The HUD Secretary detailed steps to cut red tape and stimulate production.
Since he became United States Secretary of Housing and Urban Development (HUD), one of Dr. Ben Carson's top priorities has been to reduce the barriers developers and builders face in producing new housing.
While that is still the long-term goal, the outbreak and spread of COVID-19 (commonly referred to as coronavirus) has upended everything, which made it an important topic of discussion at National Apartment Association's (NAA) Advocate conference in Washington, D.C. As the economy slows, workers in an increasing number of sectors are facing weeks, if not months, without income.
"It's a pretty devastating situation for a lot of people," Carson told the NAA Board of Directors during Advocate. "Look at the airports; they're almost empty. You have people like baggage handlers who are being impacted in a very substantial way."
Many of those workers rent and will need help to get through the coming months. Carson said policymakers were considering pumping money into the Small Business Administration to provide companies with loans "so that people can actually keep their workers rather than firing their workers," Carson says.
Longer-term, the goal for Carson is to reduce the barriers to create housing for workers of all types. "We have teachers, nurses, policemen and firemen who can't afford to live in the neighborhood where they work, and that is not only a disservice to them, but is a disservice to the community as well," Carson says.
Carson says regulations can increase costs up to 42 percent in apartment housing. "Look at places like California, for example, [if] you want to talk about the affordable housing crisis," he said. "The estimated cost of building new apartments there exceeds $500 per square foot. There's a lot of other places where you're talking $100 per square foot, and those land issues tend to be local issues."
To address the problem, Carson says local leaders need to be persuaded to change their approach and agree to share and utilize best practices. He credited NAA's research, specifically the U.S. Barriers to Apartment Construction Index, in helping HUD better understand the obstacles to affordability and prioritize appropriate partnerships.
"All of those barriers have a collateral impact, obviously on the ability to attract development financing as well," Carson said. "I've often said that in order to find solutions for the problems we face, it's going to be necessary for the federal, state and local governments to work together, along with the for-profit and not-for-profit, faith-based organizations."
To improve affordability, Carson is taking a hard look at deregulation. "If there's one thing that a surgeon is good at, it's cutting stuff," he said.
HUD also is pursuing regulatory reform to make it easier to develop and rehabilitate housing. The agency recently announced that it would allow newly constructed or substantially renovated properties to be refinanced under the Section 223(f) program, without needing to wait two to three years to obtain a waiver. The program ensures lenders against loss on mortgage defaults by allowing long-term mortgages to be financed with Ginnie Mae mortgage-backed securities.
"Owners no longer need to endure that long, cumbersome waiver process, which means they can come to HUD a lot sooner, to recapitalize through refinancing," Carson says. "That refinancing is going to get even better with the interest rates dropping. The end result is that you get a lot more flexibility."
In addition, President Trump signed an executive order to create the White House Council on Eliminating Regulatory Barriers to Affordable Housing last June, a group which NAA has endorsed and participated in. NAA is a member. Carson chairs the multi-agency council, which also includes the Department of Energy, Agriculture, Transportation and Treasury, among others.
In recent months, the council has hosted a series of roundtables with a range of stakeholders. "To further assist the council's work, we opened a request for information, and we've received thousands of comments," Carson says.
By reducing red tape, Carson thinks HUD, in concert with community leaders and state and local officials, can "improve the quality of life for a lot of our people."
"Solving this affordability challenge, as I said before, is a team effort," Carson says. "It's going to require all of us working together."