Bad Timing on the New Title 21 (December 13, 2015)

The implementation of the new Title 21 scheduled for January 1, 2016, couldn’t come at a worse time for builders and developers. Originally conceived during the housing boom of the mid 2000’s, it was meant to create a more aesthetically pleasing new age community. Ten years later it is bogged down in 836 pages of design criteria that is both expensive and impractical in today’s economic environment. After more than two years of discussion, the municipality of Anchorage has finally recognized it has an affordable housing crisis of significant proportions. How ironic is it that at the same time this lack of housing has become accepted knowledge, the assembly has enacted a new Title 21 which is going to add to the cost of every new home built in 2016 and beyond?

Every homebuilder and residential land developer is now hiring engineers, surveyors, planners, architects, home designers, et cetera to help figure out whether their current home plans and site plans meet the new requirements and if not, how they must be changed. The cost just for deciphering the new Title 21? Most likely anywhere from $75 to $225 per hour. For changes to exterior elevations, assuming the basic plan conforms, add an additional $1,500 per home for new exterior elevations. In total, add $2,000 to any new home for 2016. But changes to the land use regulations will also increase the cost of developing single family lots and condo tracts. The new regulations will force developers to create larger lots in order to accommodate double and triple car garages (number one on a new home buyer’s wish list). The wider the lot the more expensive it is to develop with roads, water and sewer. Add another $5,000 to $10,000 to the price of the lot and pass it on to the home builder and the buyer. In an environment where we need more affordable housing, we’ve now added anywhere from $7,000 to $12,000 to a new home in 2016.

All this at a time when residential building permits remain at historic lows. Single family permits have declined over the past two years. YTD through October permits have fallen to 237. Duplex permits have fallen to 92 units—a sharp decline from 160 YTD in 2014. And multi-family permits have fallen from 295 permits to 251. We are doing nothing to solve our housing crisis. Instead, we are adding to the cost of every new housing unit to be built in 2016. The new regulations will not only increase costs but also slow down permitting as the industry grapples to adjust.

Last week, after reported pending and closed sales, there were only 497 single homes left for sale in Anchorage. Twenty-six percent of those homes were priced over $500,000. The new Title 21 will only add to that percentage in 2016, making Anchorage the Santa Monica of Alaska. With all due to respect to the planning staff who have worked for ten years on this document, and the assembly’s well-intentioned vote of 9 to 2 to approve the new Title 21, everyone needs to take a step back and re-evaluate what they have created and the unintended consequences of the new Title 21 in light of our housing crisis. Now is not the time to burden home builders and developers with aesthetic reform. Do what needs to be amended to the existing Title 21 for the benefit of health and safety. The market place will make its own demands for design and aesthetics. Just log on to Pinterest or Houzz and see for yourself.