Impact of Columbia's Unified Development Ordinance on Affordable Housing

By Jim Meyer

Note: This is a conceptual example, the numbers used are believed to be reasonable and representative by the author but have not been rigorously derived.

Situation Developer buys 100 acres to subdivide to create a residential subdivision, recent development regulations would have allowed: 

75% of the land can be developed as lots for houses, the other 25% are stream buffers, storm water mitigation features, roads, etc.

Developer can have many more than 30 houses served by one subdivision entrance.

Developer ends up with 300 lots to sell @ $40,000 each. = $12,000,000 retail price of lots.

In order to borrow money and make a home building project work financially a home builder typically must build a home that sells for approximately 4 times what the lot costs. Therefore, a house on a $40,000 lot will typically have a sales price of around $160,000.

The Unified Development Ordinance takes lots out of production and results in other costs: 

Trees in stream buffers no longer count towards the required saving of 25% of "Climax Forest" so 25 potential lots can no longer be built.

The rule requiring no more than 30 houses be served by one subdivision entrance require more thoroughfares than would have been needed in the past. — 12 more potential lots can no longer be built. Three additional subdivision entrances are also required.

The rule requiring a round-about at every 4-way intersection takes more land than traditional street intersections — 10 more potential lots can no longer be built.

Rules about "steep slopes" (that are not actually steep from a soils science or engineering perspective) restrict building on ground that would have otherwise been buildable — 5 more potential lots can no longer be built.

A total of 52 potential lots are therefore lost — 17% less that what would have been allowed under previous rules. The developer now has only 248 lots to sell.

City staff use their additional discretion under the new development rules to "negotiate" for additional concessions from the developer — fancy subdivision entrances, cost of installing the extra thoroughfare street, set asides of land for other purposes without compensation, etc. All of this costs the developer an additional $1,000,000.

To make the same return given increased costs imposed by regulation the developer must now charge $52,400 for each lot. This is an increase of $12,400 or 31% over the previous lot price.

In order to borrow money and make a home building project work financially a home builder typically must build a home that sells for approximately 4 times what the lot costs. Therefore, a house on a $52,400 lot will typically have a sales price of around $209,600.

The net result of the Unified Development Code requirements considered in isolation (not including the cost of recent building code changes, increased cost of building materials, increased cost of concrete, increased cost of labor, increased cost of borrowing money as interest rates rise, etc.) in this example cause a rise in the cost of housing from $160,000 to $209,600 which is an increase of $49,600 or approximately 31%.

The cumulative effect of all of these regulations, with no attempt at cost-benefit analysis, is to make housing unaffordable in our community.