New Reports Highlight the Cost Savings of Faster Development Reviews

Filed in Land Development by on January 13, 2016 0 Comments

landdev1Land development review processes and regulations aren’t glamorous. But their impacts on the cost of new housing strike a chord with most developers and builders across the country, and for good reason: When money is lost as a result of project delays, that money won’t likely be recovered.

Within the last decade, development approvals in many parts of the country have gone from taking just a few months to now dragging on for two years or longer—often times much longer. And that time equals money.

An economic impact analysis recently commissioned by the Montgomery County (Maryland) Department of Permitting Services (DPS) shows just how much is at stake. Adding a year to the review process can reduce the value of that property by an average of 20%. Or, from a more positive angle, shortening the time from concept to occupancy by one year could save the business as much as 20% of the project cost.

Inefficiency doesn’t just squeeze the balance sheets of developers and builders. It can also negatively impact housing affordability, increase government offices’ administrative costs and stifle economic growth.

NAHB recently released a report, “Development Process Efficiency: Cutting through the Red Tape,” highlighting specific examples of developers, builders, land use officials and other stakeholders working together to improve the review and approval process and better control housing costs to create a win-win for all parties.

Washington state is one example from the report where the state auditor’s office created the Local Government Performance Center to improve the permitting process. In 2012, it launched the Lean Academy to provide in-depth training to government representatives involved in the permitting process, teaching them how to identify inefficiencies and implement streamlining initiatives.

Several Washington counties that participated in the Lean Academy have reported substantial reductions in permitting approval times. Clark, Kitsap and Whatcom counties, for example, have all reduced their average times to approve residential permits by more than two thirds.

Similar time reductions were seen in Montgomery County, Md., after its county executive implemented a streamlining initiative in 2012. Since that time, record plat processing declined from 20-30 weeks to 8-12 weeks. Site plan reviews that used to take more than a year are now required to be completed within 120 days. And the time frame for building permit approvals dropped from 12 weeks to 30 days.

This speedier review process was the result of several changes the county adopted, including increased agency accountability. Agencies are required to consistently release reports showing statistics of their current review times year over year. Additionally, agencies are implementing online permit filing, increasing staff, and educating applicants how to avoid common application errors that can delay reviews.

The report can be viewed in its entirety on nahb.org. This topic will also be covered in more detail during an upcoming webinar hosted by NAHB’s Land Development Committee to be scheduled this spring.

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