Content uploaded by Frank Braconi
Author content
All content in this area was uploaded by Frank Braconi on Nov 20, 2017
Content may be subject to copyright.
Environmental Regulation and Housing Affordability
Cityscape 81
Cityscape: A Journal of Policy Development and Research • Volume 2, Number 3 • September 1996
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Environmental
Regulation and
Housing Affordability
Frank P. Braconi
Citizens Housing and Planning Council of New York, Inc.
Abstract
This article surveys environmental regulations affecting housing development and
operation and analyzes the ways in which they have enhanced housing and community
design through more rigorous planning techniques. At the same time, environmental
regulations may have raised the cost of housing in certain regions of the country
through the effects of intergovernmental finance. This article shows that the impact
of housing costs can be reduced by streamlining review procedures, limiting the
scope of review to matters affecting the physical environment, and considering more
carefully the fiscal effects of environmental policies.
The conservation and housing reform movements were political siblings, born during
the late 19th century in reaction to an unbridled industrialization that trampled the natural
endowment and generated unhealthful urban squalor. One was dedicated to protecting the
Nation’s natural environment, the other to improving its built environment. For much of
the following century, the two movements evolved along parallel lines, with little conflict
and frequent cooperation,1 but as the conservation movement evolved into environmental-
ism and developed a more complete understanding of society’s ecological impact, envi-
ronmentalists and housing professionals found themselves increasingly at odds.
During the past quarter-century, the environmental movement has infused virtually
every aspect of housing development and management. That infusion has benefitted both
the environment and housing, resulting in improved planning techniques, ecologically
sounder development patterns, and advancements in housing quality and safety. Yet
housing professionals increasingly believe that environmental regulation has become too
bureaucratic and complex, too prone to political manipulation, and somewhat insensitive
to broader social considerations. Friction between the housing and environmental commu-
nities has been exacerbated by social and economic factors that have rendered adequate
housing less affordable to many Americans. Advocates of affordable housing and envi-
ronmental protection have also found government to be less willing or able to underwrite
necessary initiatives. Consequently, the two groups have clashed more frequently on the
allocation of financial responsibility.
Braconi
82 Cityscape
Has Housing Become Less Affordable?
That housing has become less affordable to many Americans seems self-evident. The
homeless appear to be ubiquitous on city streets, and the frustrations of young families
unable to purchase their first home are legion. But do these impressions conform to the
reality? Has housing truly become less affordable, or do we misperceive the forces at
play?
Aggregate measures do show a decline in housing affordability in recent years. Median
monthly homeownership costs for households with a mortgage increased from 19.2
percent of household income in 1979 to 21.0 percent in 1989, and median gross rents
rose from 25.0 to 26.4 percent of the household income of renters during the same period.
Relative to income, housing costs to homeowners with a mortgage increased in 37 States,
and costs rose in 40 States for renters (Bureau of the Census, U.S. Department of Com-
merce, 1983, 1993a).
More dramatic were changes in the rate of homeownership. Between 1980 and 1990, the
homeownership rate among householders 25 to 34 years old dropped from 51.6 to 45.3
percent, and among householders 35 to 44 years old it fell from 71.2 to 66.2 percent
(Bureau of the Census, U.S. Department of Commerce, 1983, 1993a). Although these
trends have received some attention in the national press, their long-term significance has
not been fully appreciated. Falling homeownership rates, combined with such factors as
an aging population, inevitable reductions in Social Security benefits, and instability in
the private pension system, portend increasing economic distress among the elderly in
coming decades. As the current generation of elderly has demonstrated, the greatest
source of economic security in old age is a home owned free and clear.
Affordability is, of course, a function of both housing cost and income, and a long-term
stagnation in household income has left little leeway for the absorption of increases in
the cost of housing. The median real income for families in the United States has changed
little over the past two decades. The 1990 figure was actually below that of 1973, and a
polarization of the income distribution amplifies the effects of that stagnation (U.S.
Department of Commerce, 1990). The relative cost of housing rose during this period.
Between 1973 and 1993, the Consumer Price Index (CPI) for Shelter rose at an annual
rate of 7.0 percent, compared with a 6.1 percent increase for all CPI items (Bureau
of Labor Statistics, 1974–1994). This seemingly small disparity, compounded over a
period of 20 years, produced an increase of nearly 14 percent in the relative price of
shelter.
Overall housing costs comprise several important items, including the actual cost of build-
ing a house or apartment building, the carrying costs of long-term financing, and ongoing
operating costs. Environmental regulation affects primarily the first and third of these cost
components.
Housing Development Costs
Housing development costs are best measured by sales prices of new single-family
houses. Since single-family detached homes are the dominant housing form in the United
States, their data are the most detailed and most comparable over time. Between 1963 and
1993, the median sales price of new homes rose sevenfold, from $18,000 to $126,500
(U.S. Department of Commerce, 1974–1994a). That increase was due to general price
inflation, improvements in house size and quality, and an increase in the real price of new
housing. Rental prices for new apartments tend to track closely the sales prices of new
homes.
Environmental Regulation and Housing Affordability
Cityscape 83
By deflating the quality adjusted price index for new homes by the CPI, it is possible to
abstract from both size and quality improvements and general price inflation (see table 1).
The procedure reveals that real home prices increased fairly steadily from 1963 through
1979, reaching a peak relative value of 125 percent (using 1963 as a base). Prices then
began an equally steady descent, and by 1993 were only 7 percent above the 1963 base
value.
Table 1
Index of the Real Price of New Homes, 1963 to 1993 (1963=100)
Region 1973 1983 1993
United States 107.6 114.0 106.7
Northeast 120.4 116.1 127.7
Midwest 106.5 104.4 101.1
South 105.4 111.1 97.9
West 105.4 126.8 118.2
Source:
U.S. Department of Commerce, Bureau of Labor Statistics
The aggregate data mask significant variations in regional trends. Over the entire 30-year
period, real home prices rose by only 1 percent in the Midwest, and they actually fell by
2 percent in the South. However, home prices rose by 18 percent in the West and by 28
percent in the Northeast. In 1963 the median price of a new home in the Northeast was 26
percent higher than its counterpart in the South. By 1993 that gap had increased to 41
percent (U.S. Department of Commerce, 1974–1994a).
At present, the perceived housing affordability crisis is primarily a regional phenomenon
affecting the Northeast and the West, especially the Pacific Coast. There is wide variation
in housing costs among the western States—average home values in California are
about three times those of Texas, Utah, and New Mexico (Bureau of the Census, U.S.
Department of Commerce, 1983, 1993). Between 1980 and 1990, the median cost of
homeownership in California soared from 20 to 25 percent of household income—the
largest increase in the Nation. Housing costs are 95 percent above the national average in
San Diego and 28 percent above in Eugene, Oregon. In Phoenix, Arizona, and Amarillo,
Texas, housing costs are 8 percent and 26 percent, respectively, below the national
average. Because wage rates do not vary nearly as much as housing costs among these
regions, and construction material prices vary even less, it is apparent that variations in
housing costs are related to the cost of land and the ease with which housing can be
developed.
Financing Costs
The second major component of housing costs is financing. Although interest rate levels
somewhat affect housing development costs, they have a more dramatic effect on long-
term carrying costs, which are reflected in home buyers’ mortgage payments or in tenants’
monthly rents. On a $125,000 home financed with a 30-year, self-amortizing mortgage at
an 80 percent loan-to-value ratio, each 1-percent increase in the interest rate means an
increase of approximately $75 in the monthly carrying cost. If landlords wish to cover
their expenses, the interest rate will have a similar effect on apartment rents. Historic
trends in mortgage interest rates are familiar. They rose throughout the 1960s and 1970s,
Braconi
84 Cityscape
reached a peak of 16.52 percent for a 30-year, fixed-rate mortgage in 1981, and generally
declined during the 1980s (Board of Governors of the Federal Reserve System, 1970–
1994). Housing finance costs generally paralleled the real price of new housing, thus
amplifying the impact on affordability.
Operating Expenses
Operating expenses, the third major component of housing costs, include heating, light-
ing, water and sewer service, refuse removal, and property taxes. These costs have played
a large role in reducing housing affordability during the past 2 decades (see table 2). In
the 1970s, heating fuel and electricity were significant factors in housing cost inflation,
although they have moderated substantially over the past decade. Water and sewer ser-
vice, refuse removal, and property taxes, on the other hand, have of late begun to play a
more significant role in the operating costs of housing. Since 1982 the CPI for Fuels and
Other Utilities has increased at an annual rate of less than 2 percent, while the cost of
water and sewerage maintenance has risen at a 6.1 percent rate and refuse collection at an
8.4 percent rate (Bureau of Labor Statistics, 1974–1994). Housing maintenance and repair
costs have risen modestly, but the profound impact of environmental health considerations on
the cost of operating the Nation’s older rental stock is not captured fully by the CPI.
