Lowering Housing Costs with Development Process Efficiency: 6 Strategies to Get There

June 17, 2022
HubSpot Video

The housing crisis. You’d probably lose track trying to count the innovative approaches to addressing it. An array of initiatives have been touted as the solution - and in some instances implemented - including community land trusts, shared house price appreciation, density bonuses,
a ‘street votes’ system where residents govern the development on their street - the list goes on.

Yet, there’s one important factor of housing costs that’s often overlooked: the land development review and approval process. 

Every project needs approval. So why isn’t more focus put on development and permitting process improvement as a strategy for housing affordability?

As the National Association of Home Builders (NAHB) explains:

“In the quest for creative solutions, less glamorous but often more important factors of housing costs are often overlooked. In fact, if there is one silver bullet to improve housing affordability, it is probably not found in a new program or subsidy or type of mortgage. Instead, it is more likely to be found among the practices, processes, and regulations to which virtually every house built is subject.”

More precisely, the most actionable and impactful strategy to at least address the housing deficit, and in doing so, advance affordability, is to do something about slow and archaic development approvals that are costly and frustrating for all involved. 

The land development review and approval process - also referred to simply as land management - involves multiple stakeholders and a seemingly endless number of zoning laws and other regulations to navigate. As such, it’s innately complex, time-consuming, and synonymous with delays (often taking months, sometimes years from start to finish).

These delays increase builders’ overall carrying costs, and consequently, the price of new homes.

In some cases, disproportionately so with affordable housing projects that already provide a lower return on investment, lengthy delays can even cause developers to deem a project no longer feasible, adding yet another barrier to getting affordable homes built.

The City of Leesburg, Virginia, for example, saw the loss of a high-profile business that planned to open a large location due to frustrations with the city’s permitting process at the time, as an NAHB case study found

As the city explained in the study:

“A permit applicant in Leesburg could expect to submit their application seven times, with each resubmission taking well over the state-mandated 45 days for second and subsequent submissions. In addition, an applicant could expect three separate comment letters from different permitting departments sent at different times, often with conflicting comments.”

Fast-forward a few years, after an overhaul of its approvals process, and Leesburg was considered a leader in permitting efficiency, managing to incentivize that once put-off high-profile business to open a location in the city. 

The same could be said for housing development. For developers, time is money, so quicker project approvals mean more profit, and more profit means a bigger margin to take on affordable housing projects.  

Quicker and more efficient permit approvals can help cut the regulatory red tape and fill the critical housing gap. It’s not the only solution - but it’s a large part - and there’s proven and documented strategies to get there.

6 Strategies to Achieve Development Process Efficiency

To streamline processes while maintaining the thoroughness of reviews, NAHB suggests following some or all of these 6 strategies:

1. Increase staff capacity for land development review and approval (when possible)

If budget allows, keep staff on year-round, even during slower periods, to ensure trained and specialized are on-hand to maintain consistent approval turnaround times.

2. Create a separate process for expedited review 

Adopt an expedited review process for affordable housing proposals that disproportionately suffer from the costs associated with delays. This can help lower builders’ costs, and in turn, make it feasible to move forward with affordable developments.

3. Implement online permitting 

The pivotal role of permit software in fast-tracking development approvals is covered in more detail here, but in summary, online building permitting/land management systems can cover almost all - if not all - aspects of the development review and approval process under one digital roof. Essentially, permitting solutions provide a ‘one-stop-shop’ for permitting departments and their customers open 365 days of the year.

4. Create accountability 

Too often, with so many different departments involved, and no one central system to track progress, stakeholders aren’t held accountable to reasonable timelines for their part in the review process. That’s why, to create accountability, departments should adopt a digital building permitting system that includes a public-facing portal that makes department metrics and timelines public. 

5. Make the process more user friendly 

In addition to lengthy delays, a lot of the frustration related to development approvals surrounds the complexity of the process, and the lack of information about what’s needed for each application. This is made worse by the fact that each jurisdiction typically has a different process and set of requirements, so even if a builder becomes familiar with one city’s process, the next may be entirely different. 

To get around this, applicants should be provided with a comprehensive checklist of requirements at the beginning of the process, or guided through the step-by-step process using smart forms. With Clariti, for example, applicants are taken down a specific journey based on their initial selection of permit type, and given detailed instructions about what to include at each step to prevent any confusion. 

6. Take action at the state-level

Although local governments hold a lot of the power to make changes to processes and regulations governing development and land use, state governments can also make an impact by passing legislation that directly affects the review and approval process at the local level. This could include requirements that towns and cities report on permitting metrics and performance; limits on the amount of time for reviews before a permit is automatically granted; and rules that consolidate or streamline the public comment process.

If governments follow these guidelines in conjunction with other necessary changes such as loosening restrictive zoning codes and revising development standards, we’ll be well on our way to lowering housing costs by getting new homes built quicker.

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