By Benjamin Peterson, Colin Cook, and Scott Williams
One of the core issues of the DeVoe Moore Center (DMC) is regulatory streamlining and reform. Previous reports on local permitting have considered particular development types, including shopping centers and telecommunications towers. The DMC’s Data Analytics Group continues to examine the permitting process and most recently began examining retail and commercial building permits. DMC researchers obtained all publicly available permitting records for these projects from 1996 to 2014 from the Tallahassee Growth Management Department (TGMD). This information was used to determine the average wait time for permits, a key measure of regulatory performance and a cost to entrepreneurs trying to open businesses in the Capital City.
Permitting processes vary from project to project, but usually follow certain prescribed steps. (The permitting process for telecommunications towers in Tallahassee was detailed in a 2016 policy report by the DeVoe Moore Center).
- An applicant acquires a Land Use Compliance Certificate, which ensures that the proposed use conforms with land development standards in Tallahassee’s zoning code.
- An Applicant then completes a concurrency application, which specifies how the project will impact public utilities and the flow of traffic.
- A Natural Features Inventory is conducted at the expense of the property owner to identify all existing environmental features on the site, such as trees, wetlands, or animal habitat.
- An applicant must also create a site plan – an initial set of blueprints for the facility and a detailed construction plan. Land developers often need to revise and resubmit hard copies of the site plan to ensure conformance to the code.
- The Natural Features Inventory and the site plan must then be approved by Tallahassee’s Development Review Committee at regularly held public meetings.
- Once an applicant’s plans are approved, they may apply for a building permit. Construction can begin after acquiring the building permit. An applicant must also obtain electrical, plumbing, fire, roofing, and mechanical permits.
- Once all these permits are obtained and the structure is built, the applicant must obtain a certificate of completion or a certificate of occupancy.
Not all of these steps are followed in actual practice. Applicants can seek exemptions from certain parts of the process, and the Development Review Committee may grant deviations or “variances” from local zoning and building codes as its members see fit.
Figure 1 shows the annual number of projects, as well as the average length of the process from start to finish between 1996 and 2014. To ensure a consistent comparison among projects, we only consider projects classified as “stores/mercantile” in TGMD records. This type of commercial development includes shopping malls, department stores, pharmacies, grocery stores, and auto shops, among others. Applying for a Land Use Compliance Certificate is considered the starting point and the issuance of a building permit is considered the finishing point of the development review process.
A total of 132 projects were completed during the period. The average number of completed projects per year was around 6.5, and the time between the first and last steps of the process averaged 1.71 years. Notably, both the volume and length of time for approval declined over the period.
These data alone are not sufficient to determine the cause of falling average permit approval times. Nevertheless, the volume of permits likely follows the broader construction market, and larger volumes of permits probably delays average process time unless staff is increased or modifications are made to the permitting process. It’s unclear if wait times would remain constant if the volume of projects rose substantially.
These time costs likely represent a major hurdle to entrepreneurship in the Capital City. According to TGMD records, the average investment into each project was $975,869, not including permit fees. Put in perspective, a continuously compounded investment of $975,869 into the S&P 500 index fund would have appreciated by about $123,320 in the average time it takes to complete the permitting process (the average annual inflation-adjusted rate of return for the S&P 500 index during this period was about 7 percent). This suggests entrepreneurs are foregoing a substantial opportunity cost (the cost of not taking the next best opportunity available) to build within Tallahassee.
Streamlining the permitting process could be beneficial to local businesses and consumers. Digitizing parts of the permitting process using computer applications could improve wait times, as well as record keeping (TGMD had complete records for only 87 of 132 projects). Simplifying the zoning and building codes could also reduce the cost to build in Tallahassee and allow entrepreneurs to better serve Tallahassee residents.