Table 2
Changes in Consumer Housing Costs, 1982 to 1993
Expenditure Category Percent of Change
All consumer items 3.80
All housing 3.52
Shelter 4.54
Residential rent 4.09
Homeowners’ costs 4.45
Maintenance and repairs 2.94
Fuels 1.14
Electricity 2.68
Water and sewerage maintenance 6.10
Refuse collection 8.39
Source:
Bureau of Labor Statistics, Consumer Price Index
Innovations and Frustrations
Changes to the income side of the affordability equation are matters of national economic
policy over which the housing community has little say. Housing professionals have
consequently focussed on the cost side of the equation, and have made many important
innovations in the past 25 years. Builders have emphasized cost-effective construction
techniques and materials, and important financing mechanisms have been introduced in
the public and private sectors. Furthermore, between 1963 and 1993 prices for basic and
intermediate construction materials increased only three-quarters as rapidly as new home
prices (Bureau of Labor Statistics, 1964–1994b) while the real average hourly earnings of
construction workers fell substantially (Bureau of Labor Statistics, 1964–1994a). But the
proliferation of environmental requirements may have partially offset those factors, a cause
of concern for housing professionals.
Environmental Regulation and Housing Affordability
Cityscape 85
Members of the housing community recognize the need for environmental safeguards
and support the objectives of environmental policy. All Americans have a stake in the
protection of the natural environment—to ensure that the air is safe to breathe and the
water to drink, that the land and oceans remain productive, that environmental hazards
do not pollute our homes and yards, and that our neighborhoods are developed in esthetic
harmony with nature. However, housing professionals know firsthand the frustrations of
elaborate regulatory reviews, the unnecessary costs associated with frivolous litigation,
and the exclusionary effects of selectively expressed environmental concerns. They also
question the allocation of environmental costs, which too often seem to be passed on to
those whose political voices are most diffused.
Environmental requirements affect housing affordability in three principal areas. Environ-
mental reviews affect the “soft” costs of housing development, including technical and
legal expenses and short-term financing charges, while substantive environmental stan-
dards tend to raise both the “hard” costs of development and the operating costs of housing.
Environmental Reviews and the “Soft” Costs of Housing
Development
National Environmental Policy Act
The National Environmental Policy Act of 1969 (NEPA) is the centerpiece of Federal
environmental review. It requires Federal agencies to prepare a detailed statement of the
probable environmental effects of each major Federal action significantly affecting the
quality of the human environment and to identify alternatives to those actions. Through
regulations promulgated by the Council on Environmental Quality (CEQ) and individual
agencies, an elaborate system of procedures has been established to ensure that there are
uniform standards for the consideration of environmental effects. NEPA serves as the
model for similar legislation at the State level. A majority of States have enacted “little
NEPA” statutes, applying environmental review requirements to actions of State and
local governments.
NEPA affects housing development primarily through the programs of the U.S. Depart-
ment of Housing and Urban Development (HUD), although environmental evaluations
made by other Federal agencies, such as the U.S. Department of Transportation (DOT)
and the Environmental Protection Agency (EPA), can also affect housing development
plans. Because the Federal Government engages in little direct housing production,
responsibility for environmental review is often delegated to State or local agencies that
receive Federal housing or community development funds. Pursuant to CEQ guidelines,
HUD’s regulations governing environmental review for its programs identify three types
of projects:
■ Those categorically excluded from environmental review.
■ Those requiring an environmental assessment.
■ Those automatically requiring an environmental impact statement (EIS).
Most housing rehabilitation falls into the first category, while the majority of new housing
construction falls into the second. Environmental assessments are preliminary analyses
conducted to determine whether a “full-blown” EIS is necessary.
NEPA has proved to be a successful piece of environmental legislation. It has generally
fulfilled its intention of forcing Federal agencies to consider environmental effects when
planning programs or projects and, over the years, it has prevented or modified hundreds
Braconi
86 Cityscape
of environmentally damaging actions. Environmental review has also had a salutary effect
on the housing development community by bringing more scientific rigor to the planning
process, improving the livability of housing developments, and stimulating innovation in
housing and community design.
Environmental protection has come at some cost, however, especially with respect to
State environmental review requirements that typically cover a broad range of State and
local decisions affecting housing development. At the State and local levels, environmen-
tal review extends beyond government sponsorship or financing of projects to primarily
private actions that require, for example, agency grants of zoning variances or approval
of subdivision plans.
Endemic to any system of regulatory review are the costs associated with project develop-
ment lead times. It is difficult to generalize about these costs, because review periods
differ with the complexity of the application and the reviewing agency’s workload and
organizational structure. When a private development entity seeks permits or approval
from a local government agency, it is natural that the reviewing body will attach less
urgency to the application than does the applicant. If the length of the review period can
be predicted with some degree of certainty, adverse financial impacts can be minimized
(for example, work crews and equipment can be scheduled efficiently), although some
may be inevitable (for example, carrying costs accrue on land awaiting development).
However, when the length of the review period is variable and uncertain, scheduling diffi-
culties may be created and significant risks may be introduced (for example, market con-
ditions or financing terms may change). One way to minimize such risks is to establish
regulatory timetables that must be observed.
Government agency as housing developer. When the development entity is itself a
government agency, the situation is more complicated. In the NEPA model, the sponsor-
ing agency is required to consult with other agencies that are involved in the action or
have particular technical expertise, or whose legal mandates are affected under such laws
as the Fish and Wildlife Coordination Act or the National Historic Preservation Act. But
the sponsoring agency does not need to gain “certification” of its environmental review.
The theory is that agencies must incorporate environmental considerations into all of their
planning activities, which is less likely to happen if environmental review occurs in an
adversarial, interagency context. Most “little NEPA” statutes follow the same approach.
New York City’s experience is instructive. Although New York’s State Environmental
Quality Review Act (SEQRA) designates the sponsoring agency as the “lead agency” for
environmental review purposes, New York City’s implementing regulations once designated
its Departments of City Planning and Environmental Protection as joint lead agencies for
environmental review of all municipal actions. Consequently, virtually all government-
assisted housing, as well as private housing involving discretionary government approval,
required environmental certification from both agencies, which did not necessarily assign
the same priority to housing development. This situation created notorious delays in the
housing development process, especially during times of heavy activity, with certification
sometimes taking as long as 2 years from the time of completion of the environmental
assessment. Eventually, the courts ordered the city to make its procedures consistent with
the State statute.2 The changes in procedures, which were accomplished during Mayor
David Dinkins’ tenure, resulted in a significantly streamlined process. Delays were cut
dramatically, and the local housing agency is now better able to prioritize and coordinate
its development activities.
Environmental Regulation and Housing Affordability
Cityscape 87
NEPA and the courts. The expense of preparing environmental reviews is a direct cost
of housing development. The evolution of those costs is intertwined with the legal history
of NEPA and its State-level progeny. Key questions relate to the obligations of agencies
to mitigate environmental impacts and to the standards of judicial review that should be
applied to agency environmental determinations.
The U.S. Supreme Court has held that NEPA is a procedural law that does not mandate
particular results or impose a substantive requirement that adverse environmental effects
be mitigated.3 The law’s purpose is to ensure that adverse environmental effects of pro-
posed government actions are adequately identified; agencies may decide that other val-
ues outweigh the environmental costs and undertake the actions nonetheless. The general
test for whether an agency has fulfilled its legal obligation to evaluate environmental
effects was articulated by the Court in Citizens to Preserve Overton Park v. Volpe.4 This
case actually dealt with agency responsibilities under the Federal Administrative Proce-
dures Act but has been applied to a broad range of government administrative actions,
including NEPA. In Overton Park the Court ruled that an agency’s decision must be
allowed to stand, providing that it was not “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law.” When determining whether an agency’s deci-
sion is arbitrary or capricious, courts must examine the “full administrative record” of the
determination. If the record does not disclose all of the factors considered, the reviewing
court may require that the decision be reconsidered. The legal necessity of leaving a
“paper trail” is thus the reason for many regulatory documentation requirements—such as
HUD’s Environmental Review Record—and the trail may raise the cost of performing a
basic environmental review. More importantly, the need to defend against possible litiga-
tion is a major source of inflation in the scope of environmental impact statements.
When litigants use NEPA to force agencies to reconsider alternatives to projects poten-
tially damaging to the environment (see table 3), the law is fulfilling its purpose. How-
ever, housing development often stirs opposition based on a desire to preserve the ethnic
or economic homogeneity of a community or its general ambiance. Opponents to projects
intended to house low-income or African-American families recognized early on that
environmental laws could be used to obstruct unwanted developments by delaying them
and raising their cost.5 During the first 6 years of NEPA’s existence, 120 NEPA lawsuits
were brought against HUD, the third highest number of lawsuits brought against any
Federal agency (Council on Environmental Quality, 1972).
