R.I. land-use policies cutting into housing starts

BUILDERS SAY the regulatory process in Rhode Island is so unpredictable and difficult that it's time-consuming and expensive that it's hard to build new single-family houses. /
BUILDERS SAY the regulatory process in Rhode Island is so unpredictable and difficult that it's time-consuming and expensive that it's hard to build new single-family houses. /

Peak demand and record-low interest rates should have led to a new-home construction boom in Rhode Island. But the numbers since the turn of the century have reflected anything but.
According to year-end totals from the Rhode Island Builders Association, 1,606 permits were issued for new single-family homes in 2006. That’s down from a 1999 peak of 2,639.
A key reason, says association Executive Director Roger Warren, is that strict land-use policies in the state are keeping the numbers down.
A survey released last year backs up that theory. Conducted by Wharton School of the University of Pennsylvania, it ranks Rhode Island second in the nation when it comes to the strictness of its land-use regulations, behind Hawaii.
The factors considered included lot-size requirements and time between application for and issuance of a permit. Massachusetts and New Hampshire ranked third and fourth, respectively.
When metropolitan areas were examined, the Providence-Fall River-Warwick region ranked first, followed by Boston; Monmouth-Ocean, N.J.; Philadelphia; and San Francisco.
Joseph Gyourko, a professor at the Wharton School and lead author of the study, said that it looked at 2,600 communities nationwide, surveying municipal officials about a locality’s zoning and building requirements.
The three New England states near the top of the list all shared common characteristics, including local community groups concerned about development boasting political influence and large-lot zoning requirements.
Throughout New England, Gyourko said, there seems to be little “by right development,” meaning that even projects that meet all of the necessary zoning requirements and fit within a town’s comprehensive plan still have to go through an intensive approval process.
For Warren, the report confirms what his organization long had believed: that Rhode Island’s permitting process is stacked against the developer. He said the association believes the permitting process is founded upon “not in my backyard” attitudes from towns and the fear that new housing will strain school budgets and require raising taxes.
The increased time from application to issuance of permits has the biggest impact on smaller developers, he said, with many of them either unwilling or unable to see the project through and bear the increased costs.
“Only a few developers can withstand that,” Warren said. “So the small developer tends to be filtered out … over time. The cost of going through that process goes up.”
He said he expects regulations to get stricter as more communities adopt “inclusionary zoning,” a policy recently adopted in South Kingstown and being examined in other communities that re-quires developers to make a portion of any multi-unit project affordable.
While on the surface, Warren said, the idea seems like a good one, the initiative is not “revenue neutral” for developers and will likely only increase the cost to builders.
Builders are not alone in expressing concern about some of the policies that communities have instituted.
Scott Wolf, executive director of Grow Smart Rhode Island, said that while his organization does support some policies, such as open-space requirements, it views many as harmful, especially large-lot zoning, which runs counter to smart-growth principles.
In addition, Wolf said, lengthy approval processes may hinder builders from redeveloping blighted sites and building in the state’s urban core – a practice advocated by the nonprofit and seen as a key to developing affordable housing.
The Wharton School study “highlights some potential barriers to smart growth in Rhode Island,” Wolf said. “If the regulatory process is unpredictable for developers and onerously time-consuming, we may be discouraging good development in urban town and village centers where development often makes a lot of sense.”
Leonard Lardaro, a professor of economics at the University of Rhode Island, said that the state’s strict regulatory environment is one of the factors that slow economic development. It also contributes to housing-cost inflation, he said.
While New England states ranked high in the survey – Connecticut and Maine ranked 15 and 16, respectively – midwestern and southern states came in relatively low, with Kansas, Louisiana, Missouri and Indiana ranking the lowest nationwide.
Gyourko said that coastal and northern states had higher educational levels, median incomes and household values on average. The coastal states also have one more thing in common: more previous experiences with development, all of which may not have been positive.
“They’ve actually witnessed some of the downside and negative effects of high growth,” Gyourko said.
He worries that the tight regulations could be an impediment to the state’s economy, but he said that higher-ranking states are the way they are with good reason. It’s what the people want, he said.
“It’s reflecting the will on individuals in those jurisdictions,” Gyourko said. “I don’t think it’s being imposed on them; it’s what they want.”

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