RBC logo Regulatory Barriers Clearinghouse
Top Navigation Bar
RBC logo
Breakthroughs: Successful Local Strategies for Affordable Housing
Print versionPrint Version
Send URL to FriendSend this to a friend

  October 2005
Volume 4, Issue 5

 Code Reforms Aid Rehabilitation Efforts

A photograph of the cover of the International Existing Building Code.
In many regions of the country, older housing accounts for a substantial part of the housing inventory. In the Northeast, almost 30 percent of all housing units in 2000 was constructed before 1939. In the Midwest, more than 21 percent was in place before 1939. These units have the potential to continue to provide housing for millions of Americans who might not be able to afford newly constructed, higher-priced homes. While many of those units have needed repair, local building codes often resulted in increased building costs, thereby reducing the affordability of these older units.

Building codes designed for new construction are rarely suitable for use in rehabilitation. Fortunately, ongoing regulatory reform efforts eventually resulted in the creation of the International Existing Building Code (IEBC), which addresses many of the impediments to rehabilitation that were common in previous code iterations. Recent changes to the IEBC have made it an even more valuable tool for rehabilitation.

Old Code Approach

Before these reforms were enacted, code officials used a formula to determine the acceptability of rehabilitation. Known as the “25-50 percent” rule, the older codes established different rules based on the cost of the planned construction relative to the value of the un-rehabilitated structure. Although this rule varied somewhat in different jurisdictions, generally, if work would not exceed 25 percent of the structure’s value, then a contractor and building officials could negotiate what work was required to comply with the local code. For work that would cost between 25 and 50 percent of the value of the structure, the contractor had to meet building codes for all planned work. If the planned work exceeded 50 percent, then the contractor had to bring the entire building into compliance with the current building code.

Let’s say that an owner plans on replacing windows, doors, and some other items in a modest rental house. Because the initial value of the house is fairly low, the cost of the upgrades exceeds 50 percent of the home’s existing value. Under the old approach, the building official would require that all electrical and plumbing elements of the house be brought up to code. Based on these additional costs, the owner would frequently abandon the entire project as not being financially viable.

Early Reform Efforts

During the 1970s, the U.S. Department of Housing and Urban Development (HUD) introduced the concept that code administrators should base requirements on the type of work undertaken. HUD prepared a series of rehabilitation guidelines to assist in fairly and flexibly administering code requirements. After a HUD-convened symposium held in 1995 (see The Status of Regulations for Housing Rehabilitation), HUD and New Jersey jointly undertook further reforms. In early 1997, New Jersey officials issued a draft of a new Model Rehabilitation Subcode that they subsequently adopted the following year.

The Subcode codified the idea that requirements should be based on the nature, rather than the cost, of rehabilitation work. In May 1997, HUD issued a variation on the New Jersey approach-, The Nationally Applicable Recommended Rehabilitation Provisions (NARRP). Together, these two efforts establish a new regulatory framework that keeps requirements in proportion to the actual scope of planned work. Based on these efforts, other states and local governments followed suit with similar reform efforts, including Rhode Island and Maryland.

HUD has also released a companion document titled Innovative Rehabilitation Provisions: A Demonstration of the Nationally Applicable Recommended Rehabilitation Provisions that illustrates how the provisions are applied in practice. Another HUD publication, Smart Codes in Your Community: A Guide to Building Rehabilitation Codes provides a broad overview of the general regulatory environment governing the use and reuse of existing buildings. It also offers examples of state and local efforts to reduce regulatory complexity and suggests possible strategies to help spur reinvestment in the existing building infrastructure.

International Code Council Effort

A photograph of the cover of the International Existing Building Code.
Encouraged by these promising reform efforts, the International Code Council (ICC) embarked on its own push to improve the regulatory requirements for rehab. The ICC is the successor organization to three previous codes organizations: the Building Officials and Code Administrators (BOCA), the International Conference of Building Officials (ICBO), and the Southern Building Code Congress International (SBCCI). In 1999, ICC appointed a committee to study various codes and draft the International Existing Building Code (IEBC). ICC distributed the final draft of the new code in 2001, and published the first edition of the IEBC in 2003.

The drafting committee embraced the premise that the extent and type of planned work, rather than the cost, should dictate the type of improvements required by the code. The more work the owner planned, the more upgrades the code would require. The committee’s approach also recognized the difference between the terms “repairs,” “alterations,” and “change of occupancy.” As a result of these changes, code officials would be able to consistently interpret and enforce the code’s provisions.


Older housing provides an invaluable source of shelter for many in the United States. Unduly restrictive code requirements often discourage the redevelopment of these properties, resulting in housing deterioration and neighborhood decline. Reforms that had their origins in the 1970s have significantly contributed to the ICC’s International Existing Building Code. According to ICC Manager of Standards Ed Wirtschoreck, "This code provides flexibility in terms of building design and construction costs." He went on to say that, "It allows communities to safeguard the public and improve existing building stock, without mandating the requirements (and expense) of new construction."