Table 3
NEPA Litigation Completed, 1970 to 1976
Department/Agency Cases Dismissed Injunction Injunction
(No EIS) (Inadequate EIS)
Transportation 117 42 14 9
HUD 70 27 9 1
Defense 66 15 8 12
Interior 55 8 6 4
Agriculture 43 15 8 3
Environmental 34 14 15 4
Protection
Source:
Council on Environmental Quality
Braconi
88 Cityscape
While court rulings eventually led to a more settled legal environment and the number
of lawsuits brought against HUD has declined, similar litigation continues unabated in
State courts (Council on Environmental Quality, various editions). Varying standards
of judicial review are applicable to the environmental policy acts of the States. Michigan
and Minnesota statutes place explicit substantive obligations on agencies, and courts may
exercise independent judgment in remanding agency determinations for reconsideration.
New York and California statutes are more ambiguous, and different standards are ap-
plied. Although courts generally defer to agency determinations for fear of becoming
arenas for administrative decisionmaking, statutes that permit independent judicial judg-
ment are more likely to encourage litigation and to impose additional costs on projects
(Perlstein, 1981).
State and local development entities have learned that the most reliable defense against
obstructionist litigation is to conduct environmental reviews that are as inclusive as
possible. Public participation in the EIS scoping process is encouraged, both to identify
legitimate environmental concerns and to head off obstructionist litigation.6 In response,
project opponents continually expand their concept of the appropriate scope of environ-
mental review, propelling EISs to increasingly unwieldy lengths. Preparation of an EIS
seldom costs less than $30,000 and may exceed $1 million. Indeed, derailing a project by
raising its costs through encyclopedic environmental reviews, procedural delays, and
litigation is often a conscious strategy of opponents to development (Perlstein, 1981).
One of the most important environmental cases in New York State in recent years,
Chinese Staff and Workers Association v. City of New York,7 dramatically demonstrates
the expanding reach of environmental review. A development group sought to build a
market-rate condominium on a vacant lot in lower Manhattan. After completing what the
New York Court of Appeals later termed “a thorough environmental review of the effects
of the project on the physical environment,” the group was awarded a special zoning
permit. A suit brought under the city’s implementing regulations of the State’s SEQRA
law charged that the city had failed to consider the environmental effects on the district’s
neighborhood character that might result from the secondary displacement of low-income
residents. The court ruled that the statute’s language, which defines environment to include
“existing community or neighborhood character,” applies even if the effects do not have a
physical impact on the environment, and the zoning permit was annulled.
In addition to reflecting the plaintiffs’ misguided development ideology, Chinese Workers
demonstrates how environmental review can sometimes be stretched to cover virtually
any social or economic condition, no matter how distant from concerns about the natural
environment. Environmental review thus becomes a tool for litigating purely political
matters.
Wetlands Regulation
NEPA and its State counterparts represent only one of the forms of environmental review
that have proliferated at the Federal and State levels. Another form that has grown in
importance is wetlands regulation, under the Federal Water Pollution Control Act Amend-
ments of 1972 (FWPCA). Although environmental scientists have gradually established
that wetlands—once viewed as disease-breeding wastelands—are among the most eco-
logically productive and valuable features of the natural environment, the United States
Environmental Regulation and Housing Affordability
Cityscape 89
has lost more than half of its original wetland acreage to drainage and filling. Because
54 percent of the American population lives in coastal counties (U.S. Department of Com-
merce, 1993) and many cities are situated near inland waterways, wetland controls have a
major impact on land viable for residential development.
A constant fluctuation in regulatory standards has exacerbated tension between environ-
mentalists and housing developers concerning wetlands regulation. This tension was
caused partly by the vagueness of Section 404 of FWPCA, which gave the U.S. Army
Corps of Engineers regulatory responsibility over the “discharge of dredged or fill mate-
rial into the navigable waters at specified disposal sites.” Section 404 also involved EPA
in the formulation of permit guidelines and has given it veto power over decisions made
by the Corps of Engineers. A subsequent series of regulatory determinations and court
cases led to a definition of “navigable waters” that now encompasses virtually all wet-
lands, including isolated freshwater wetlands that are wholly within the borders of an
individual State. Furthermore, standards for identifying wetlands have also been in flux
and are subject to intense controversy.8
Initially, the Corps of Engineers was lax in exerting control over wetlands development,
partly because its legislative mandate was unclear. Despite subsequent legislation and
court decisions that clarified and expanded its obligation, confusion prevailed. At least
25 Federal statutes regulate or protect wetlands, with 4 Federal agencies (the Corps of
Engineers, EPA, the Fish and Wildlife Service, and the Soil Conservation Service) shar-
ing regulatory responsibility. A number of States have their own wetlands laws (U.S.
General Accounting Office, November 1991). Until 1989 each Federal agency had its
own standards for wetlands delineation, as did the States. The Federal Government
adopted an interagency manual for use in identifying and delineating wetlands according
to strict standards. However, proposed 1991 revisions stirred intense criticism from envi-
ronmental groups, which claimed the revisions would remove half of all wetland areas in
the continental United States from Federal regulatory protection (Henry, 1992). Federal
agencies were subsequently ordered to follow a 1987 Corps of Engineers delineation
manual while a National Academy of Sciences task force devises a new set of standard-
ized criteria.
The Corps of Engineers’ permitting process, which also has been the subject of contro-
versy, satisfies neither environmentalists nor the development community.9 Housing
developers argue, for instance, that imposing expensive mitigation requirements on
heavily developed areas where the ecological productivity of wetlands will be limited
makes little sense. They suggest that offsite mitigation measures should be permitted,
allowing for the more cost-effective and ecologically beneficial restoration of former
wetlands in agricultural areas (Henry, 1992).
While the controversy surrounding wetlands regulation raises familiar questions about the
balancing of environmental and economic considerations, it also underscores the impor-
tance of establishing clear regulatory goals and procedures. Although wetlands regulation
inherently involves delays and imposes other costs (for example, delineation studies must
be performed by specialized environmental consultants), developers can adapt and econo-
mize when they are presented with consistent regulatory requirements.10 Perpetual regula-
tory confusion, on the other hand, results in unnecessary costs and risks that serve neither
environmental nor housing development objectives.
Braconi
90 Cityscape
Coastal Zone Management
Layers of environmental regulation frequently overlap, increasing their complexity and
raising the cost of housing development. For example, under the Coastal Zone Manage-
ment Act of 1972 (CZMA), administered by the National Oceanic and Atmospheric
Administration (NOAA), States are encouraged to establish programs for managing their
coastal zones. Of the 35 eligible States and territories, 32 have established NOAA-approved
programs or are in the process of adopting them (New York City Housing Partnership,
1992).
CZMA is a voluntary program that does not mandate specific environmental or land use
standards. The major incentives for States to participate are Federal grants-in-aid and the
Act’s requirement that Federal agencies undertake only those actions that are consistent
with coastal management programs. In most participating States, the coastal program
consists of general policies and processes to guide implementation of local coastal devel-
opment programs, and there are no significant regulatory burdens on housing developers.
Several States, however, have created powerful regulatory entities that impose significant
constraints on coastal development.
New Jersey, for example, linked its CZMA program to its Coastal Area Facility Review
Act (CAFRA), which gives its environmental protection department strong regulatory
powers over a coastal zone encompassing 17 percent of the State’s land area and most of
its urban population. The program subjects all housing developments of 25 or more units
to special design and mitigation standards and all planned unit developments to full plan-
ning reviews by the State agency. California, similarly, linked its CZMA plan to the
California Coastal Zone Conservation Act, placing virtually all development in a zone
that reaches as far as 5 miles inland for the length of the coast under the jurisdiction of the
California Coastal Commission. Nearly all construction in the zone requires a permit from
the Commission and is reviewed for consistency with the California Coastal Plan. The
plan has been vigorously attacked by economists and others for its alleged exclusionary
intent and its adverse effect on housing costs and economic development (Institute for
Contemporary Studies, 1976). The Commission was the defendant in one of the U.S.
Supreme Court’s most important property rights rulings of recent years.11
Disputes regarding land regulation in coastal zones are often associated with luxury or
vacation homes and seem to bear little relevance to affordable housing, but with more
than one-half of the Nation’s population residing in coastal counties, moderate-income
neighborhoods subject to these regulations can be identified in every coastal State. Never-
theless, States have important ecological, esthetic, and economic reasons for regulating
coastal development. With a few exceptions, coastal zone regulations are neither exten-
sive nor onerous. As with pine barrens protection or floodplain restrictions, however,
these regulations are representative of the way environmental restrictions can overlap,
making the housing development process more complex and uncertain.
