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Local governments are constantly evolving, striving to improve their systems and offer better services to their residents. Often, the development review process remains a significant point of contention. Two Texan cities, Austin and Dallas, find themselves at a crossroads, pondering whether private entities can assist in expediting their permit approval processes.

Austin’s Development Services in the Limelight

For years, Austin’s development services have been under scrutiny. Many, including developers and regular permit system users, have pointed out the complexities and delays in the city’s site plan review process.

Key Points from McKinsey & Co.’s Analysis

McKinsey’s several-month review highlighted that a typical review in Austin includes nearly 1,500 steps, taking hundreds or thousands of hours and involving multiple city staff members.

Most reviews take more than a year to finalize, longer than many comparable cities.

The city’s land development code comprises roughly 1,800 regulations across hundreds of pages, leading to significant time investment for compliance checks.

Feedback from the community has been less than stellar, with nearly 180 city customers rating their satisfaction at a mere 3 out of 10. City staff members also reported challenges, citing issues with leadership, inter-department coordination, and overwhelming workloads.

While development delays primarily impact builders and developers, the consequences ripple throughout the community. Increased project costs can result in higher property prices, impacting residents directly. McKinsey noted that, in the worst cases, delays could cost up to $550,000 per month for multifamily projects.

Dallas’s Swift Approval System Stumbles

Dallas once boasted of its efficient in-person permit approval system, with most projects receiving the green light within days. However, the pandemic introduced unprecedented challenges.

The city’s shift to an online permitting system proved problematic. Phil Crone of the Dallas Builders Association described the situation as a “permitting crisis,” with thousands of applications untouched for months.

The existing Texas “shot clock” law, requiring municipalities to act on permits within 45 days, has done little to ease concerns. This situation has only fueled the debate on whether a third-party system could provide relief.

Potential Challenges of Privatization

While privatization promises efficiency, there are potential pitfalls to consider. Introducing third-party entities could raise concerns about impartiality, especially if private firms have vested interests or affiliations. Ensuring that these entities remain neutral will be crucial for maintaining the integrity of the system.

Moreover, transitioning to a new system always comes with its set of challenges. Training, integration, and coordination between the government and private entities could require substantial initial investment. The efficacy of this investment remains to be seen.

Learning from Past Initiatives

It’s not the first time privatization has been on the table. Other sectors have seen varied success with it, providing valuable lessons for cities like Austin and Dallas. One such lesson is the importance of transparency throughout the process. Transparent operations can minimize potential conflicts of interest and ensure that all parties involved adhere to the set guidelines and standards.

 The Broader Impact on the Community

For residents, any change in the system invariably translates to economic implications. While one of the primary objectives of streamlining the development process is to potentially lower housing costs, the direct savings might not always trickle down to the end consumer.

Moreover, with increased housing projects, there’s a potential for overdevelopment, which might not always align with the long-term urban planning visions of the city. Balancing rapid development with sustainability and infrastructure demands will be paramount.

 Feedback from Stakeholders

Engaging with stakeholders will be crucial as Austin and Dallas mull over potential reforms. Developers, homeowners, local businesses, and even potential third-party agencies should be consulted to understand the broader implications of such a change.

Early feedback from some developers seems optimistic, especially given the past delays they’ve faced. However, homeowners’ associations and other community groups might have reservations, particularly concerning oversight and maintaining the aesthetic and structural integrity of neighborhoods.

H.B. 14: A Solution on the Horizon?

A proposed legislative solution, H.B. 14, aims to address these delays by allowing third-party reviews if cities do not act within state-mandated timelines. This bill would allow a third party, such as a licensed engineer or certified professional, to perform necessary reviews and inspections, potentially bypassing the bureaucratic hold-ups prevalent in city governments.

Supporters, like James Quintero of the Texas Public Policy Foundation, argue that H.B. 14 offers a market-based solution, leaning on professionals already licensed by the state to expedite the development process.

Future Outlook

As the debate rages on, the eyes of many other cities across the nation are on Texas. If Austin and Dallas can successfully integrate third-party entities into their permit approval processes and yield positive results, it could set a precedent for others to follow.

However, the journey ahead is filled with uncertainties. Both cities will need to tread cautiously, ensuring that in their bid to expedite processes, they don’t compromise on quality, safety, or community interests.

In the end, the goal remains clear: to create a system that fosters growth while ensuring the well-being and satisfaction of its residents. Whether privatization is the answer to this intricate puzzle will unfold in the coming years.

Conclusion

Both Austin and Dallas, despite their unique challenges, underscore a pressing issue faced by cities nationwide: streamlining the permit approval process. As local governments consider the involvement of private entities, it becomes clear that a balance between efficiency, transparency, and public interest is paramount. H.B. 14, among other proposed reforms, may pave the way for a more agile, responsive local government operation. Only time will tell if privatization proves to be the silver bullet.

At Front Line Advisory Group, we are pioneers in Capital Improvement Bond Management, leveraging unparalleled expertise and deep industry insights. Our mission extends beyond consultation – we empower our clients to realize the full potential of their investments, ensuring tax dollars are put to maximum use through astute Program Management Consulting. For more information or to commence your journey towards transformative bond management, reach out to us at info@frontlineadvisorygroup.com

 

Further Information:

https://communityimpact.com/austin/central-austin/government/2023/08/30/consultant-report-details-extensive-issues-in-austin-permitting-system-fixes-proposed/

https://reason.com/2023/04/07/texas-considers-bill-to-privatize-the-business-of-issuing-building-permits/

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=88R&Bill=HB3699

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=88R&Bill=HB14

FLAG provides program management consulting services in Central Texas for municipal and school capital improvement bonds. FLAG is revolutionizing the construction industry and transforming client expectations by obsessing over the basics of budget oversight, schedule enforcement, compliance, vendor management, and stakeholder communication.

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