Although nongovernmental constraints are primarily market-driven and generally outside direct government control, localities can significantly influence and offset the negative impact of nongovernmental constraints through responsive programs and policies. Analyzing specific housing cost components — including the cost of land, construction costs, and the availability of financing, the requests to develop housing at densities below those anticipated in the analysis required by subdivision (c) of Government Code section 65583.2, and the length of time between receiving approval for a housing development and submittal of an application for building permits Additionally, (per Assembly Bill 879 (AB 879), Chapter 374 (2017) (Gov. Code §65400, §65583 and §65700).
AB 879 also requires the analysis of nongovernmental constraints to demonstrate local efforts to remove nongovernmental constraints that create a gap between the locality’s planning for the development of housing for all income levels and the construction of that housing and programmatic response(s) to address and remove nongovernmental constraints to the maintenance, improvement, and development of housing.
The analysis should also address any hinderances on the jurisdiction’s ability to construct the locality’s share of the regional housing need (RHNA) by income category and include programs as appropriate. The analysis also assists the locality in developing and implementing housing and land-use programs that respond to existing local or regional conditions. While the cost of new housing is influenced by factors beyond a locality’s control, local governments can create essential preconditions (favorable zoning and development standards, fast-track permit processing, etc.) that encourage and facilitate development of a variety of housing types and levels of affordability.
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Government Code Section 65583(a)(6) requires “An analysis of potential and actual nongovernmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the availability of financing, the price of land, and the cost of construction.”
Requisite Analysis
- Land costs — Estimate the average cost or the range of costs per acre for single-family and multifamily-zoned developable parcels.
- Construction costs — Generally estimate typical total construction costs, including materials and labor.
- Availability of financing — Consider whether housing financing, including private financing and government assistance programs, is generally available in the community. This analysis could indicate whether mortgage deficient areas or underserved groups exist in the community. The financing analysis may also identify the availability of financing from private foundations (including bank foundations) corporate sponsors, community foundations, community banks, insurance companies, pension funds, and/or local housing trust funds.
- Length of time before approval (timing) – Identify the actual length of time between receiving approval for housing development and submittal of application for building permits and discuss any hinderances on construction.
- Requests for lesser densities – Analyze requests to develop housing at densities below those anticipated in the sites inventory, including hinderance on the construction of a locality’s share of the regional housing need.
Potential Contacts and Data Sources to Assist in Analysis
- Local developers and title companies
- Local banks (Home Mortgage Disclosure Act data)
- Building department (valuation data)
- For-profit and nonprofit building industry
- Annual Progress Reports - Data Dashboard and Downloads
Helpful Hints
Jurisdictions that prepare Analysis of Impediments to Fair Housing for the Consolidated Plan may be able to use policy information from the plan to assist with the analysis of available financing. Learn more about Consolidated Plans.
Jurisdictions should also consider other sources of nongovernmental constraints, such as local opposition to planned actions related to the housing element, including zoning amendments, selection of sites for the sites inventory, and etc. Opposition to plans in the housing element may hinder local governments from moving forward on development projects or other actions that will implement housing element programs or facilitate the RHNA, If applicable, local governments should provide an analysis of this as a constraint and include an appropriate programmatic response.
Other nongovernmental constraints that jurisdictions can consider in the analysis include economic conditions and drivers (COVID-19), workforce development, rates of housing conversion, indirect costs associated with housing development (administration and project management), and housing revenues.