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Builders tell lawmakers costs, permitting timelines and land constraints make many projects unfeasible
Summary
Industry representatives told the committee that rising construction costs (up to 40–45% higher over several years), long entitlement timelines, and constrained land availability are primary obstacles; a Frederick case study showed a mid‑rise unit cost of roughly $383,000 and an underwriting gap that prevents projects from ‘penciling’ under current market conditions.
Local builders and consultants presented case studies and cautioned lawmakers that high costs and long approval timelines are shrinking the universe of viable housing projects.
Andrew Welker, a local multifamily developer, outlined a three‑building, 112‑unit mid‑rise infill project in Frederick. He said total development costs equaled about $383,000 per unit and that market rents targeted at roughly $2,200 per month would take many years to return the capital investment; under current financing and cost conditions, the project would need rents near $3,000 or a roughly 27 percent reduction in costs to meet typical investor return thresholds.
Industry cost drivers
Presenters identified several persistent cost drivers: steep increases in construction and material costs (Welker cited 40–45 percent construction cost inflation over six to seven years), high soft costs (architectural, legal and entitlement work), large permitting and mitigation fees, and carrying costs associated with multi‑year entitlement cycles. Welker and others said land acquisition and competition for developable parcels (competing uses like data centers or industrial development) also constrain supply in suburban markets.
Land‑use constraints and the “everything bagel”
Casey Anderson and panelists used mapping analyses to show that conservation, forest conservation requirements, stream setbacks, historic overlays, public parks, and single‑family zoning cumulatively remove large swaths of land from development—leaving few ‘holes in the Swiss cheese’ where additional housing can be built without additional policy choices.
Industry suggestions
Builders urged predictable, shorter timelines for approvals, clearer and less prescriptive local design standards, targeted fee relief or deferred fee payment for affordable projects, and prioritizing housing projects in entitlement queues. They said supply‑focused measures will better address affordability than measures that only regulate institutional investors.
“The problem often is that even the most expeditious review processes are still going to leave us with high‑cost housing because we're asking development to do a lot of different things,” said one consultant.
The committee asked industry to provide more data behind cost estimates; builders said they would share case studies and underlying modeling.
