
In fact, many local governments at the city and county level are erecting barriers to housing expansion. They generally do so under the guise of “protecting our property values”. That’s getting pretty close to saying the quiet part out loud, in that they want to keep prices high.
High prices, to too many, means self-selecting the “right” neighbors. It also means keeping too many working people out. The term for these practices is called “exclusionary zoning”.
There’s quite a few levers pulled at the local levels that build barriers to attainable housing options. They start with the zoning process itself, with minimum lot sizes, minimum square footage, minimum number of bedrooms, … lots of minimums. The result is that many are forced to choose among houses and/or lots that are larger than they want or need.
The next layer is “design standards”. These are additions to building code that supposedly add to the “quality” of the home, but in reality add more expensive materials and construction methods which increase the home’s cost, by design.
What does this mean in plain English? Take a home that might work for an average Georgian wanting to take their first bite at the American Dream. They may only need one or two bedrooms, a small yard, a parking pad to park their car, and the other basics of a home.
Now let’s make them have a minimum acre lot, refuse to allow them to have a slab foundation, require that their home have 3 bedrooms, a garage, and be made of brick or masonry siding. These are actual requirements being added in various locations not by HOA covenants, but by governments covering their entire jurisdiction. It’s quite easy to add tens of thousands of dollars to the minimum home in an area by adding just a few of these requirements.
Then there are impact fees that vary widely across Georgia. Some areas have none at all, while others are implementing and increasing them regularly, though few have requirements that these fees be spent to mitigate the “impact” the new residents add to local infrastructure.
There’s also a too-often subjective interpretation of building codes that can add costs, a few hundred dollars at a time. After adding tens of thousands of dollars in design standards, a few hundred dollars here and there seems trivial, but it all adds to the final cost.
A recent survey of builders by the Georgia Public Policy Foundation reported that the costs of regulation at the federal, state, and local level represented 27% of the final cost of housing in Georgia. While no one is claiming this 27% can or should be completely eliminated, a hard look at the costs of these regulations versus the benefit is in order.
The state legislature will be debating a few bills this year that will put many of these regulations under the microscope. House Bills 514 and 517 sponsored by Representative Dale Washburn of Macon, have received the endorsement of the Georgia Chamber of Commerce. They seek to eliminate the exclusionary zoning practices of using design standards to inflate home construction costs, as well as to put some guardrails on local impact fees to ensure they’re not used as general operating funds.
You can expect local governments to push back, screaming “local control” loudly and frequently. A reminder to them that the Tenth Amendment regulates power to the states, or to the people.
There is no purer form of local control than an individual choosing what kind of home suits their needs, for property they own. Adding costs and forcing home choices that an individual does not need is not a function of “limited government”. It’s an artificial barrier to the American Dream.