What’s Driving Faster Permit Approvals

Until now, there wasn’t any objective understanding of the system by which the city decides where and what can be built around San Diego. Discussion around the system has been entirely anecdotal. But after a sustained push from Voice of San Diego, the city has released records from its permitting system. We’re using the newly released data to get solid answers to basic questions, and see what else we can learn about the city in the process.

♦♦♦

Developers are getting permits faster than at any point in the last 10 years, but it’s not clear what’s driving the change.

City leaders would love to take credit, but even those in charge of the city’s Development Services Department recognize there’s more to it than that.

The drastic drop in permitting times coincided with the recession. It also coincided with a new outline for where and how the city should grow in the future, and some modest changes to development restrictions.

The collapse of the real estate market, which made developers wary of pursuing ambitious projects and of pushing to get projects approved, played a big role, and the city’s bureaucratic fine-tuning could have helped too.

Applications Cratered

The number of projects submitted to the city cratered once the recession hit. It went from more than 1,300 in 2005 to just 318 in 2010.

With DSD’s workload — the total number of requests it needed to review — falling that far, it’d make sense to assume that accounted for its improvement in approval time. With less work to focus on, it got more efficient with the work it had.

That doesn’t seem to account for much of the change.

Unlike other departments, DSD’s staffing level comes from the fees it collects from developers. That means its staffing levels rise and fall with how much development is taking place.

Indeed, the data shows that the number of DSD project reviewers tracks closely to the number of projects it has to review.

But the volume of projects the city is seeing could still play a part. That’s because many of the projects require public hearings in front of community planning groups, the citywide Planning Commission and the City Council. The opportunities for a hearing at those meetings are limited, so even if city staff and developers are moving a project forward, it’s possible for a queue to build up if too many projects are waiting for their chance, said one DSD official. “I think the volume of projects is a chunk of the story,” said Jim Myers, deputy director for DSD. “I see our review performance getting better, but not better to this degree.”

The Market Crashed, and Developers Got Patient

Developers actually have a lot of control over how fast discretionary projects get approved. Our “approval time” measures projects from the day they’re submitted to the day they’re approved. In between, there’s a lot of back-and-forth between project reviewers and developers. We’re measuring both reviewers and developers at once. During the recession, it started taking a really long time to get a project approved.

Jeff Barfield, a developer with RBF Consulting, said the spike in approval times came from developers who didn’t want to bring a project to the market when the economy was so bad that it wouldn’t be successful.

So, they started dragging their feet, and put projects on ice until things recovered.

“That spike came from developers looking at the market,” Barfield said. “That’s clear as day to me.”

Once projects are approved, developers have a limited time before they can begin construction, or else the approval expires.

Developers knew they didn’t want to begin construction and start selling condos when unemployment was high and would-be homebuyers weren’t ready to enter the market. So they found ways to play out the string and get projects approved once things started to improve, Barfield said.

Likewise, David Graham, the city’s deputy chief operating officer in charge of Development Services, said some of the projects at the height of the recession had been conceived during the boom years and reflected unrealistic requests in the first place.

The faster approval times during the recovery show how those requests changed, he said.

“As things got tighter in the market, that risk-averse nature starts kicking in, so investors aren’t going after those pie-in-the-sky projects,” Graham said. “They’re saying, ‘We need to get this done, we only have so much time, and this is what we can get in and out the door quickly.’”

There is evidence that developers got more realistic once the recovery got started.

During the worst years of the recession, the share of projects approved by the city was at its lowest point, with the remaining projects getting rejected or abandoned. In recent years, the share of approved projects reached a high, even though they’ve had far less time to work their way through the process.

That could be evidence that developers grew practical during the recovery.

The Ever-Popular Streamlined Permitting

If you’ve listened to a mayoral or City Council debate in San Diego, you’ve heard assurances that city leaders are cutting red tape and streamlining bureaucratic processes.

Mayor Kevin Faulconer, for instance, commissioned a report when he took office that used the word streamline 20 times. It specifically said the city needed to streamline the permitting process to fix regulations that “contribute to high construction and permitting costs for market rate housing.”

Before him, former Mayor Bob Filner in his inauguration promised to streamline the city’s regulatory process so “entrepreneurs who want to create good-paying jobs can count on a timely and predictable response and fixed costs from the city.”

It’s a popular message.

It’s reasonable to ask, then, whether the drop in the time it takes to get a discretionary permit is evidence that those initiatives are actually happening.

The city has passed some regulatory reforms in recent years.

In 2008, the city passed a new general plan — its outline of major development priorities and guidelines.

That doesn’t change much about what developers can actually get approved, since it doesn’t alter what types of things can be built in a given area.

But Graham said it was still effective in communicating the ground rules for new projects.

“In a lot of cases, inconsistencies with the general plan can be a problem and cause hiccups in the development process,” he said. “Those inconsistencies can cause a lot of back and forth with the developer and regulatory staff.”

The city has also passed two major updates to its citywide development restrictions, its land development code.

Amanda Lee, the city staffer in charge of those revisions, said they were each focused on regulatory reform. For the most part, that meant moving certain proposals to a lower level of discretionary review.

The first, for instance, was passed in 2011 and gave certain proposals a bit less scrutiny. Residents could open a dance or art studio in their apartment with a simple over-the-counter permit, for instance, rather than going through a more cumbersome discretionary review.

The changes the City Council passed in 2013 were similar. Restaurants could open sidewalk cafes with less rigorous review, for instance.

But it’s hard to credit much of the decrease to the city’s regulatory reforms.

None of the changes made in 2013 would show up in the data at this point. And the 2011 changes came after the brunt of the drop had already taken place. The timing of the new general plan looks great, but that’s the one that changed the city’s overall philosophy, but didn’t make any specific changes.

Damon Crockett contributed data analysis to this story.