PropTech Challenge and Yacht Party, Nov. 29th | NYC REAL ESTATE TECH WEEK →

How Technology and Public Pressure Can Speed Up the Building Permit Process

Obtaining building permit approvals has never been easy. For landlords, a delay in getting a permit is a delay in doing business. Delays in getting projects entitled also add to the cost of developments, which is especially unwelcome as construction materials prices continue to rise and supply chain problems drag on. They can even lead to serious financial repercussions if construction loans come due. Permit delays aren’t just impacting landlords. Without a place to occupy, tenants will sometimes have to pay for temporary ‘swing space.’ 

Building permitting delays were a problem before the pandemic, but when COVID-19 hit, it was like throwing a wrench in a giant, worn-out machine. Nationwide lockdowns and social distancing precautions caused building departments to close their office hours or Many departments offloaded their permitting processes online. Since September 7, 2021, applications for NYC Department of Buildings-issued licenses and registrations must be submitted online. 

In New York, real estate professionals say obtaining commercial building permit approvals should continue to improve, but it’s still a major headache. “The new NYC mayor (Eric Adams) is keen to get the city building again, so he’s been proactive about permit delays,” said Joe Stevens, Partner at Turton Bond, a construction consultancy firm. “In the next 6 to 12 months, there’s probably going to be a big improvement with permitting in New York City.”

Wildly complex systems

Many major U.S. cities continue to grapple with construction permitting challenges, but some are worse off than others. In Dallas, real estate and construction professionals are furious with a permitting process that’s been clunky since the pandemic started. Residential builders say it’s taking 8 to 10 weeks to get approvals. On the commercial real estate side, Linda McMahon, head of the Real Estate Council, said she receives a “daily barrage of emails” from brokers and small developers who can’t figure out why the permitting process is taking so long. The problem has received widespread media attention in Dallas and could culminate in the firing of embattled City Manager T.C. Broadnax.

Portland, Oregon, is having similar problems. The current wait time for securing permits for new construction there is nearly 200 days. Portland’s Bureau of Development Services is working on the backlog, setting up a task force last year that recommended consolidating all the infrastructure bureaus under one manager. Terri Theisen, a Portland city official, said the consolidation would decrease the number of departments permit applicants would have to interact with. “It’s a wildly complex system,” Theisen said. “Customers have to interface, depending on the project, with up to seven different bureaus on one project, and that’s not with the same person.” The bureaucratic slog in some cities like Portland and Dallas is a nightmare of Kafkaesque proportions.

Stevens of Turton Bond said another way building owners and developers can speed up the process is by using building permit expediters. Expediters are consultants who help a client through the permitting process. They let building owners know when to file permits, work through other logistical hurdles, and have critical relationships with building department officials. One could almost think of them as a more benign version of a “fixer” who periodically appears in a Quentin Tarantino movie.

Common delays in permit approvals come from the submission of inaccurate or incomplete Request for Information documents, which is an area where expediters can help. All requested information must be filled in, and sometimes busy developers and building owners gloss over small details that ultimately come back to haunt them. Once the paperwork is filed, circulating the forms takes time. Even with online permit application systems, officials must slog through hundreds or even thousands of documents for review.

For cities without online systems, “sometimes the progress of an entire project depends on a piece of paperwork that gets buried on someone’s desk,” says Milrose Consultants, an NYC-based permit expediter. Building owners who have an expediter in their corner may gain inside access to building officials, and that piece of paperwork gets discovered more quickly. Still, even with the help of expediters, Milrose Consultants estimates some approvals, such as fire safety plans from the FDNY, can take between 6 to 8 weeks at least.

A moving target

With the country facing a housing shortage, permit delays will only slow down construction at a time when some cities and states desperately need new housing supply. This is especially true in California, where the state’s housing department says it needs to double its current rate of housing production in the next seven years to keep up with expected population growth and prevent further price increases.

The phenomenon of Accessory Dwelling Units (ADUs) in California has helped many residents, but it has also been hindered by permitting backlogs at local building departments. ADUs allow homeowners to extend their primary residence with an extra dwelling, usually in their backyard. The units are known by many names, including ‘granny flats’ and ‘in-law suites,’ these units are also sometimes used to generate passive revenue through short-term rentals. California loosened regulations for ADUs in 2016, but the rules on how to apply for permits can still be complex and confusing.

