If the solutions were simple, there wouldn’t be problems.
This column is a companion to the WSBS (860AM, 94.1FM) radio show, It’s Not That Simple, on the air every other Friday at 9:05 a.m. Listen to the podcast here.
This is the fifth part in a series of columns examining the housing shortage in Great Barrington. Future columns will look into possible remedies that have been suggested here in the Berkshires and in the rest of the country, as well as other ideas suggested by readers.
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If housing is in such demand, if housing of all types is scarce, if housing is a basic human right, why do we make it so hard for developers to build it, often vilifying them in the process? Everyone agrees that we need more housing, and there will be some “affordable” housing built by nonprofits with tax dollars, but the vast majority of new housing units will be built by profit-driven developers, people who won’t do it if they can’t make money.
Hurdles in the current system discourage both professionals and non-professionals from attempting small, incremental developments. The process to get a building project approved is complex, time-consuming, expensive, and uncertain, with many complicated levels of approval. The result of this process is scarcity of new housing and, if time is money, and it definitely is if financing is involved, unnecessary increases in the cost of housing.
These are the opinions of local developer and property manager, Sam Nickerson of Ecos Properties. We invited him on the show to talk with us about the hurdles faced by developers.
Sam Nickerson: First let’s talk about what we mean when we say there’s a housing shortage. Because of the difficult and complicated permitting process, the only houses that are getting built now are fancy, custom, luxury homes and affordable housing projects. The luxury homes are by right and financing is straightforward, so they are easy to build. Affordable housing is a technical term; it’s not just housing that is affordable. In order to be a tenant in an affordable housing unit, your household income has to be under a certain amount, say $55,000. If you make more than that, but not enough to buy a $2 million home, you are in the wilderness. There are a lot of people who fall into that spot and there is very little new construction.
We used to have development of all kinds: small houses, small apartment buildings, mixed-use buildings. It was once a very normal thing, for someone nearing retirement, not a professional builder, to build a three-unit building, live in one and rent out the other two: a “New England Triple-Decker.” But the regulatory process has made it very difficult to build that sort of incremental development. Developers call this small-scale housing the Missing Middle.
It’s Not That Simple: Can you describe the process? What’s so terrible?
SN: There’s a 25-page manual the town puts out just to describe how to get through the permitting process. First you need to look at the zoning and see what is allowed. Are apartments allowed? What are the dimensional requirements, setbacks, density?
INTS: But that is all in the various codes, so you can read what they are and know what they are.
SN: You have to jump around a lot of sections of code before you know what you can actually do, and that takes architects, engineers, and lawyers. All of that before you know what you can do. Then you have to prepare a site plan and get approval.
Here’s an example. At the top of Railroad Street, we renovated an existing building to create 13 apartments and 5 retail spaces — relatively small-scale project. We ended up with a 650-page document that includes architectural drawings, a traffic study, a lighting plan that shows how light will go onto neighboring properties and the street. This is for something that is just like all the other buildings that are there already.
Then there are the meetings where we present our plans and review the documents. In very specific detail. We had to submit our site plan twice because we didn’t include the temperature of the lightbulbs in exterior lighting.
INTS: What does that mean to you?
SN: It’s a month of delay and you have to return with your lawyer, engineer, and architect, all of whom get paid. You’re paying interest and insurance and taxes for that time. It’s expensive.
Sometimes we will be told by a board, “I don’t like the result of this study, do it again.” That’s thousands of dollars. Sometimes the decision-makers sitting on approval boards are not qualified to interpret the technical documents required by the process. I remember a case where we had a stormwater management plan that ran 60 pages. After paying our engineer to create it, we were required to hire a second engineering firm to review it for the board.
All of these costs are not borne by the developer. They are passed on to the tenants who will rent, or the buyer. It has to be that way, otherwise the developer will be out of business. All of these delays and costs make housing more expensive for everyone.
INTS: You go through the process, invest a few hundred thousand dollars, and you secure all the approvals you need. Then there’s a period where people can challenge it. What guarantees, what security do you have as a developer after you go through that process, that you actually build it.
SN: None. It’s very, very risky. To be a developer you need to have a very high tolerance for risk and very low self-esteem.
INTS: We have been to many public hearings where people who oppose a project don’t just say “I don’t like the project.” They call you an evil developer who is only interested in money. But the bottom line is, profit is what builds housing.
SN: Everyone says “I’m all for housing.” But then we add all these requirements and limits that make it impossible to build. “We want housing, but the person who is actually out there building it, we hate.” It doesn’t make sense.
INTS: We have an expression, “People hate the bark of the dog they love.” We want housing but we don’t want density, traffic, etc.
SN: The makeup of public meetings is structurally biased. Attendees at public meetings tend to be affluent, older, homeowners, who have a bias against proposed developments. The people suffering most from housing scarcity and housing unaffordability are not represented in the meetings. I’ve never once been at a meeting where an apartment renter was there advocating for new development. You just don’t hear from them. So the segment of the population you are hearing from is the segment that doesn’t need the housing. Boston University did an interesting study on this.
INTS: This is the part of the show where Pedro gave a sermon:
Aren’t the zoning and building laws we have in place specific enough, or is there an opportunity to make them specific enough, so that we don’t need all these reviews for housing projects that are so important? The building code and zoning are there. It’s democratic because it was approved by Town Meeting. Why not just follow that and eliminate the approval process? We have a town employee, the building inspector, with the expertise to enforce what is written. Why not just use that?
SN: You started off with the question, why is it so difficult for town administrators and citizens to approve construction? From my perspective, as someone who’s done this, it’s that process that has taken away the ability of regular people to develop housing. This system has put development only into the hands of professional developers because it’s a full-time job to do this. That’s not how the town was built. It was built by non-professionals. The butcher, the baker, the candlestick maker. They just went and built their own buildings. But if I need to do engineering reports that are more costly than building the thing, it isn’t going to happen.
All of the small projects have been eliminated. Imagine how different it would be if each person could make investments on a small scale? It’s not rocket science. I should be able to build a little building for my bakery with an apartment above it. We could get back to a system that helps regular citizens invest in their town and build more housing for people who need it, but it will mean taking a hard look at the process and streamlining the regulations.
If you look at some of the most beautiful buildings that generate the highest taxes for the town, beautiful brick buildings on Main Street and Railroad Street with apartments or offices upstairs, these are the buildings that people say they love. If they suddenly disappeared, it would be illegal to put them back under the current regulations. This is a bizarre state of affairs.
INTS: Last question. Talk about the difference between building three units of housing and 40 units of housing, with regards to the process.
SN: There’s a technical term for this in real estate development: Return on Brain Damage. It’s the same process. You have to do the same 650 page report, you have to hire the same people, do a traffic study. There should be a way of, at a minimum, just copying the buildings that are already there without having to do all this. I’ll put in a modern sprinkler system, but otherwise just copy it. We can do this. Reforming the process to make it more straightforward, less expensive, and simpler is really not that complicated. We can make it easier for all sorts of people to participate in developing housing, improving the places they live, making investments in the community
If you are interested in learning more about this topic, two recommended resources are Strong Towns and Incremental Development Alliance.
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