American Habits: Four proven ways state legislatures can lead the charge on America’s housing crisis
President-elect Donald Trump made the housing crisis a focal point of his presidential campaign. He correctly diagnosed a national problem: housing costs must come down to improve the country’s economy and its standard of living. But having made the right diagnosis, federal leaders, like President-elect Trump and his administration, also expect state leaders to treat the condition, just like a generalist might work with a specialist to treat a patient’s disease. State policymakers are the specialists who can address the high cost of housing, which ultimately stems from a lack of supply to meet the demand issue.
Many practical solutions are readily available for state legislators to implement, and a recent report from the housing experts at Pacific Legal Foundation explores some of those solutions in-depth. With state legislative sessions underway soon, here are four ideas from that report that they can adopt to hit the ground running and get good bills to their state governors’ desks as early as possible.
When an applicant follows all local rules for development, the government cannot deny the application based on “discretion”
Local governments exercise excessive discretion when considering development projects, even when applicants follow all the rules. What does “discretion” mean in this context? Answer: it means that even when an applicant meets all the government’s objective qualifications to be approved to build, like building height, land use, and density, City Hall often unfairly or arbitrarily delays approval or even blocks the permit altogether for purely subjective reasons like “neighborhood character.” This creates an unpredictable and expensive system that decreases the supply of housing. Once all agree the builder followed the government’s rules to build housing, the government must approve the project as a matter of right—treating every application fairly and boosting predictability.
Require that local governments make prompt decisions on permit applications
Putting decision-making deadlines in place for permitting approvals respects local considerations, but local governments must make prompt decisions per fundamental fairness. A well-designed “shot clock,” as these rules are often called, provides for automatic approval of permit applications if bureaucrats drag their feet. Local government inefficiency should not make it harder for individuals and families to find homes, but that is what too often happens when permitting applications languish—despite timeliness from applicants. This unpredictability impedes needed housing.
Stop local governments from charging excessive fees to build more housing
Not only are burdensome fees harmful, but the Supreme Court recently held, in Sheetz v. El Dorado County, that excessive fees are also unconstitutional. Local governments can no longer weaponize the permitting process to extort land or money from families—like PLF client George Sheetz with his wife and grandson—or builders who have the opportunity to create needed housing. States should heed the Court’s decision and ensure that requirements or conditions imposed on building projects are roughly proportional to the cost of mitigating an identified adverse impact. They must also “show their work” when asked by property owners and should embrace this transparency to avoid future litigation at taxpayer expense. Local governments may no longer profit from unjustified, crippling fees that slow or altogether stop the building of housing.
Prevent third parties from slowing down building projects with unnecessary lawsuits
Courts across the country are rife with lawsuits intended to stop approved development permits due to personal preferences, not actual harm or hazards. States must require objectors to meet standards to bring lawsuits, such as having an adjacent property and proving by clear and convincing evidence that an approved development will create particularized harm to the objector. Frivolous legal challenges should not interfere with local government permitting decisions.
The housing crisis won’t be cured overnight, but no serious condition ever is. Fixing the housing crisis—so that millions of Americans will again be able to afford housing—should be at the top of politicians’ and voters’ minds. State legislators are uniquely situated to begin addressing this crisis today by introducing the policies described above to increase the housing supply. These are ideas worth legislating on because good housing legislation that frees up the private sector will make one of the main necessities of life—shelter—more affordable for everyone.
This op-ed originally appeared in American Habits on December 2, 2024.