California’s slow permitting process led a team of researchers at Stanford University to create new technology that aims to speed up the permitting process. Some of those researchers went on to found a company called Symbium. Symbium’s tech encodes ADU use-case scenarios and zoning regulations, so building officials, developers, and residents instantly know what’s possible on any property. It’s like a Google search for zoning regulations. “The technology can eliminate the back-and-forth between developers and planners,” said Leila Banijamali, Co-Founder & CEO of Symbium Corp. “The idea is to get the permit approval process down to a fifth of the time it usually takes.”

At the moment, Symbium’s technology is only being used in California, but the company is looking to expand into other states. The tech is also only being used in residential housing, but Banijamali, the company’s CEO, said it could easily be transferred not just to commercial real estate but “virtually any industry that’s highly regulated, such as the financial sector.”

Steve Vallejos, CEO of prefabADU, a California-based ADU construction firm, got his start with accessory dwelling units 17 years ago and has worked with many cities on streamlining the permit process. At first, Vallejos said the challenge was getting cities to understand that the dwelling units were legal. Some cities fought against ADUs, others were more receptive, but so many applications flooded building departments that approvals slowed to a crawl. Then, during the recession that started in 2008, getting approvals became easier because “no one was building,” Vallejos said. But then, about a decade later, the pandemic slowed things back down again. “Permitting is a moving target,” Vallejos said.

In general, Vallejos told me city building officials aren’t that helpful in answering permitting questions, which is why tech like Symbium has helped. Every city building department his company works with has staffing problems, and the manual review process becomes a burden for everyone. “In more backlogged cities, you sometimes can’t even get an appointment,” he said. “It can take up to 120 days to go through the process, and I’ve seen this happen in almost every city. They don’t have the resources to whittle down the backlog.” 

Vallejos said he’s working with local cities to eliminate their unwieldy online permit application submittal systems that have poor consumer-interfaced protocols. The systems are built more for internal recordkeeping than for developers, building owners, and consumers looking to submit documents easily.

Every day counts

Milpitas, California, is one of the cities in the Golden State that has begun using Symbium to streamline its permitting. Avery Stark, the Associate Planner for the city of Milpitas, said the tech “puts the power in peoples’ hands.” Building owners, developers, and residents get permitting questions answered without interacting with a city planning staffer or traveling to city hall. Instead, they do everything on their own time from their home. “The information people get is the same they’d get in person from a city staffer,” Stark said. “And it’s available to them 24 hours a day, 7 days a week.”

The tech has also been helpful for a city planning staff that’s stretched thin. Officials don’t have to answer repeated questions, and the approval process for permits has been smoother. Before using the technology, people wanted answers they could only get from architects and engineers. So, there would be sometimes 45-minute phone calls plus emails, adding to the planning department’s workload. “We’d only be able to do this during business hours, so it was challenging for staff,” Stark told me. “The tech helps clean up the questions we’re asked and provides better information.”

The building permitting process has been a complicated one for a long time. The American Institute of Architects conducted a study in the 1990s on why the permitting process often moves so slowly. Greg Burke, a Florida-based architect, said the study’s results remain mostly true today, and there’s a ton of blame to go around. Building departments are usually frustrated when they receive permits with missing information, leading to a so-called ‘volleyball effect’ of comments and responses from developers and building owners. Architects and engineering consultants are sometimes well-versed in providing the correct information on permit applications, but some aren’t.

The predictable results of all this dysfunction are that building owners and developers lose potential income from not getting their buildings operational, and building departments get further behind on the mountainous number of permits that get filed daily. More jurisdictions are moving permitting systems online, which should significantly help speed up the process.

Building departments are under increasing pressure to speed up permitting and code reviews, and this is happening at the same time that departments are short-staffed and municipal budgets are shrinking. New technologies are simplifying permitting regulations and providing property owners with quick answers, so using automated systems for code and permitting reviews seems like a perfect solution. But, don’t expect building department officials to be replaced anytime soon. Software-based solutions can’t creatively read and interpret codes and regulations like humans, and they also can’t replace the experience of building officials. There’s also an art to the negotiation process between developers and building officials that no artificial intelligence can replace (yet, at least).

New tech developments that help with permitting are exciting and should be celebrated, but they still have a long way to go. Meanwhile, building owners and developers will have to do what they can the old-fashioned way. A delay in a permit approval is a delay in doing business, and every day counts. For developers, building owners, and backlogged building officials, time is of the essence with permits, so any improvements are welcome.

Image - Design