Soundings

Jody Kass and Kathryn Wylde
Regulated out of House and Home
Autumn 1995

Those of us who develop affordable housing know that it costs at least 20 percent more to build a new home in New York City than in the surrounding suburbs. One important reason: unfunded government mandates that disproportionately affect construction in urban centers. A survey by the New York City Housing Partnership finds that complying with such mandates costs between $15,000 and $50,000 per home.

The federal Clean Water Act, for instance, obliges cities to clean up sewage before discharging it into rivers and bays. Because New York's wastewater treatment plants are inadequate, new homes in the boroughs outside Manhattan must include extensive underground storm-water retention systems and dry wells that cost upward of $4,000 per home-even though the amount of pollution the new homes would generate is trivial compared with that of New York City's millions of existing homes that don't have such systems. Other federal and state environmental laws drive costs up further. Because many urban building sites have a history of manufacturing uses, illegal dumping, and other polluting activities, home building in the city is subject to testing and insurance requirements that typically cost at least $4,000 per home, even when no contamination is present. (See "When Cleanliness Isn't a Virtue.”) And one agency's garbage is another's gold: federal regulations require archaeological testing-costing $3,000 or more per home-on construction sites thought to contain "artifacts" (read trash) more than 50 years old.

Federal and city laws require multi-family homes to be wheelchair-accessible, adding about $10,000 to the cost of a new three-family house. Sometimes these laws run head-on into the city's historic preservation mandates: one can no longer build multi-family homes with the front stoop characteristic of most historic brownstone districts.

All of these mandates arguably have some benefit, and the cost of each individual one may be bearable. But the cumulative effect of unfunded government mandates has been the virtual elimination of New York City's private home-building industry—at the ultimate expense of would-be homeowners.
 

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