Environmental Standards and the “Hard” Costs of Housing
Development
Environmental review procedures may sometimes lead to the termination of a housing
project because its adverse impacts are judged to be too severe. More often, project
approval is conditioned upon the developer’s willingness to implement mitigation mea-
sures identified through the review process. Such requirements can raise the cost of housing
Environmental Regulation and Housing Affordability
Cityscape 91
development by introducing design complexities, by mandating the provision of public
parks or other onsite public facilities, or by requiring upgrades of related public infra-
structure. Initially borne by the developer, these costs are usually passed on to the
homebuyer or renter.
Clean Air and Water
In an urban context, mitigation expenses arising from general environmental concerns are
often minor. The Clean Air Act of 1970 (CAA), for example, requires specific mitigation
measures for industry but not for housing, and the incremental automobile travel gener-
ated by modest infill housing is usually insignificant relative to a city’s total traffic vol-
ume. Only when major urban redevelopment projects are contemplated or subdivisions of
substantial size are planned for low-density areas do air pollution concerns involve major
mitigation expenses.
Nevertheless, some environmental mitigation requirements can add significantly to the
construction costs of housing. For example, water quality concerns have resulted in a
potentially serious new burden on housing construction. In cities where storm sewers
are integrated with municipal waste treatment works, storm water surges can overload
treatment plants and cause untreated effluent to be discharged into waterways. Those
discharges have long been regulated under FWPCA. New York City, for example,
has attempted to address its sewer overflow problem by proposing a series of massive
surface and underground holding ponds. Frustrated by engineering complexities and
community opposition to that strategy, the city has looked toward onsite methods of
controlling runoff. Based on that approach, the developer of a federally assisted elderly
housing project in the Bronx was required to provide an 800-cubic-yard underground
holding tank as a condition for obtaining a sewer connection permit. The cost of creating
the holding tank, which required excavation in igneous bedrock, added about $4,500 to
the cost of each of the project’s 75 dwelling units. Similar mitigation costs may soon be
imposed on housing in cities with separate storm water and sewage treatment systems.
Because storm water runoff picks up various toxic substances and pollutants in developed
areas before being discharged, EPA has stepped up its efforts to regulate such discharges
(Crawford, 1991).
Site Contamination
Another environmental statute that has a universal effect on hard development costs is
the Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), the funding arm of which is called Superfund. Because of the potentially
staggering cleanup liabilities that may be assessed against owners—even “innocent
landowners”—of sites contaminated by toxic wastes under CERCLA (Smith, 1993),
an entirely new consideration has been added to the development process.
Although lenders are not generally held liable for cleanup costs of contaminated sites,
they risk liability if they foreclose on a project (Harvard Law Review, 1991; Kass and
Gerrard, 1991, 1993). Furthermore, unforeseen cleanup costs can destroy prospects for
a successful project, thus imperiling loans. Consequently, lenders now require due dili-
gence procedures for detecting toxic waste problems as a condition for granting loans.
Environmental site assessments typically involve a two-phase process. In Phase I, a
search of public and private documents is performed to ascertain whether a site has had
any history of uses that may have resulted in toxic contamination. These searches usually
Braconi
92 Cityscape
cost about $2,000, which does not add significantly to the cost of a dwelling unit in an
apartment building or planned development. However, if the Phase I search indicates
potential problems, a Phase II test involving chemical testing of soil and groundwater is
necessary. Phase II tests often cost up to $30,000, adding materially to development costs
even if the results indicate no toxic contamination. If serious site contamination is found,
the cost of remediation can range from a few thousand dollars to tens of millions of dol-
lars, depending on the nature and extent of the contamination. Obviously, remediation
costs will determine whether development is more expensive than initially anticipated,
and the project may be abandoned altogether.
The need to address potentially hazardous site conditions presents difficult problems for
urban redevelopment. CERCLA has stimulated private environmental site assessments
that protect the safety of future residents and protect developers and lenders from poten-
tially disastrous investments. However, Superfund provides Federal funding for cleanup
of only the approximately 1,200 highly toxic sites on the National Priorities List, a small
portion of the 300,000 contaminated sites believed to exist. In urban areas in particular,
many former industrial sites are not severely contaminated and could be used for afford-
able housing or economic development projects if properly treated. If they are to be
redeveloped, either the residents must pay higher purchase prices or rents or the local
government must assume the cost of cleaning up the sites. In many cases, in fact, the
municipal government owns the site as a result of abandonment, tax delinquency, or
condemnation (Steinzor, 1990). Theoretically, the local government could sue under
CERCLA to recover remediation costs from the responsible parties, but a lawsuit is an
expensive and time-consuming approach and, in many cases, the responsible parties no
longer exist. Because an effective funding mechanism for cleanup is lacking, sites other-
wise viable for redevelopment lie fallow, and community revitalization goes unrealized.
Radon
Not all hazardous site conditions are the result of human activities. During the 1970s and
1980s, it became apparent that naturally occurring radon gas poses a health threat to resi-
dents of homes subject to indoor buildup of the gas. Radon gas is produced by the decay
of radium-226, a radioactive element found in many types of soil and rock. Such soil and
rock are found most often in Florida12 and throughout a geologic formation that stretches
through Pennsylvania, New Jersey, and New York, although they also occur in isolated
contexts throughout the Nation. EPA estimates that from 7,000 to 30,000 lung cancer
deaths a year are attributable to radon exposure,13 although these estimates have been
contested by some radiation health specialists (Schneider, 1993). EPA has established an
action level for indoor radon exposure of 4 picocuries per liter and estimates that 6 million
American homes have average levels exceeding that limit.
The Federal Government first became involved in the issue of radon gas contamination
through the 1986 amendments to CERCLA. Title IV of the act directed EPA to establish
a program of research on radon gas and indoor air quality and directed EPA and HUD
cooperatively to develop methods of assessing potential radon contamination in new con-
struction and to devise measures to avoid indoor air pollution. The Act authorized $5
million for each of the subsequent 3 fiscal years to implement the program. In 1988 the
Indoor Radon Abatement Act (IRAA, Title III of the Toxic Substances Control Act)
expanded Federal involvement by directing EPA to: establish a voluntary proficiency
program for rating testing methods, devices, and contractors; develop model construction
standards and techniques for controlling radon levels; and provide technical assistance
and grants to States with radon mitigation programs. The Act authorized grants totalling
Environmental Regulation and Housing Affordability
Cityscape 93
$10 million for each of the ensuing 3 fiscal years, with State matching requirements of
25, 40, and 50 percent, respectively. Prior to the Federal grant program, only four States—
Florida, New Jersey, New York, and Pennsylvania—had what EPA termed extensive
radon programs, and only New Jersey provided financial assistance for radon mitigation
(U.S. Environmental Protection Agency, 1989). By 1993 all 50 States had some type of
radon mitigation.
In 1988 an amendment to the Stewart B. McKinney Homeless Assistance Act required
that HUD develop and recommend to Congress a policy for dealing with radon contami-
nation in HUD-held housing; public and Indian housing; and housing assisted through the
Section 8, Section 236, and Section 221(d)(3) programs. The amendment directed HUD
to submit a report describing its recommended policy 1 year after the law took effect.
That report ultimately became a source of friction between HUD, EPA, and Congress.
When HUD submitted the report in mid-1991, it recommended an additional 4 years of
research and evaluation of radon risks and mitigation measures for row houses and for
low-rise and high-rise apartment buildings—housing forms that compose the majority of
the 2.9 million units subject to the requirements of the McKinney Act amendment.
HUD’s position was that virtually all scientific knowledge up to that point pertained to
single-family detached housing and that it would be imprudent to base a radon program
for other housing forms on that knowledge. EPA disputed HUD’s assessment of the avail-
ability of radon gas testing and mitigation measures, and a U.S. General Accounting Of-
fice report prepared at the request of the Senate Committee on Environment and Public
Works concluded that HUD’s proposed policy did not meet the requirements of the
McKinney Act amendment. HUD subsequently conducted a series of demonstration
projects to identify the most appropriate testing and mitigation measures, but no compre-
hensive policy was recommended.
As required by IRAA, EPA issued model construction standards for radon-resistant new
residential construction in 1993. Developed in conjunction with the National Association
of Home Builders and other private groups and State agencies, the model standards
emphasize preventing radon entry by using less-porous foundation construction materi-
als, improving sealing, and diverting radon entry with sub-slab ventilation systems U.S.
Environmental Protection Agency, 1994). Similar codes have been adopted by the States
of Washington and New Jersey for new construction in high-risk areas.
