Environmental regulations thwart housing construction yet again

President Joe Biden doesn’t have a lot of good ideas, but his decision to use existing Department of Transportation programs to finance the conversion of office space into apartment buildings is a good one.

Unfortunately, his party’s refusal to work with Republicans on long overdue reform of onerous environmental regulations has made the completion of construction projects impossible, leaving downtowns in limbo and rents high.

Urban downtowns throughout the United States suffered long before COVID, but the pandemic accelerated a shift to remote work that has left many city center office buildings vacant. While some cities have struggled with crime in the aftermath of the George Floyd riots, others have maintained law and order and are still desirable places to live. So desirable that rents in cities with the hottest job markets are often higher than the average starting salary. 

One easy solution to the lack of affordable housing in urban areas is to convert vacant office buildings into residential apartments. These buildings are already properly zoned for height and just need financing to be gutted and retrofitted for residential living.

Enter the Department of Transportation’s Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation and Improvement Financing programs. Normally, these loan programs are used to finance rail infrastructure, but the underlying statutes also allow for construction projects as long as they are within a mile of a train station. Many empty office buildings fit that description, including Pittsburgh’s 44-story Gulf Tower, which is just a block away from Union Station. 

The owners of the half-empty Gulf Tower were eager to tap Department of Transportation financing to convert their office space into living space, but they quickly discovered any project involving the federal agency action runs into a buzzsaw: the National Environmental Policy Act.

Passed in 1970, NEPA requires that every project funded by the federal government first conduct an environmental assessment. This sounds like common sense. However, NEPA also contains a powerful citizen suit provision allowing just about anyone to sue in federal court and delay a project.

Environmental activists quickly learned how to use this to stop the construction of any project they oppose, which often includes housing projects. Even without litigation, to jump through all the necessary legal hoops, an average NEPA review takes over 4 1/2 years and costs $4.2 million.

“In a typical real estate financing deal, you’re closing that loan in 60 to 90 days,” said Aaron Stauber, president of the company that owns Gulf Tower. In other words, the time and expense created by NEPA makes funding by the federal agency useless.

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Sens. Mike Lee (R-UT), Ted Cruz (R-TX), and Kevin Cramer (R-ND) have introduced commonsense legislation that would streamline the NEPA process by limiting such lawsuits and setting a time limit on how long federal agencies must spend complying with NEPA planning regulations. But Democrats rejected these efforts outright.

Thanks to Bidenflation, housing unaffordability is at an all-time high. The nation needs more housing. Lots of it. If only Democrats would work with Republicans to reform NEPA, we could build homes for so many people.

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