More Regulations Means Higher Development Costs

Thursday, December 6, 2018

We have seen this play out a thousand times:  

Elected official:  We need more affordable housing in Chattanooga. 

Developer: We are bringing in affordable housing, just $X,000/month! 

Everyone else: That's not affordable.  

Who's at fault for housing cost being so high? Elected officials that constantly increase regulations, fees, design standards, etc are the ones who essentially increase the cost of the housing. Every additional drawing requiring an engineered drawing adds to the bottom line. Each additional permit or inspection increases the cost. Every new code restriction means additional material or labor costs. The developers and contractors don't seem to mind. Builders work off of a profit margin somewhere around 10-20 percent of actual costs. If the costs increase another $10,000 for erosion control, then they get another $1,000-2000 in their pockets. Big deal right? 

Did you just read that your new home price just went up $12,000? That's right. Developers aren't paying for storm water measures; you are. And each items that increases the house cost or the land development cost moves that needle just a little further north. Every thousand bucks added, puts another ~$10 on the mortgage. We just increase the mortgage $120 with our one item. Do that a few more times and you've put a serious increase on your monthly bills.  

Chattanooga needs to decide if we want to see soaring housing costs and the corrective bust that will ensue. We need to either admit defeat in the affordable housing arena or find a way to keep increasing building regulation in check and reasonable. 

I would urge our City Council to consider this need for balance before wantonly mandating industry debilitating regulations. 

Tim Giordano


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