By Matt Kelly
An efficient regulatory process is essential to the business development strategies of cities like Tallahassee, Florida. Regulations that are too cumbersome or unnecessary increase the cost of doing business without serving the public interest. The growth and negative impact of regulatory accumulation at the federal level has been well documented, but local land use and permitting processes have received less attention. To elucidate the local permitting process and assess its performance, the DeVoe Moore Center has mapped the permitting process for specific development types from start to finish. A recent report by Florida State University professor and director of the DeVoe Moore Center Samuel Staley and policy analyst Matthew Kelly analyzes the permitting process for telecommunications towers, and finds it to be excessively lengthy and variable.
Figure 1. Average number of days for telecommunications tower projects in Tallahassee, Florida’s regulatory permitting process
(Source: Calculated by authors from Tallahassee Growth Management Department public records. The beginning of the process is marked by the issuance of a Land Use Compliance Certificate, and the end is marked by the issuance of a building permit. Values are given in the year a project began the process. No new towers were permitted in 2007, 2009 or 2010.)
The telecommunications sector provides an integral service, connecting people across great distances in a manner similar to the railroads of the 19th century. Increased connectivity improves economic productivity by reducing the cost of communication and allowing labor to better specialize. Whether current telecoms regulations serve the public interest is of importance to local economies, many of which would not otherwise have as much access to outside markets.
The purpose of regulations should be to correct so-called “market failures.” Examples of market failures include monopolies, information asymmetries, high transaction costs, and externalities. When a market failure exists and the private sector cannot correct it, government regulation may improve economic outcomes. However, government regulations also produce “government failures.” Crony capitalists can game the regulatory system for their advantage. Price controls and barriers to entry can create shortages. Overregulation discourages investment in a community and reduces the employment opportunities and income of residents. Government failures of regulation must be weighed against the market failures they are meant to counteract.
Tallahassee’s own permitting process for new telecommunications towers is lengthy and variable. A review of 29 telecommunications tower permit applications in Tallahassee determined that the average time spent in the permitting process between 1997 and 2011 was 274 days, ranging from a minimum of 7 days to a maximum of 688 days. Average wait times by year are presented in Figure 1. Regulatory fees levied on permit applicants averaged $2,224, 3 percent of the average project value of $66,684. Developers undergo a 10-step process, in which they must prove the need for their services, conduct geological tests, inventory natural features on their construction site, and comply with sometimes unusual and often illogical requests from regulators.
The report also presents a case study of one tower developer’s experience in the permitting process. Beginning in 2010, Tallahassee businessman DeVoe Moore and information technology specialist Freddie Figgers spent 258 days obtaining necessary permits to build a telecoms tower. A log detailing 90 phone calls and 50 trips to government regulatory agencies was kept by Moore and Figgers, who described their experience as “procrastinated”. Their experience appears to be typical of the process as a whole.
The length and variability of the permit times suggested that local regulators wield substantial discretion over the pace of approvals at different stages of the development process. This creates uncertainty in the regulatory process and, to the extent it fails to correct market failures or creates new government failures, discourages private investment and economic development.
Conversations with tower developers in Tallahassee and throughout Florida suggested that publicly owned towers experience fewer delays, while private developers face a more confusing process. Permitting is carried out by multiple government agencies, many of which fail to properly coordinate their duties. Though developers disagreed about the degree to which local regulators hinder tower construction, most said the process is needlessly lengthy and requests often have no rational purpose. Consumers ultimately pay for these delays and regulatory costs through higher prices, less access, or less service diversity.
Improving Tallahassee’s permitting process is of significant importance to its economic growth strategy. Some businesses that have prospered here for years have moved elsewhere explicitly because of the burdensome red tape of regulations. The telecoms tower construction boom has already subsided for the most part, but streamlining and simplifying the regulatory process as a whole can ensure that future innovations are not similarly stifled. Such reforms could be accomplished without sacrificing the safety of residents, since many delays analyzed in this report did not serve a public safety purpose anyway. To read more about potential policy changes that could improve Tallahassee’s regulatory environment, read the full policy report. To attract investment and jobs, Tallahassee needs a regulatory system fit for the twenty-first century.