During the past several years, Congress has tried unsuccessfully to reauthorize and
expand IRAA. Several bills have included provisions to require radon testing of all homes
in radon priority areas that will be sold with Federal assistance (Federal Housing Admin-
istration, Veterans Administration, and Rural Housing Service), and a provision that all
federally assisted housing built in radon priority areas be built to EPA Model Construc-
tion Standards. Home builder and Realtor groups opposed those provisions, arguing that
short-term tests made prior to sale can be scientifically misleading, that radon standards
for new construction are better left to State and local authorities, and that legislative defi-
nitions of “radon priority areas” would establish exposure triggers at levels well below
those scientifically justifiable at present.14
Efforts to develop a national radon testing and mitigation policy have foundered on the
familiar problems of incomplete scientific evidence and cost allocation. Mitigation meas-
ures are believed to be fairly effective at costs ranging from $500 to $2,500 per dwelling,
depending on the type of construction (new or retrofit) and the type of structure. How-
ever, the testing of every home—as EPA recommends—and mitigation in about 1 in 15
homes, are multibillion-dollar endeavors. HUD appears to have been reluctant to embark
on a major radon mitigation program without complete scientific evaluation of health
Braconi
94 Cityscape
risks and alternative remediation techniques, and Congress has shied away from any sug-
gestion of new Federal financing for mitigation programs. IRAA specifically precluded
States from using Federal grants for mitigation assistance.
Asbestos
Asbestos, a fibrous mineral widely used in construction materials because of its flame-
resistant properties, is another source of indoor air pollution that has had a profound
impact on housing, particularly on rehabilitation practices. Since the early 1900s, chronic
exposure has been a known cause of asbestosis (a form of pneumoconiosis) in asbestos
miners, and during the 1950s and 1960s the mineral was linked to a variety of other lung
diseases, including cancer. Although medical opinion of the effects of exposure to various
types of asbestos in nonoccupational settings is still divided,15 a flood of personal liability
suits against asbestos manufacturers and others during the 1960s precipitated a panic
among property managers whose buildings contained asbestos. Many of them hastily
removed asbestos-containing materials (ACMs) to protect the health of tenants, to avoid
future liability suits, or in anticipation of regulations that were expected to increase the
cost of removal. Research results now show that intact ACMs are generally better left in
place and that careless removal can increase health risks for building occupants.
Two Federal agencies—EPA and the Occupational Safety and Health Administration
(OSHA)—are heavily involved in asbestos regulation. EPA’s regulatory powers stem
from CAA. Asbestos regulations were initially promulgated in 1971 as part of the
National Emission Standard for Hazardous Air Pollutants (NESHAP). Those regulations
required building owners to: notify EPA before demolishing or renovating a building if
a given amount of asbestos would be disturbed; comply with a “no visible emissions”
standard during alterations; and dispose of the materials in landfills meeting certain stan-
dards. In 1990 EPA revised and strengthened its asbestos regulations,16 providing greater
specificity of emission control techniques and adding new requirements for predemolition
surveys, worker training, and supervision. Pursuant to its authority under the Toxic Sub-
stances Control Act, EPA also instituted a phased ban on the manufacture and import of
virtually all ACMs in 1989, but a U.S. Court of Appeals decision overturned the ban
in 1991.
ACMs are subject to even more rigorous regulation by OSHA. Although OSHA has regu-
lated worker exposure to asbestos since 1971, the agency did not promulgate separate
standards applicable to the construction industry until 1986. Those rules were challenged
by both labor unions and industry, and a lengthy period of litigation and rulemaking fol-
lowed. In 1994 OSHA issued final rules governing occupational exposure to asbestos in
construction and general industry.17 The final rules define four classes of activities that
trigger specific worker safety provisions. The most stringent safeguards apply to Class I
activities, which include the removal of sprayed-on or trowelled surfacing materials or the
removal of thermal-system insulation, such as that commonly applied to pipes, boilers,
tanks, and ducts. Class II activities involve removal of other ACMs, such as floor or ceil-
ing tiles, siding, and roofing. Class III activities involve the incidental cutting away of
small amounts of ACMs, while Class IV activities relate to maintenance and custodial
activities, such as polishing floors containing asbestos or changing light bulbs in fixtures
attached to ACMs. The regulations prescribe a complex matrix of compliance measures
for activities in each category—including the use of high-efficiency particulate air
(HEPA) vacuums and ventilation systems, respirators, protective clothing, and isolation
methods—and set standards for worker training and supervision.
Environmental Regulation and Housing Affordability
Cityscape 95
While regulation by EPA, OSHA, and similar State and local agencies has had some
effect on the cost of new construction, the impact is far greater on the cost of renovating
and rehabilitating older buildings. In the low-rise apartment buildings often found in older
metropolitan areas, ACMs are usually found in insulation for boiler and steam pipes or in
roofing materials. The cost of removing these materials according to regulatory standards
usually ranges from $10,000 to $20,000. If the structure contains 10 or more dwelling
units, the cost is substantial but not prohibitive. However, asbestos removal can be a sig-
nificant obstacle to the rehabilitation of smaller buildings, which must have the removal
costs spread among fewer units. Housing renovators also believe that the cost will esca-
late as buildings constructed during the 1960s and 1970s require rehabilitation, since
ACMs are more pervasive in those buildings.
Historic Preservation
In older inner cities, historic preservation requirements can also complicate efforts to
develop or restore affordable housing. Motivated by a desire to preserve the best aspects
of the built environment, historic preservation requirements can have a number of positive
effects. Preserving architecturally or historically distinctive neighborhoods in declining
cities can protect urban assets that will be instrumental in promoting revitalization. Preser-
vation can also help to retain a nucleus of upper- and middle-income residents, to the
benefit of the city’s tax base and socioeconomic health.
Nonetheless, historic preservation does present certain problems for urban redevelopment.
In cities with large or numerous historic districts, housing providers are subject to an
additional layer of regulation that can be quite rigid and adds to the administrative costs
of developing or rehabilitating housing. Moreover, historic preservation requirements
can add significantly to the hard costs of housing maintenance and rehabilitation (Wylde,
1992). For example, standards for historic rehabilitation issued by the Secretary of the
Interior in conjunction with the Historic Preservation Tax Credit encourage repair rather
than replacement of a structure’s original components and fidelity to the original materials
and craftsmanship—practices that inevitably add to the cost of the project. Those stan-
dards are widely followed by State and local preservation offices, even when tax credits
are not involved.
The additional cost associated with historic preservation makes it more difficult for hous-
ing rehabilitators in historic districts to conform to cost limitations in housing assistance
programs, with the perverse result that historic buildings are usually the last, rather than
the first, structures to be rehabilitated in redeveloping neighborhoods.18 Fortunately, a
number of States and municipalities have begun to implement programs to help defray
preservation costs, usually through the use of tax incentives.
Environmental Standards and the Cost of Operating Housing
Through elaborate review procedures, excessive litigation, land use restrictions, and
contaminant screening and remediation, environmental regulation can raise the cost and
decrease the supply of new housing. Furthermore, environmental impacts on housing do
not end there. The housing community is becoming alarmed increasingly by the burden
environmental regulation places on housing management. This burden not only adds to
the carrying costs of new housing but often falls disproportionately on the older, most
vulnerable elements of the housing stock.
Braconi
96 Cityscape
Unfunded Mandates
The environmental movement’s achievements of the 1970s—CAA, the Water Pollution
Control Act Amendments, the Toxic Substances Control Act, the Resource Recovery
and Conservation Act of 1976 (RCRA), and Superfund—helped to arrest a centuries-long
process of environmental degradation. While imposing new standards and practices, those
laws were often accompanied by massive commitments of Federal funds to assist States
and localities in implementing programs. During the 1980s and 1990s, however, the
Federal Government continued to impose environmental mandates while reducing its
financial assistance.
It is an aspect of American federalism that the burden of fulfilling those “unfunded man-
dates” falls disproportionately upon the Nation’s housing stock. Although the Federal
Government has an array of funding options that are broadly based and neutral among
sectors of the economy, State and local governments (particularly the latter) must operate
within a more constrained fiscal environment. Few local governments have the legal
authority to levy personal or corporate income taxes and are precluded by State law
or State revenue priority from raising significant revenues from sales and excise taxes.
They are also inhibited by interjurisdictional competitive pressures; raising sales taxes or
imposing fees on polluting activities, for example, may simply divert jobs and tax revenue
to neighboring jurisdictions. Consequently, localities are forced to finance unfunded man-
dates through their traditional “captive” sources—property taxes and user fees. By their
very nature, these sources are essentially housing taxes that raise the cost of shelter
relative to the cost of other goods and services.
Table 4
Growth in Local Government Revenue, 1983–1993
Annual Percentage Change
Total Revenue: All sources 7.5
Federal Government –0.5
Property taxes 8.0
Water supply fees 8.1
Sewerage fees 11.3
Solid waste fees 15.6
Source:
Bureau of the Census, U.S. Department of Commerce
The case of water pollution is instructive. The Nation’s fundamental policy on water qual-
ity was set by the Water Pollution Control Act Amendments of 1972 and 1977, which set
ambitious goals for water quality and established mechanisms for Federal regulation of
pollution discharge from municipal sewerage facilities. The 1972 legislation, however,
authorized more than $20 billion in Federal construction grants for treatment works over
the following 3 years. State and, particularly, local spending on sewerage systems, exclu-
sive of Federal spending, rose from $17.5 billion between 1962 and 1971 to $40 billion
during the 1972–81 period (Bureau of the Census, various editions). Federal spending for
pollution control (mainly in the form of planning and construction grants to localities)
increased from $2 billion to $34 billion during these same periods (U.S Office of Manage-
ment and Budget, 1993), soaring from 12 percent of State and local sewerage expenses to
47 percent. In the 1982–91 period, the situation reversed dramatically: State and local
spending grew to $106 billion while Federal spending decreased in real terms, falling to
Environmental Regulation and Housing Affordability
Cityscape 97
30 percent of the total. In 1990 EPA projected that local government spending on water
quality would increase by 70 percent in real dollars during the ensuing decade (U.S. Envi-
ronmental Protection Agency, May 1990).
