Homebuilding is an expensive undertaking. Though many disparate factors contribute to the hefty price tag, the lions’ share comes from land costs, hard costs, and soft costs. Land costs are better thought of as land cost per unit. Zoning rules influence them by restricting the number of units that land costs can be spread across. Hard costs include timber, windows, or insulation, subject to the whims of complex supply chains and tariffs. Finally, soft costs– like design, permitting, and governmental review–grow with time and when approvals are uncertain. Like land, they can often be spread across multiple units.

Soft costs typically comprise 30 percent of total homebuilding expenses. When combined with land and hard costs, the price of homebuilding skyrockets. Once zoning reform is achieved to allow denser infill growth in the first place, soft costs become a binding constraint on housing growth and affordability because one-off infill developments can’t defray soft costs across several units like larger projects.

Last year South Bend, Indiana, took an innovative approach to mitigate these residential development costs. The idea–inspired by earlier zoning reforms and a 2019 form-based code–was to create a catalog of pre-approved plans, matched to the city’s zoning districts, that a developer could take to a general contractor and build without any further architectural work or discretionary approvals from the city. The plans also indicate what zoning districts each model can be built in, establishing additional certainty and removing zoning analysis and approvals from the soft cost equation. 

South Bend’s pre-approved home catalog is clear, concise and includes an array of building plans. The smallest is a carriage house with living quarters over a garage. There are also two single-family home plans, one duplex, and one six-unit apartment building. 

A typical plan from South Bend’s Neighborhood Infill catalog. The page includes basic building layout and dimensions, different window and roof options, estimated building costs, and what zoning districts where the home can be built.

Two projects are now under construction. According to local city planner Michael Divita, ten other projects are also in the development pipeline using pre-approved plans. Most of the developers are nonprofits, with some tax credit and workforce developers considering using the plan catalog as well. Divita explains this is consistent with existing infill development, as other developers see higher margins outside the city, or near Notre Dame University.

While the plan catalog has options for several zoning districts, most projects will be in the Urban Neighborhood zoning districts, which primarily contain single, duplex, and some fourplex development. These districts feature modest building setbacks and a pedestrian-scale development pattern.

One project underway and perhaps ten waiting to kick off doesn’t seem like a lot, but South Bend has seen a relatively flat population trend over the past few decades. The city’s population peak of 132,000 came in 1960. It is 103,000 as of the 2020 Census. The city issued 89 home construction permits in 2021, meaning pre-approved home catalog projects could make up over 10 percent of annual housing starts in the city. 

With low growth and low home prices and rents, infill homebuilding is mostly about replacing destroyed or existing structures. Reducing soft costs improves the viability of each of these scenarios over simply walking away and building somewhere else. Lower soft costs also boost growth prospects by lowering the viability threshold of slightly denser development.

Population growth is essential in a city like South Bend because it stabilizes the tax base to fund public services with high fixed costs, like water and sewer infrastructure, public schools, and first responders. In this instance, growth isn’t just welcome: it’s critical for the city’s long-term fiscal health.

Other cities have also adapted this approach. Kalamazoo, Michigan, and Spokane, Washington have similar programs. Los Angeles, San Diego County, and Seattle have pre-approved plans for Accessory Dwelling Units. These programs have lowered the barrier to entry by thousands of dollars for new housing construction and boosted output. In Seattle, for example, the city issued 130 permits based on its pre-approved ADU plans between 2020 and 2022. 

Overall, the pre-approved plan program is an evolution rather than a revolution in building infill homes. Pre-approved designs in most markets are a helpful supplement to zoning reform in general, not a substitute: pre-approved multifamily designs that still are only allowed by zoning on a small share of residential won’t have an impact beyond the land on which they’re zoned, for example. Still, this promising initiative should help lower the burden of replacing and growing South Bend’s housing stock allowing the city to grow in a fiscally sustainable way that maximizes existing infrastructure and public services.

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