Washington – Representing one side of the equation, James H. Schloemer, Chair of the National Multifamily Housing Council, testified before the House Financial Services Subcommittee on Housing and Insurance on Wednesday, arguing: “We do not have enough housing.
“I would like to offer the apartment providers’ perspective on efforts needed to promote workable and sustainable policies to address our nation’s housing challenges,” Schloemer said. “Our goal is to ensure that apartment providers can meet the long-term housing needs of the 40 million Americans who live in apartment homes and continue to make significant contributions, currently $3.9 trillion annually, to the growth of our economy.”
He explained, “The only way out of this supply shortage crisis is to build more housing. Estimates indicate that we will need 4.3 million new apartment units by 2035. Regrettably, the current political, economic and regulatory environment makes building incredibly difficult.”
At the same time, he lamented that “policymakers are considering a multitude of proposals that negatively impact the addition of housing supply.”
He said that these include: “AI, revenue management, broadband, rent and fee regulation, evictions, financial and criminal screening, energy efficiency and building code standards, just to name a few. Each has the potential to negatively impact the investment, ownership and operations of rental housing providers. None would increase housing supply.”
He also continued to pushback on rent control proposals.
“Rent regulations are another harmful proposal, including the misguided and counterproductive plan offered by President Biden to cap rent increases at 5% annually,” he said. “Decades of research shows that rent regulation devastates rental housing quality and harms affordability.”
While many dispute this contention, from their perspective, “The Biden administration proposal to cap rents will not add a single new unit of housing, and, in fact worsens housing availability and quality.”
Schloemer cited a new study, by Arthur C. Nelson, Professor Emeritus at the University of Arizona, which he said provides a “comprehensive review of peer reviewed academic articles that examine various rent control and other rent regulation laws across the United States and abroad.”
Nelson finds that the results of these newer rent control efforts have harmful effects on renters and those seeking rental housing, including:
- Disincentivizing investment in the rental community, resulting in fewer rental units;
- Inhibiting mobility, thus creating a barrier to entry for new renters seeking housing in rent-controlled communities;
- Distributing the limited benefits of rent regulation disproportionally to higher-income, older and white residents, respectively;
- Substantially reducing the value of rent-regulated properties as well as nearby unregulated rental properties, thereby reducing real estate tax revenue to the locality; and
- Failing to address, if not negatively impacting, eviction prevention, renter well-being, renter educational attainment opportunities and neighborhood quality
He added, “With little to no ability to earn a profit, developers and investors will shift their investments to other non-rent regulated jurisdictions—the NMHC/ NAHB cost of regulations report16 indicated 88 percent of respondents avoid working in jurisdictions with rent control.”
He also cited Jason Furman, former President Obama’s chair of the Council of Economic Advisers, who on July 15 said to the Washington Post, “Rent control has been about as disgraced as any economic policy in the tool kit. The idea we’d be reviving and expanding it will ultimately make our housing supply problems worse, not better.”
Not all research agrees with that conclusion.
Schloemer and the NMHC called for “easing regulations” that they believe “could go a long way to addressing the housing affordability challenges faced by communities across the nation while making critical investments in infrastructure of all types.”
He said that “we urge the Committee to support the Pro Housing Grant Program and redouble its efforts to incentivize states and localities to remove or mitigate local barriers to development of rental housing.”
Examples include:
- Streamline and fast track the entitlement and approval process;
- Provide density bonuses and other incentives for developers to include workforce units in their properties;
- Enable “by-right” zoning and create more fully entitled parcels;
- Defer taxes and other fees for a set period of time, including providing tax abatement;
- Lower construction costs by contributing underutilized buildings and embrace new technology driven construction advancements; and
- Encourage higher density development near jobs and transportation.
To this end, NMHC and NAA strongly support the Yes in My Backyard (YIMBY) Act (H.R. 3507/S. 1688) that Representative Flood, (R-NE) has introduced with Representative Kilmer, (D-WA).
He said, “We applaud the Financial Services Committee for unanimously approving this bill – by a 48-0 vote – on May 16. This legislation would help eliminate barriers to development by requiring Community Development Block Grant (CDBG) recipients to report periodically on the extent to which they are removing discriminatory land use policies and promoting inclusive and affordable housing.”
Schloemer told the committee, “We can solve the housing challenges facing the country. Congress must prioritize increasing our nation’s housing supply and support pro-housing policies that will, in turn, ensure greater housing stability and affordability for renters at a variety of income levels for decades to come. We further urge Congress to work with the Administration to implement initiatives like the Administration’s Housing Supply Action Plan that address challenges to the development of new housing.”