A similar situation prevails with regard to public water supply systems. The Safe Water
Drinking Act of 1974, its 1986 amendments, and its implementing regulations established
national standards for drinking water contaminants, requirements for monitoring drinking
water quality, and criteria for determining which of the systems that rely on surface water
must filter their supplies. As a result, local spending on water supply systems has been
growing at a real annual rate of better than 3 percent, and that is expected to accelerate
(U.S. EPA, May 1990). Although EPA is authorized to pay up to 75 percent of the cost
of administering State programs, its actual contribution has been much less (U.S. General
Accounting Office, May 1994), and there is no capital assistance program specifically for
local water supplies.
These mandates have put great stress on integrated municipal water supply and sewerage
systems and the housing stock that pays for them. Most systems are financed through user
fees (Federal capital assistance requires dedicated revenue sources), from which local
collections grew at an annual rate of 9.3 percent from 1983 to 1993—well above the 7.5
percent annual increase in all local government revenue (U.S. Environmental Protection
Agency, May 1990). While the costs have placed a particularly heavy burden on small
communities that lack economies of scale and technical expertise, they also affect large
cities with many poor households concentrated in economically marginal multifamily
housing. Apartment buildings that house low-income households are particularly vulner-
able, because there is no technically feasible way to submeter water in order to encourage
conservation, and little money is available to repair inefficient plumbing systems. In New
York City, low-income buildings that have been metered have incurred annual water and
sewer charges of up to $800 per apartment. Rising water fees are believed to be a major
factor behind a recent upsurge in tax arrears and foreclosures (Citizens Housing and Plan-
ning Council, 1993).
Local governments also face a growing solid waste management problem. Because of
increased waste generation, growing opposition from potential host communities limiting
the siting of new landfills and incinerators, and capital costs rising as a result of safeguards
mandated by RCRA, municipal solid waste expenditures have been rising more than 10
percent a year (Bureau of the Census, various editions). Whether financed through user
fees or property taxes, solid waste costs billed to residences have been one of the fastest-
growing components of shelter costs. Although recycling programs offer the promise of
revenue offsets, the fiscal benefits of recycling have thus far been unrealized.
User fees and property taxes that finance municipal water supply, waste water treatment,
and solid waste disposal operations are levied primarily on the housing stock. In the case
of rental housing, all of the fees and taxes are reflected in monthly rents. For homeowners,
whether they pay property taxes and other fees directly or through their mortgage pay-
ments, the costs must be factored in as part of the carrying costs of housing. In either case,
the incidence of these environmental costs raises the price of housing relative to other
goods and services, making housing less affordable.
Lead Paint
Recent concern with the environmental safety of housing has created serious new problems
for housing providers. As discussed above, resident exposure to radon in some areas of the
country has generated health fears and necessitated expensive retrofitting of existing housing.
Braconi
98 Cityscape
Likewise, recognition of the health dangers of asbestos has led to Federal, State, and local
regulations governing its removal and has raised substantially the cost of performing
some types of housing renovation. But growing concern about household exposure to lead
poses perhaps the greatest danger for the Nation’s affordable housing stock.
Ingestion of lead is known to cause severe, irreversible neurological damage to young
children that results in learning disabilities, behavioral problems, and other serious health
conditions. The most severe instances of childhood lead poisoning occur when children
chew or swallow chips of lead-based paint. For both economic and health reasons, the
paint industry gradually reduced the lead content of its products between 1940 and 1960,
and the interstate shipment of lead-based paint was eventually banned by the Consumer
Products Safety Commission. The Lead-Based Paint Poisoning Act of 1971 (LBPPA)
prohibited the use of lead-based paint in federally assisted housing, provided money for
educational and screening programs, and authorized the use of Federal funds for research
and development programs. The Act also authorized Federal grants for abatement of lead
hazards in privately owned housing, but appropriations were never made and the provi-
sion was repealed in 1982. Most States and municipalities also have enacted laws regulat-
ing the use of lead-based paint and the abatement of hazardous conditions. As early as the
1950s, Baltimore and New York City adopted local laws empowering their health depart-
ments to order the removal of lead-based paint from homes.19
A persistent issue in addressing the lead poisoning problem has been determining the
level of remediation required. LBPPA was amended in 1973 to require HUD to establish
procedures for eliminating lead-based paint hazards from existing housing covered by
an application for Federal mortgage insurance or housing assistance payments. In 1983
LBPPA implementing regulations that limited the definition of hazardous conditions to
paint that is peeling, scaling, or chipping were found by a Federal court to be inconsistent
with congressional intent, and the Department was ordered to redraft the regulations to a
higher standard.20 Similar legal conflicts have occurred at State and local levels.
Central to the dispute about abatement practices has been the issue of cost. Housing
providers have maintained that complete removal of lead-based paint from structures is
prohibitively expensive; they urge less costly remediation measures, including repairing
damaged walls and friction surfaces, repainting, and dust vacuuming, with efforts con-
centrated on high-risk housing. That position has been vindicated by the recognition that
certain remediation techniques, such as scraping painted surfaces, may create more haz-
ards than they cure, necessitating much more elaborate and expensive abatement practices
(U.S. General Accounting Office, 1994).
Inhalation of lead dust created by routine friction on painted surfaces and ingestion of
lead-contaminated soil are now believed to play a role in lead poisoning. These new fears
about even low-level lead exposure have caused another flurry of legislative and regula-
tory activity. The Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X
of the Housing and Community Development Act of 1992) reflects this concern. Title X
directs EPA to define hazardous levels of lead in paint, household dust, and soil; to pro-
mulgate standards for performing inspection and abatement activities; and to design
guidelines for avoiding lead-based paint hazards in performing renovation and remodeling
activities. EPA missed its legislatively mandated deadlines for setting the standards, but
the general direction of both Federal and State efforts appears to be toward the use of
rigorous safety precautions when performing lead hazard abatement. Thus previous esti-
mates of the cost of complete lead-based paint removal now appear conservative.
Environmental Regulation and Housing Affordability
Cityscape 99
New York City’s housing agency has found that complete removal of lead-based paint—
which usually involves replacing all sheetrock, cabinets, windows, and doors, as well as
resurfacing floors—costs between $15,000 and $25,000 per dwelling unit. This amount is
consistent with the costs incurred by other cities. Title X authorized appropriations of
$375 million over 2 fiscal years for grants to identify and abate lead hazards in assisted
and private housing; $140 million was appropriated in fiscal year 1994. Philadelphia,
using Title X and CDBG funds, is implementing a program to address lead problems in
approximately 400 owner-occupied homes in which resident children have been poisoned
by lead-based paint. The cost is about $19,000 per home (Journal of Housing, March/
April, 1994). Baltimore has undertaken a similar effort at a cost of about $15,000 per
dwelling (Goldreich, 1994). Given such costs, the total Title X authorization could fully
remove lead-based paint from approximately 35,000 of the Nation’s 50 million dwellings
built before 1960.
Because the cost of full lead-based paint removal may exceed the value of many proper-
ties that house low-income residents, requiring full removal could trigger a new wave
of inner-city housing abandonment like that experienced during the 1970s. Complicating
matters are the mounting number of lead-poisoning liability claims and the resulting
unwillingness of insurers to issue liability policies for low-income housing that may con-
tain lead-based paint. Caught between the public’s concern about lead-poisoning risks
and the economic realities of operating low- and moderate-income housing, many in the
housing community feel that they are holding a ticking time bomb.
Conclusion: Cooperation for Progress
The environmental regulations discussed in this article grew out of important—even
urgent—ecological and health concerns. Individually, few of the regulations place an
undue burden on housing providers,21 but cumulatively they have had a profound effect
on the development, management, and, ultimately, the cost of housing. To the degree that
sounder development patterns and practices have evolved and safer housing has been
built, those effects are to be welcomed. But if the associated costs inhibit the regeneration
of inner-city communities or prevent working families from attaining the economic secu-
rity of homeownership, the regulations are a cause for concern.
It is sometimes easy to underestimate the impact of costs that are not readily quantifiable.
