Long Island homebuilders say zoning rules, insurance costs are biggest obstacles

A group of Long Island homebuilders said Wednesday that lengthy delays to get municipal approvals and the cost of construction insurance are among the top obstacles to building housing in the region.

The comments came as the Long Island Builders Institute, the Islandia-based trade group, released a report on the economic impact of residential construction to Long Island’s economy.

The report found nearly 20,000 people were directly employed by construction companies involved in building single-family housing and multifamily housing as well as residential remodeling. The analysis was conducted by the consulting firm Camoin Associates, which specializes in economic development and has performed other analyses for local industrial development agencies.

In addition, the analysis attributed 114,000 employees to the building industry when adding in employees of contractors responsible for concrete, framing, masonry, roofing, siding, plumbing and numerous other trades. That total also includes a portion of workers at construction wholesalers, hardware stores, and home centers as well as attorneys, engineers, building inspectors and surveyors, among other professionals.

The figure represents more than 10% of the Island’s workforce, according to state Department of Labor data.

The report also counts more than $150 million the industry contributes on Long Island toward sales, income and property taxes. 

"We wanted to quantify what the industry meant to Long Island," said Michael Florio, CEO of the Long Island Builders Institute, at an event Wednesday in Farmingdale, surrounded by local developers and construction industry leaders. Others at the event noted the report could be used to demonstrate to lawmakers why they shouldn’t introduce legislation that might hurt homebuilders.

A survey of Long Islanders last year showed residents want more affordable housing options but don't favor dense housing. Inadequate homebuilding over the past decade is one reason experts say the cost of housing on Long Island has risen. The median home price across Long Island, excluding the East End, hit a record in the third quarter at $700,000, according to real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.

Top obstacles

Camoin researchers conducted interviews with 15 local builders and identified five obstacles to building on Long Island: land costs and availability; delays in getting zoning changes approved; lengthy waits to get building permits; community opposition to new development; and the cost of construction insurance.

"Liability insurance is higher here than pretty much every other state," Jonathan Weiss, principal and president of construction at B2K Development, said at the event.

Those barriers are leading more developers to take up projects in other lower-cost states, Florio said.

"The process here is often too burdensome," Florio said. "It's too costly, and it takes too much time. [Developers] could go to North Carolina or South Carolina and find a piece of property, and they could be constructed and done in a much shorter period for a much lower cost."

He added later: "If communities came to us and said, ‘We want you here. We’re willing to do this.’ It would be an easier process."

Those obstacles are keeping young Long Islanders from having adequate housing options, said Anthony Bartone, managing partner at Terwilliger & Bartone Properties in Farmingdale.

"Our schools are terrific, right? We're making the investment, but we're not capitalizing on that investment because our next generation is leaving," Bartone said. "Why are they leaving? They don't have a place to live."

The report took a broader view of the economic impact of the industry calculating not only the workers employed and revenue generated by builders and supporting industries but also induced economic effects that result from spending by employees as well as employees of suppliers at other non-construction businesses.

When taking this broad view, the industry accounts for $41.7 billion in sales, which represents 9% of the total Long Island economy, according to the report. Builders and the other firms that support their work generated $24.8 billion in sales, the report said.

The builders announced the report at a new 12-unit apartment complex on Conklin Street in Farmingdale. The Enclave has all two-bedroom, two-bathroom units with backyard space, which are renting from $3,650 to $4,000, said Grant Havasy, president of the developer Blue & Gold Homes in Huntington.

The rents are necessary to recoup construction costs, which have increased about 50% compared with a project the developer completed in 2018, Havasy told Newsday. That accounts for rising labor and material expenses but also a surge in the price of construction insurance.

Without rents at that level, Havasy said, a few expensive maintenance calls could wipe out his profit on an individual unit.

"We constantly have to keep going to the next [price] level," Havasy said. "This is $3,650 to $4,000. I would love this to be $3,000 to $3,650 because I know it would rent much quicker and that many more people would qualify."

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.