Can Trump Reduce Housing Regulatory Costs?

More than that, can he reduce them from 25 percent to 2 percent? Here are some regulations Trump has the power to change.

In an August 11, 2016, speech before the National Association of Homebuilders’ (NAHB) Board of Directors, Presidential candidate Donald Trump made one of his few public campaign statements about housing costs.

“No one other than the energy industry is regulated more than the home building industry,” he said.
“Twenty-five percent of the cost of a home is due to regulation. I think we should get that down to about
2 percent.”

The statistic Trump cited was from a 2016 NAHB study claiming that regulations imposed by the government at all levels account for 24.3 percent of the final price of a new single-family home built for sale.

As a developer, Trump had first-hand experience with the costs of over-regulation. His transition website vows to “identify and eliminate unnecessary regulations that kill jobs and bloat government.”

But can he reduce housing regulatory costs by 90 percent? Here are a just a few federal requirements that a Trump Administration has the power to change.

 Clean Water Rule

In 2015, the Environmental Protection Agency (EPA) and Army Corps of Engineers (Corps) published a “Waters of the U.S.” final rule, which clarified which streams, marshes, lakes and rivers are regulated under the Clean Water Act. Home builders consider it to be a vastly overly-expansive rule that would significantly reduce the volume of land they can construct on by requiring expensive federal permits to develop private property near most water bodies. According to one study, it takes an average of 788 days and $271,596 to obtain an individual permit and 313 days and $28,915 for a nationwide permit.

The Trump Administration’s transition website says it “will eliminate the highly invasive Waters of the U.S. rule, and EPA Administrator nominee Scott Pruitt led the fight among Republican attorneys general against it.

The Sixth Circuit Court of Appeals halted the rule’s implementation during pending litigation. A Trump Administration could ask the court to hold the case and send the rule back to the EPA and Corps for reconsider-ation. To prevent legal challenges, it would need to publish a notice for comment announcing its plans to withdraw the rule and then begin a new rulemaking policy process.

Overtime Rule

The Department of Labor’s (DOL) final Overtime Rule nearly doubled the current overtime salary cap from $23,660 to $47,476. According to its own estimates, compliance costs will be $677.9 million in first year and $241.5 million every subsequent year.

Trump did not say much about the Overtime Rule during his campaign. But it has faced strong opposition from home builders and many other industries, and from Labor Secretary nominee Andrew Puzder.

The rule’s December 1, 2016 effective date was stayed on November 22 by a U.S. District Court after 23 states challenged the rule. The Department of Justice, on behalf of the DOL, appealed the stay to the Firth Circuit Court of Appeals.

A Trump Administration could direct DOL to withdraw the rule, which would require notice-and-comment rulemaking. Or, Congress could attempt to overturn the rule under the Congressional Review Act, which provides Congress a period of 60 days in which it is in session to pass a resolution of disapproval without triggering a Senate filibuster.

Joint Employer Liability

The Democrat-controlled National Labor Relations Board (NLRB) ruled in 2015 that companies can be held responsible for labor violations committed by unaffiliated contractors and subcontractors, overturning a longstanding test requiring a company to have direct and immediate control over employees before it is considered to have “joint employer” status. The ruling was based on a case in another industry, but home builders protested it on the grounds that it could cripple small businesses. The NLRB decision was followed by a 2016 Administrator’s Interpretation published by the Department of Labor’s Wage & Hour Division, which set expansive new standards for determining joint employer status under the Fair Labor Standards Act.

Trump has not spoken about the joint employer liability issue, and the NLRB is an independent agency that is not subject to Presidential authority. But Trump will have the opportunity to appoint Republican members to the NLRB who could reconsider the ruling, and DOL Secretary nominee Puzder has a say in future DOL enforcement standards and priorities.

What is Attainable

Most observers agree that a 90 percent cut is unattainable. Many regulations affecting housing costs are imposed by state and local governments, over which the President has minimum control. Moreover, even the NAHB explained that its 24.3 percent estimate is limited to costs and does not account for benefits resulting from housing regulations.

Nevertheless, there is hope today within the home building industry that the Trump Administration will significantly cut back on regulations that increase the cost of housing.

by Sue Johnson, strategic alliance consultant 

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