Part of the problem in assessing the economic impact of environmental regulation on
housing is that rarely, if ever, do all environmental considerations converge at a single
point; they may be negligible in some cases and prohibitive in others. It is impossible
to quantify the impact of environmental regulations on the cost of building 2 million
housing units in 50 States with thousands of regulatory, geographical, and market vari-
ables. Similarly, the effect of environmental regulation on the operation of 100 million
existing housing units defies quantification. Nevertheless, the aggregate data are sugges-
tive. From 1963 to 1993, a period spanning the growth of modern environmental regula-
tion, the relative price of shelter increased by 26 percent while the relative price of energy
decreased by 1 percent, transportation by 11 percent, and all commodities by 18 percent.22
Such figures do not prove cause and effect, but they certainly indicate a need for further
inquiry.
The housing community, like any other industry, must shoulder its fair share of the
cost of protecting the natural environment. Housing development that directly causes
environmental degradation, such as the filling of valuable wetlands, should be prevented
or made to absorb the necessary mitigation costs. However, requiring the housing sector
to finance a disproportionate share of society’s general environmental expense is not
Braconi
100 Cityscape
justified. Imposing the costs of drinking water filtration, sewage treatment facilities,
or solid waste disposal upon housing through property taxes, user fees, or impact fees, is
purely a result of intergovernmental politics. Likewise, there is no legitimate reason to
allow environmental review procedures to become unnecessarily complex or confusing,
or to let them become mechanisms for litigating grievances that are unrelated to authentic
environmental concerns.
Ironically, some environmental policies affecting housing encourage degradation rather
than protection of the environment. It has been widely noted, for instance, that local
growth controls can promote suburban sprawl, generating an increased amount of traffic
congestion and air pollution. Likewise, other environmental policies may discourage
high-density housing and more efficient urban lifestyles. Imposing user fees for water,
sewer services, or solid waste disposal on homeowners can encourage conservation and
may be economically neutral. However, because no practical way has been devised to
charge individual residents of multifamily housing for these services, there are no incen-
tives for conservation. The charges simply raise the cost of operating high-density hous-
ing and impede the revitalization of inner cities.
Environmentalists and affordable housing providers sense that they are entering a difficult
era. The halcyon days of the 1960s and early 1970s, when Congress readily enacted land-
mark environmental legislation, embarked on the War on Poverty, envisioned model
cities, and provided funding for all of the programs, have ended. If further progress is to
be made in protecting the environment and improving housing conditions, professionals
in both fields must work to restore the spirit of cooperation that prevailed in earlier years.
They must identify ways to administer environmental regulations more effectively, to
share environmental costs more appropriately, and to locate legislative opportunities that
will advance mutual interests.
Streamlining Administration
There are several areas in which housing providers and environmentalists might cooperate
in promoting more effective and expeditious regulation. One obvious area is the need for
adequate staffing of environmental review offices. In periods of fiscal stringency, govern-
ment agencies tend to cut back on the least-visible services. Such cutbacks often translate
into a shortage of professional staff trained to perform environmental reviews and a result-
ing backlog of permit applications. When economic conditions improve, increased staff-
ing often lags behind new building activity, costing developers critical months in the
business cycle and increasing political pressure on review officials to perform hasty envi-
ronmental analyses. Likewise, there are numerous opportunities at the State and local
levels for overlapping regulatory responsibilities to be consolidated so that environmental
determinations can be made in a more definitive and timely manner.
Environmentalists and housing providers also have a mutual interest in working toward
early and definitive clarification of regulatory processes and intent. Regulatory confusion,
such as has prevailed regarding wetlands regulation, frustrates environmental and devel-
opment objectives and unnecessarily increases discord. Most responsible developers will
adapt to clear and consistent regulatory constraints. Frictions are most likely to arise when
the ground rules change in midstream. Because establishing clear and appropriate regula-
tory parameters often depends on accurate scientific information, environmental and
housing professionals also need to cooperate in supporting funding for adequate environ-
mental and medical research. Environmentalists will recognize that unnecessarily strict
regulatory standards can squander valuable political capital and misallocate organizational
Environmental Regulation and Housing Affordability
Cityscape 101
resources, while housing professionals have learned that standards that are too lax invari-
ably result in more onerous expenses at a later time. Better and earlier research can help
all interests coalesce around reasonable standards and mitigation measures.
The environmental and housing communities should seek to focus environmental laws
and regulations more directly on matters affecting the natural environment or individual
safety. A gradual expansion of the scope of environmental regulation and increasingly
frequent use of environmental laws to litigate broad political grievances will ultimately
undermine the legitimacy of statutes protective of the natural environment. Moreover, as
case law evolves further from the original intent of environmental statutes and as the
composition of courts changes, the laws’ efficacy in fulfilling their original purposes
becomes less certain.
Allocation of Costs
Many housing and community development professionals are uncomfortable with cur-
rent congressional efforts to impose legislative restrictions on “unfunded mandates,”
recognizing that many of those mandates have served to advance important social goals.
However, these professionals are also increasingly frustrated that they must devote so
much of their time and resources to fulfilling those mandates rather than carrying out
their primary missions. Their frustrations are heightened when the mandates appear to be
of a “one-size-fits-all” design that requires expenditures seemingly unrelated to local
conditions. The movement of some national urban coalitions from strong support of
environmental legislation to outspoken backing of limitations on unfunded mandates
should be taken as a signal that a threshold has been crossed.
If environmental, housing, and community development interests are to renew the partner-
ship that once existed, there must be greater sensitivity to local differences and greater
awareness of the ultimate fiscal impact of Federal mandates. It must be recognized that no
mandates are truly unfunded—the funding source is simply implicit, and the incidence is
usually quite predictable. It is entirely appropriate that local officials resist Federal man-
dates that will inevitably exacerbate their fiscal problems, and that they be joined by hous-
ing providers and homeowners who ultimately finance the services through user fees and
property taxes.
More attention must also be paid to the equity of cost allocation among private interests.
Powerful and cohesive institutional interests will be able to mobilize quickly to shift cost
burdens onto the less well organized, but there is also power in numbers. Environmental
organizations must include fiscal information in their public education campaigns so that
voters are made more aware of who will bear environmental costs. The housing and
development community can assist, particularly in the early stages of the legislative process,
by ensuring that industries or activities responsible for environmental degradation are held
accountable. For example, the cost of municipal solid waste disposal—and the resulting
taxes and fees on housing—is soaring, largely because we have been politically unwilling
to assess the contents of packaging materials, junk mail, and other items that fill municipal
landfills and recover the true environmental costs from the manufacturers. Consumers
must be taught to recognize that their property taxes pay for the proliferation of such
waste.
Finally, there must be recognition of the fact that unfunded environmental requirements may
be meaningless, or even counterproductive. For example, forcing older, economically mar-
ginal housing to bear the full cost of lead paint remediation will eliminate the hazard only by
eliminating the housing, resulting in a much higher cost to society. Effective environmental
Braconi
102 Cityscape
legislation must incorporate funding mechanisms consistent with its regulatory objectives,
and housing constituencies need to be enlisted in efforts to achieve this goal.
Legislative Collaboration
Many of the environmental costs borne by today’s housing industry are the result of past
environmental ignorance or dereliction. Dangerous substances such as lead and asbestos
were originally used in homes to increase quality and safety, not to harm residents. Like-
wise, toxic site conditions are a significant concern for housing providers today because
environmental controls were lacking in the past. It would seem that the environmental and
housing communities often share interests that are compatible over the long term. Efforts
to prevent industrial pollution before it becomes a land-use obstacle and to test materials
rigorously for their environmental safety before they are widely installed in housing can
help prevent a repetition of past errors.
Environmental and housing professionals should seek opportunities to pursue mutual
legislative goals, a number of which are readily identifiable. For example, laws requiring
that certain products contain specific percentages of recycled materials can support mar-
kets for recovered materials and help offset municipal solid waste expenses. Likewise,
stricter standards or higher excise taxes on automotive fluids can reduce the toxicity of
municipal storm water runoff or help defray the cost of treatment. As housing providers
and other urban interests become more concerned about the cost of fulfilling environmen-
tal requirements, they will grow more receptive to participation in legislative efforts
aimed at a more equitable distribution of those costs.
Finally, there is a need for reaffirmation at high political levels of the essential compat-
ibility between environmental and urban redevelopment goals. High housing costs in
urbanized areas are a prime stimulus for the exurban expansion that contributes to envi-
ronmentally destructive land use and transportation patterns. Policies that enhance
the economic attractiveness of urban life will, in the long run, further environmental
objectives.
Author
Frank P. Braconi is executive director of the Citizens Housing and Planning Council of
New York, a nonprofit policy research group. He was a founder of Business Trend Ana-
lysts, a research and consulting firm, and has worked in a variety of capacities related to
real-estate development. He holds a masters degree in economics from New York Univer-
sity, has taught in the Department of Urban Affairs and City Planning at Hunter College,
and is completing his doctorate at the City University of New York.
