U.S. Sens. John Thune (R-S.D.) and Jerry Moran (R-Kan.) today introduced the Housing Supply Expansion Act,legislation that would address the shortage of affordable housing options across the nation by making targeted reforms to requirements under the Davis-Bacon Act, a 1930s-era labor law. These reforms would reduce labor costs and administrative burdens on construction contractors, which would free up capital that could be redirected toward building additional affordable housing.
“The lack of affordable housing is an issue that is consistently raised by folks as I travel throughout South Dakota,” said Thune. “These shortages affect prospective homebuyers and renters, as well as small businesses that are trying to overcome pressing workforce needs. This common-sense legislation would increase the supply of affordable housing options, reform archaic requirements in the Davis-Bacon Act, and cut through its overly-burdensome red tape.”
“Purchasing a home is a part of the American dream that is currently out of reach for many families,” said Moran. “Reducing the burden of federal regulations will help homebuilders meet the demand for new homes, making homeownership a reality for more Kansans.”
“At a time when the nation is facing an unprecedented housing affordability crisis, the Housing Supply Expansion Act will make a real difference in reforming deep flaws in the Davis-Bacon wage process, in turn supporting the development and preservation of affordable housing,” said Doug Bibby, president of the National Multifamily Housing Council. “With housing demand higher than ever before, we should be doing all we can to reduce costs and find creative ways to expand housing opportunity to all those in need.”
“NAHB commends Senators Thune and Moran for introducing legislation that will help lower the costs of multifamily construction by streamlining and modernizing Davis-Bacon prevailing wage requirements,” said Jerry Konter, chairman of the National Association of Home Builders. “A recent Berkley study found that prevailing wage requirements raise construction costs by more than $30 per square foot. By that metric, these wage requirements are increasing construction costs by $27,000 for an average 900 square foot apartment, which ultimately translates into higher rents. To solve the housing affordability crisis affecting many of our communities, Congress needs to look at all the factors driving up housing costs, which is why the nation’s home builders strongly support this bill.”
“The Mortgage Bankers Association commends Senators Thune and Moran for taking action to improve and encourage access to quality affordable housing,” said Bill Killmer, senior vice president of legislative and political affairs at MBA. “Specifically, this legislation will reduce the administrative burden and complexity that split-wage determinations currently create for residential housing projects. MBA will continue to advocate on behalf of policies that both ensure a healthy real estate market and provide consumers with sustainable housing choices.”
“The National Apartment Association (NAA) is proud to support the Housing Supply Expansion Act, a critical tool in driving down the cost of building housing,” said Bob Pinnegar, president and CEO of the National Apartment Association. “Importantly, the bill addresses the industry's long-held warnings that red tape and administrative burdens hurt housing affordability by adding unnecessary costs to housing construction and exposing the industry to additional legal risks. NAA and housing providers are committed to addressing the nation's affordability crisis and are thankful for Senators Thune and Moran’s leadership.”
“The Aberdeen Home Builders Association appreciates the importance of Senator Thune’s bill to make targeted reforms to the Davis-Bacon prevailing wage requirements to better encourage housing affordability,” said Rachel Dix, executive officer at the Aberdeen Home Builders Association. “By reducing the complexity of the behind-the-scenes paperwork, it allows our builders to focus on building and it puts their boots on the ground. We stand firm with NAHB and strongly support this legislation.”
Enacted in 1931, the Davis-Bacon Act requires construction contractors involved in certain federally funded or federally assisted construction contracts, like those awarded as part of the various federal housing programs, to pay individuals working on the contract at least the prevailing wages of the vicinity in which the construction project is located. The Davis-Bacon Act – as it stands – can disincentive the construction of affordable housing due to the high costs it places on construction contractors. The U.S. Department of Labor (DOL) sets these prevailing wage rates by reviewing data submitted by construction contractors through voluntary surveys, which can be, at times, inaccurate or inconsistent. Recently, DOL initiated a rulemaking that would update certain tenets of the Davis-Bacon Act.