Be sure to read our December issue of Breakthroughs to see how these reform efforts encourage rehabilitation by establishing code requirements that are in line with the scope of work to be performed.


Columbus Makes Written Commitment to Improve Development Review Process

In the late 1990s, Columbus, Ohio’s mayor determined that the process for approving development was seriously flawed, and set out to remedy the situation. Deborah Hoffman, Administrator of the Building Services Division, calls the resulting document a historic agreement between industry and the city to reduce processing time for building and other permitting reviews. The Memorandum of Understanding, inked in November of 2001, establishes a set of standards that the city and industry must meet in order to reduce the amount of time needed to approve development plans. As part of the agreement, industry leaders agreed to a 28 percent increase in fee charges, as long as these increased fees would assist in streamlining the process.

City Commitments Outlined in the Memorandum

The city agreed to undertake 22 actions to streamline the development process in Columbus. Some of these actions include:

  • Designate a single point of responsibility.
  • Maintain appropriate staff levels, appropriate training, and overtime or contract services to cover peak periods.
  • A photograph of a streetscape with single-family homes.
    Here we see an affordable
    housing subdivision in Ohio
    Make development laws, requirements, standards, procedures, and processes available in print and on-line.
  • Hold training seminars.
  • Consult with the industry before making fee, policy, rule, or procedural changes.
  • Provide applicants with the opportunity to have a pre-filing project review.
  • Establish and maintain a tracking system to identify and document processing time.
  • Notify the applicant’s contact person of the name of the coordinator assigned to a project.
  • Establish an e-mail hotline for plan/plat review questions/status.
  • Establish a standard form for issuance of a limited or partial building permit prior to site plan approval.
  • Perform requested building inspections in the field, usually within one business day of receiving the request.
  • Provide builders/contractors checklists for structural, HVAC, plumbing, and electrical inspections.
  • Collect and document causes of reinspections.
  • Advise the builder/contractor of the applicable code section when rejecting work and limit the reinspection to only the work that was rejected.
  • Maintain legally required continuing education.
  • Identify potential inspection consolidations without sacrificing public safety and code compliance.
  • Implement the information technology enhancements.

Industry Commitments Contained in the Memorandum

According to Hoffman, the agreement also specifies responsibilities on the part of those who apply to the Columbus Department of Development, Building Services Division for permission to build housing. These commitments include:

  • Learn and comply with the city’s development laws and processes.
  • Avoid submitting an incomplete or noncompliant plat or plan.
  • Address review comments when submitting a revised plat or plan.
  • Contact the staff to schedule a project review before filing an application for plat/plan approval or building permit.
  • Provide the plat or plan in both digital and paper format when filing an application.
  • Designate a single contact person and project decision-maker when submitting a plat, site plan, or infrastructure engineering plan.
  • Depict the planned phases on engineering plans and plats if the development will be implemented in phases.
  • Submit final engineering plans for (a) sanitary sewer and (b) street, storm sewer, water, grading, erosion control and street lighting prior to or concurrently with the final plat.

Service Timeframes and Redress Procedures

Columbus also established specific timeline standards against which city staff’s performance can be measured. The agreement says, however, that these standards assume the applicant will submit complete plans and address review comments. Some examples of the timeline standards include:

  • Processing the preliminary plat – 22 days;
  • Processing the final plat – 42 days; and
  • Residential (1, 2, 3-Family) permitting process – 7 days.

Should these timeframes not be met, applicants will receive a credit or rebate of a portion of the fee, or they can request a meeting which will result in a decision within 120 hours. The agreement also puts city employees on notice that the city will evaluate performance on the basis of meeting the standards listed in the agreement. The agreement also outlines a 19-step process for reviewing applications and actions applicants can take, should the city not meet the timeframes contained in the agreement.

Impact and Results

According to Hoffman, the 13 agencies responsible for undertaking these reviews have not missed a deadline since signing the agreement.

According to Jim Hilz, Executive Director of the Building Industry Association of Central Ohio, “This is a great effort on behalf of Columbus.” Hilz went on to say that, “We are trying to copy this process in other communities where processing delays increase the cost of owning land before development can occur.” While he applauds the overall effort, Hilz says that builders will continue to work with the city to streamline communications.

Hilz congratulates the city on the original document and the city’s continued willingness to reduce processing time. “We still have bumps in the road,” says Hilz, “But overall, there is more good coming out of this process than bad.”


 Tax Increment Financing of Infrastructure

Communities That Use TIF Encourage Affordable Development by Easing the Tax Burden on Residents

Budgetary and other financial constraints are forcing local governments to examine alternative methods of building new schools, roads, fire halls, libraries and other public facilities amenities. Many communities require developers to provide this new infrastructure as part of the development approval process. While helping to keep a lid on general property tax increases, these requirements often add to the cost of providing affordable housing. Realizing that these costs could impede affordable housing development,, some communities are adopting tax increment financing (TIF) to pay for increased public facility needs.