Notes
1. For a discussion of the role of urban interests in the formulation of environmental
policy, see Protecting the Environment: Politics, Pollution, and Federal Policy,
Advisory Commission on Intergovernmental Relations, 1981.
2. See Coca-Cola Bottling Company of New York v. the Board of Estimates,
536 N.Y.S. 2d, 33 (Ct.App. 1988).
Environmental Regulation and Housing Affordability
Cityscape 103
3. See Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council,
435 U.S. 519, 558 (1978) and Robertson v. Methow Valley Citizens Council, 490
U.S. 332 (1988).
4. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971).
5. For a discussion of the early HUD/NEPA litigation, see Mary E. Brooks, Housing
Equity and Environmental Protection: The Needless Conflict, American Institute of
Planners, 1976.
6. New York’s State Environmental Quality Review Act does not require public
scoping sessions but its Department of Environmental Conservation is developing
regulatory incentives to encourage them; New York City recently adopted regulations
making public scoping mandatory.
7. See Chinese Staff and Workers Association v. City of New York, N.Y. Ct. App.
11–18–86, No. 318.
8. For a history of wetlands regulation and litigation, see E. Manning Seltzer and
Robert E. Steinberg, “Wetlands and Private Development,” Columbia Journal of
Environmental Law, Vol. 12:159, 1987.
9. See Heidi Wendel, “Bersani v. EPA: Toward a Plausible Interpretation of the
404(b)(1) Guidelines for Evaluating Permit Applications for Wetland Development,”
Columbia Journal of Environmental Law, Vol. 15:99, 1990. A thorough guide to the
permit process can be found in New York City Housing Partnership, Resource Guide
to the Land Use and Development Approval Process in New York.
10. For example, the cost of wetlands delineation studies can be reduced by combining
them with other environmental site assessments, such as those needed to guard
against Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA) liability.
11. Nollan v. California Coastal Commission, 483 U.S. 825 (1987).
12. The highest levels in Florida are found in reclaimed phosphate mines from which
radium-226 had not been. Extraction from these mines is now mandated.
13. See Hearing before the Subcommittee on Clean Air and Nuclear Regulation of the
Committee on Environment and Public Works, U.S. Senate, May 25, 1993.
14. See Hearings Before the Subcommittee on Clean Air and Nuclear Regulation of the
Committee on Environment and Public Works, 1993.
15. See American Association for the Advancement of Science, Science, January–
June, 1990.
16. 55 Fed. Reg. 48406.
17. 59 Fed. Reg. 40964.
Braconi
104 Cityscape
18. For a detailed analysis of the interaction between historic preservation regulations
and affordable housing development, see Citizens Housing and Planning Council,
An Affirmative Approach Toward Historic Preservation in New York City, 1995.
19. A history of lead-based paint regulation and litigation can be found in Michele
Gilligan and Deborah Ann Ford, “Investor Response to Lead-Based Paint Abatement
Laws: Legal and Economic Considerations,” Columbia Journal of Environmental
Law, Vol.12:243, 1987.
20. Ashton v. Pierce, 716 F.2d 56 (DC Cir. 1983).
21. The exceptions are soaring water and sewer fees and lead-based paint remediation
costs, which may cause the loss of thousands of units of older inner-city housing.
22. Relative to the CPI for All Items. See Bureau of Labor Statistics, 1974–1994.
References
ACCRA. Third Quarter, 1992. ACCRA Cost of Living Index. Louisville, Kentucky.
Advisory Commission on Intergovernmental Relations (ACIR). 1981. Protecting the
Environment: Politics, Pollution, and Federal Policy. Washington, D.C.
Board of Governors of the Federal Reserve System. 1970–1994. Annual Statistical
Digest. Washington, D.C.
Brooks, Mary E. 1976. Housing Equity and Environmental Protection: The Needless
Conflict. Washington, D.C.: American Institute of Planners.
Bureau of the Census, U.S. Department of Commerce. 1983. 1980 Census of Housing,
Metropolitan Housing Characteristics. Washington, D.C.
_______. 1993. 1990 Census of Housing. Washington, D.C.
_______. 1993. 1990 Census of Housing, Detailed Housing Characteristics.
Washington, D.C.
_______. Various editions. Government Finances. Washington, D.C.
Bureau of Labor Statistics, U.S. Department of Labor. 1974–1994. CPI Detailed Report.
Washington, D.C.
_______. 1964–1994a. Employment and Earnings. Washington, D.C.
_______. 1964–1994b. Producer Price Indexes. Washington, D.C.
Citizens Housing and Planning Council. 1995. An Affirmative Approach
Toward Historic Preservation in New York City. New York.
_______. 1993. Preserving New York’s Low-Income Housing Stock. New York.
Council on Environmental Quality. 1972. Environmental Quality. Washington, D.C.
Environmental Regulation and Housing Affordability
Cityscape 105
_______. Various editions. Environmental Quality. Washington, D.C.
Crawford, Colin. June 1991. “Permits for Stormwater Discharge To Be Required,”
Environmental Law in New York. New York: Matthew Bender.
Gilligan, Michele, and Deborah Ann Ford. 1987. “Investor Response to Lead-Based
Paint Abatement Laws: Legal and Economic Considerations” Columbia Journal of
Environmental Law 12:243.
Goldriech, Samuel. June 17–23, 1994. “Property Owners Battle Economics of Cleaning
Up Lead Paint,” Baltimore Business Journal, 20.
Harvard Law Review. 1991. “Cleaning up the Debris after Fleet Factors: Lender Liability
and CERCLA’s Security Interest Exemption” 104:1249.
Henry, Michael J. July 1992. “Developments in Wetlands Regulations in New York,”
Environmental Law in New York. New York: Matthew Bender.
Institute for Contemporary Studies. 1976. The California Coastal Plan: A Critique.
Journal of Housing. March/April 1994. “City Reports” in Journal of Housing.
Kass, Stephen L., and Michael B. Gerrard. June 25, 1993. “New Worries for Banks,”
New York Law Journal, p. 3, col. 1.
_______. December 27, 1991. “Minimizing Lender Liability,” New York Law Journal,
p. 3, col. 1.
Mossman, B.T., J. Bignon, M. Corn, J.B.L. Gee and A. Seaton. January 19, 1990.
“Asbestos: Scientific Developments and Implications for Public Policy,” Science
247(4940):294.
New York City Housing Partnership. 1992. Resource Guide to the Land Use and
Development Approval Process in New York.
Perlstein, Joel T. 1981. “Substantive Enforcement of the California Environmental
Quality Act,” California Law Review 69:112.
Schneider, Keith. March 24, 1993. “How a Rebellion Over Environmental Rules Grew
From a Patch of Weeds,” The New York Times, p. A16, col. 1.
Seltzer, E. Manning, and Robert E. Steinberg. 1987. “Wetlands and Private
Development,” Columbia Journal of Environmental Law 12:159.
Smith, L. Jager, Jr. 1993. “CERCLA’s Innocent Landowner Defense: Oasis or Mirage?”
Columbia Journal of Environmental Law 18:155.
Steinzor, Rena. Winter 1990. “Local Government and Superfund: Who Will Pay the
Tab?” The Urban Lawyer 22(1):79.
U.S. Department of Commerce. 1993. Statistical Abstract of the United States.
Washington, D.C.
Braconi
106 Cityscape
_______. 1990. “Money Income of Households, Families, and Persons in the United
States,” Current Population Reports. Washington, D.C.
_______. 1974–1994a. “New One Family Homes Sold and for Sale,” Construction
Reports. Washington, D.C.
_______. 1974–1994b.“Characteristics of Apartments Completed,” Current Housing
Reports. Washington, D.C.
U.S. Environmental Protection Agency. 1994. Model Standards and Techniques for Con-
trol of Radon in New Residential Buildings. Washington, D.C.
_______. September 1990. 1989 Summary of State Radon Programs. Washington, D.C.
_______. May 1990. A Preliminary Analysis of the Public Costs of Environmental
Protection: 1981–2000. Washington, D.C.
U.S. General Accounting Office. May 1994. Toxic Substances: Status of EPA’s Efforts
To Develop Lead Hazard Standards. Washington, D.C.
_______. March 1994. Drinking Water: Stronger Efforts Essential for Smaller
Communities to Comply with Standards. Washington, D.C.
_______. November 1991. Wetlands Overview: Federal and State Policies, Legislation
and Programs. Washington, D.C.
U.S. Office of Management and Budget. 1993. Budget of the United States: Historical
Tables. Washington, D.C.
Wendel, Heidi. 1990. “Bersani v. EPA: Toward a Plausible Interpretation of the
404(b)(1) Guidelines for Evaluating Permit Applications for Wetland Development,”
Columbia Journal of Environmental Law 15:99.
Wylde, Kathryn. Autumn 1992. “Albany’s Restoration Redlining,” The City Journal, p. 15.
