‘Workforce housing’ fees make homes more expensive for everyone

The most expensive county in Wyoming to build a house thinks everyone should pay more to build a house. Does that make sense?

In Teton County’s twisted logic, forcing residents to pay higher building fees to support “workforce housing” is the solution to its chronic housing shortage for lower-income residents. The fees apply even if those building include plans for rental units that would ease the problem.

One Jackson couple is suing in federal court to stop the insanity. Given recent Supreme Court decisions, those who hope to build in Jackson should be optimistic the fees will be overturned. They should also prompt the county to reduce the regulatory burden – that helped to drive the average price per home in the area to $7.4 million earlier this year— and give notice to jurisdictions throughout the country that their unwise and costly housing policies are on the judicial chopping block.

First, the back story: Trey and Shelby Scharp purchased five acres of land with a 1,000 square foot cabin in 2021. After navigating the most expensive and unwieldy permitting processes in the state and changing plans multiple times to accommodate requirements that wouldn’t allow them to build a separate rental unit in their basement (single-family code violation), they were told they needed to pay a $25,000 “workforce housing” fee in order to build their proposed modest house. They didn’t dispute it because they didn’t want to delay their project any further.

Teton County determined these fees were necessary as a study it commissioned found that new builds produce jobs that don’t necessarily pay enough to live in the county. As Pacific Legal Foundation (PLF), the pro bono group representing the Scharps, described the situation, “Individual property owners who don’t control market wages or housing costs are forced to pay for broader economic issues they didn’t create.”

And to put Teton County’s code and fee process in perspective, a 2023 state legislative study found that code and fee compliance in the locality adds an additional $64,000 per unit for developers building a 10-lot entry-level subdivision. In addition, obtaining all the proper permits averaged 1,034 days. By comparison, the study found that in Sheridan County codes and compliance added an extra $3,150-$6,150 for the same type of subdivision with a time frame of obtaining permits averaging 141-215 days. In Natrona County, compliance cost $4,290-$5,290 with a timeline of 123-125 days.

Legally, Teton County’s case is as well built as the proverbial straw house.

Multiple Supreme Court cases (Koontz v. St. Johns River Water Mgmt. Dist and Sheetz v. Cnty. of El Dorado), show that, as PLF writes, “A plaintiff need not wait for a permit denial, file a variance, or pursue administrative workarounds in order to state a claim. Nor does subsequent negotiation, reduction, or even acquiescence to the demand eliminate the injury. The constitutional violation is not defined by the final amount paid or whether the government was successful in its demands, but by the coercive use of government power to force a rights-holder to choose between exercising their right or receiving a public benefit—here, a permit to build a family home.”

Austin Waisanen, a PLF attorney litigating the case, said, “with that [Sheetz] decision and the growing bipartisan consensus recognizing that we can only build ourselves out the housing affordability crisis, it’s open season on these wrongheaded inclusionary zoning policies that assume that new construction would somehow worsen housing affordability.”

He’s hoping for a decision within a month. May the decision spur cities and counties around the nation that require “workforce housing” fees—many in places where homes are exorbitantly expensive and out of reach for most residents – to reduce the regulatory burden to make more homes available and affordable.

As the state legislative study notes, many regulations have nothing to do with safety. It recommends adding sunset provisions for codes, so that officials can review whether they were effective at regular intervals, and reducing regulation by five percent per year for five years or at a minimum, eliminating a code when a new one is added, among other ideas.

Lawmakers can also consider the permitting reform adopted by Florida in 2021. That law creates penalties for enforcement agencies if permits go unapproved within 30 business days for single-family units, or if additional information is not requested. A 10 percent reduction per day is then applied to the fee. 120 days is given for master building permit applications, and the same 10 percent reduction per day is applied to the fee. This reform is fixing housing challenges in Florida.

These reforms and other suggestions would be a great place for Teton County to start laying the foundation to make housing more affordable in reality rather than in theory. In addition, the state legislature should also revive and consider 2025’s Senate File 40, which would ban workforce housing fees as a condition of building, to codify common sense.