This isn't really about government spending, since the regulations are written by people not affected by the costs of projects. It's a bit muddled in this case

This isn't really about government spending, since the regulations are written by people not affected by the costs of projects. It's a bit muddled in this case because it's public housing, but those are still far removed levels of the government (national vs. municipal). The local governments are just one of many groups of stakeholders who regularly provide input to the regulatory process.