Tax Increment Financing Fundamentals

In its basic form, TIF allows a local government to use tax revenue generated by a development to pay for public infrastructure needed by that development. In a tax increment financing agreement, the local government taxing authority establishes an area or tax district where it agrees to freeze the tax assessment on a tract of land. For new construction, the base can be the original assessment against the raw land. For redevelopment, the base can be the assessment against the land and the existing improvements. The taxing authority uses any additional assessment against the new improvements and the taxes to finance required improvements.

Tax Increment Financing in Rapid City, South Dakota

TIF has been available in South Dakota since 1978. Rapid City created its first TIF district in 1983, and has created a total of 52 districts. In a recent interview, city planner Karen Bulman observed that, “Rapid City is very conservative in granting tax districts.” She went on to say, “Only ten percent of the taxable value of the city can be in these districts. City authorities want to maximize the return to the city for any tax districts established.”

She also commented that using TIF for affordable housing is a fairly new strategy in rapid City. In order to qualify for this financing option, developments must meet several criteria. The mandatory criteria that apply to housing are:

  • At least 25 percent of the area is blighted;
  • The project complies with the Comprehensive Plan; and
  • There is no net loss of pre-existing tax revenues.

In addition to the compulsory criteria, a project must meet two of six elective criteria. Four of the six relate to housing developments, and encourage projects that can…

  • A photograph of road construction in a new housing development.
    Demonstrate that TIF makes the project economically feasible;
  • Eliminate actual or potential hazard(s) to the public;
  • Result in additional redevelopment in certain downtown TIF areas; and/or
  • Result in the construction of affordable housing units.

The city defines affordable housing as projects where the developer reserves at least 51 percent of the dwellings for those earning below 80 percent of the area median. In addition, residents must pay no more than 30 percent of gross income for housing. The dwelling must remain affordable for at least ten years or the owner must repay a portion of the tax increment financing benefit. The city has a number of discretionary criteria it uses to evaluate projects. A more detailed description of these criteria is contained in the “Guide for Applicants.”

TIF Uses

Developers can use TIF for capital costs of public improvements, the clearing and grading of land financing costs, and other costs associated with the public infrastructure required by the development. Those constructing affordable housing cannot use this type of financing to construct residential structures.


Those seeking approval for a TIF district must complete an application that includes a specific list of uses for which the developer will need tax increment financing. Only those identified uses would be eligible for the program.

City staff submits applications for TIF to the Project Review Committee, who then makes a recommendation to the Planning Commission and the city’s Common Council. The Common Council retains final authority to approve the proposal. Following approval, the city staff and the applicant negotiate a development agreement that the Common Council must approve.

When approving the agreement, the city only makes a commitment that the applicant/developer can use the additional tax revenue to retire the debt. The city does not issue bonds, nor is it responsible for the debt. The applicant/developer secures the financing to pay for the approved infrastructure improvements based on the city’s commitment.

South Creek Village

Recently, a developer approached Rapid City with a proposal to construct an 80-unit housing development using Low Income Housing Tax Credits. Since the developer of South Creek Village was committed to serving low- and moderate-income households, the project was, “Just on the edge of profitability,” said Murray Klane, a consultant with the Gandolf Group, LLC. The city’s requirement that any development with more than 40 units provide two points of ingress and egress would have had a tremendous impact on the economic feasibility of the project. In addition, the city required that this development provide a street connecting two existing streets. With government restricted rents, the project could not carry the additional debt without TIF assistance. According to Klane, “Categorically, we would not have been able to complete this project without the policy decision by the city to create this tax district.” The developer asked that the city create the tax district and use the increased revenue to pay for the required street improvements. Once the city made its commitment, the developer’s lender pledged to fund a loan, based on the city’s action. Klane said that the approval process took three to four months, but he was so pleased with the result that he was considering a TIF for another affordable housing development.

The Tipping Point

Rapid City’s infrastructure requirements could have prevented the developer from constructing 80 units of much-needed affordable housing. In this case, the city and the developer created a means whereby the developer paid for the obligatory roads, but used TIF, rather than increased rents, to pay for the improvements.

For additional information on tax increment financing, visit HUDUSER’s Bibliographic database.



HUD User logo
Disclaimer: Archived pages are no longer updated and may contain broken external links.

Back to Top Back to Top
PDR logo
HUD logo
Regulatory Barriers Clearinghouse
P.O. Box 23268
Washington, DC 20026-3268
Telephone: 1-800-245-2691, option 4
Email us at
TDD: 1-800-927-7589
Fax: 1-202-708-9981

Equal Housing icon
RBC Home | Privacy Statement
Oxnard, California Town of Corte Madera, California Fort Collins, Colorado Santa Fe, New Mexico Austin, Texas San Antonio, Texas King County, Washington Grand Forks, North Dakota Chicago, Illinois Cincinnati, Ohio White Plains, New York Fitzgerald, Georgia Orlando, Florida Carolina, Puerto Rico America's Affordable Communities Initiative: "Expanding Affordable Housing Through  Regulatory Barrier Reduction" HUD Logo