With the impending arrival of Amazon HQ2, New York City and northern Virginia need to make some changes. At the top of the list is reforming zoning regulations to reduce the shock of a rush of workers and their respective families into already strained housing markets.
Amazon has promised 25,000 jobs to each headquarters city, and that could mean up to 25,000 new Amazon workers in each area. In addition to Amazon-specific jobs, tech jobs have a multiplier effect, and it is estimated every new high tech job creates five non-high tech jobs. That would mean 125,000 new jobs each in New York City and northern Virginia as a result of Amazon’s move.
It's likely that a portion of these workers and their families reside within New York City and northern Virginia areas already. But even adding part of 125,000 workers and their respective families to Long Island City and National Landing will add pressure to housing markets in these neighborhoods.
Housing prices are already high in both places: the median home in Queens, NY (where Long Island City is located) is valued at $640K and the median home in Arlington, VA (where National Landing is located) is north of that, at $660K. These figures are roughly three times the national median home price, and prices in both markets are on-trend to grow over the coming year.
Complacency by officials in the face of increased demand will lead to continued declines in housing affordability. Without proactive regulatory reform, New York City and northern Virginia will continue shutting working class people and minorities out of their communities, which is what happened in San Francisco when tech workers arrived and city officials remained complacent about regulatory policy.
So, what can be done? Local government needs to reduce regulatory barriers to housing development to contain housing costs. Here are a few ways they can do that:
1. Increase allowable development density -- yes, even in New York City.
Maintaining or improving housing affordability means ensuring housing supply meets demand for housing. But in urban areas, land in the most desirable areas has already been developed, so in order to increase housing supply developers need to build up. Unfortunately, New York City and northern Virginia prohibits this through their zoning codes.
Despite its reputation for towering high rises, the majority of New York City is zoned for one- or two-family homes. And surprisingly, an estimated 98% of residential structures in Queens -- where Amazon HQ2 is located -- are three stories or less. With Amazon on its way, restrictions on density must be relaxed to accommodate growth. New York City must continue increasing allowable density in the boroughs.
Meanwhile, although Virginia’s National Landing location is relatively more dense than many locations in the DC/Virginia metro area, its neighbors to the North and South have severely restricted development density. For example, large swaths of DC are zoned for three to four story homes (see: Capitol Hill), and between one-third and one-half of Alexandria, Virginia is zoned for single family homes (Amazon Headquarters is partially located in Alexandria). DC and Alexandria should upzone and let property owners decide if it makes sense to build more densely.
2. Relax or eliminate parking requirements.
Outside of Manhattan and a few locations in Long Island City, parking is mandated in New York City, even in transit-connected areas. These requirements should be relaxed so individuals can decide what the appropriate ratio of parking to housing is. Developers are more familiar with consumer’s needs than New York City’s planners are, and it’s likely many buildings require less parking than what’s currently mandated.
Providing parking comes at a substantial cost to developers, which pass unrecouped costs on to tenants. Streetsblog recently reported on a New York City developer that paved a basement and parts of first and second stories to provide city-required parking in a transit-connected area that didn’t need parking to begin with. The developer estimated the mandated parking requirement resulted in a $12 million-plus loss, and the space could have been used for something more productive.
Amazon HQ2 is located in Long Island City, where parking requirements are higher than the New York City average. And although parking requirements were reduced for new subsidized housing near transit in New York City in 2016, the changes did not apply to market-rate residences, so parking requirements for market-rate residences still need an overhaul.
3. Streamline permitting processes.
Under Mayor De Blasio's administration, New York City has made efforts to improve the building permitting experience and increase permitting transparency. Still, there are problems. For example, the City’s environmental permitting process, which is invoked in the case of “most discretionary land use actions considered by the City Planning Commission” is lengthy, costly, and unpredictable.
Estimates suggest that environmental permitting costs between $100,000 for and $2.5 million for a typical construction project, and takes 6 months to complete. Exempting projects that are likely to be compliant would increase efficiency and reduce costs.
Although northern Virginia doesn’t have local environmental assessment laws like New York City does, cities like Alexandria, Virginia have an excessive amount of regulation and development oversight. For example, there is “a 200 page design guideline guidebook on the special considerations associated with development in this historic downtown area alone... In Alexandria, there are around 25 citizen boards managing architectural, archaeological, environmental, historical, urban design and related planning considerations for proposed development. This number excludes task forces with other specific planning functions, like determining parking standards for new development.”
This web of decision makers and regulations will reduce housing development in the area south of National Landing and push prices up. In order to accommodate growth, Alexandria must overhaul and streamline this process.
Besides these recommendations, New York City and northern Virginia can relax construction standards and codes, reduce rehabilitation requirements associated with remodeling existing housing stock, reduce impact fees and exactions on development, legalize non-traditional affordable housing (accessory dwelling units, single room occupancies, manufactured housing, etc) where applicable, and expand urban development areas in Virginia. In order to avoid penalizing future and existing development, cities can collect taxes on land value instead of property.
New York City and northern Virginia have a lot of work to do to overhaul regulatory barriers to housing supply and provide an affordable home for current and future residents. The good news is there are a lot of ways to get started.