Delays in Building Permit Approvals Cause Millions in Lost Revenue for Communities.
Communities with a more efficient building permitting process can gain millions of dollars in tax revenues and significantly bolster their economic development.
Delays in local permit processes have been costly and frustrating for architects, engineers, developers, general contractors, local governments, and building occupants for many years. Numerous budgetary and institutional constraints have limited the ability of government officials to adopt meaningful reforms. In the interest of addressing some of these concerns, the American Institute of Architects funded this ground-breaking report by PricewaterhouseCoopers LLP to study the relationship between permit processes, local economic activity, and government revenues. The study finds opportunities to increase local development activity and government revenues through the implementation of more efficient permit processes.
The study concluded that the implementation of a more responsive permit process over a five year period could result in a 16.5 percent increase in property taxes and a 5.7 percent increase in construction spending. The costs of regulatory delays on economic development are largely unseen because it is not readily apparent that buildings are not being built, potential tax revenues are not being collected, and related jobs are not present.
“Inefficient permitting processes are equivalent to a drain on economic development. Project delays lead to higher costs that either will be passed through to occupants or will discourage new construction. Less new construction, by reducing the total supply of buildings in a community, will tend to lead to higher rents for everyone,” said Linden Smith, Managing Director, PricewaterhouseCoopers. “Conversely, a municipality with an efficient and predictable permitting process will attract investment by reducing the risk of scheduling delays and cost overruns. All else equal, investment dollars will be drawn to these municipalities.”
Prepared for the American Institute of Architects by PriceWaterhouseCoopers. Posted here with permission.