Texas Considers Bill To Privatize the Business of Issuing Building Permits
If a municipality fails to approve or deny a permit by state-set deadlines, developers could hire private third parties to get the job done.
Dallas builders construct a huge amount of housing, in part because the city government approves their projects pretty quickly.
While it can take some jurisdictions around the country a year or more to process permits, Dallas' in-person approval system could normally get an applicant their permits within a few days.
At least, that was true before COVID, which shut down Dallas' in-person system. Meanwhile, the online permitting system the city had been in the process of setting up proved to be a disaster. The result was a "permitting crisis" says Phil Crone, of the Dallas Builders Association, whereby applications for thousands of new units were sitting idle and untouched at city hall for months.
Under an 18-year-old Texas "shot clock" law, municipalities have to approve or deny development permits within 45 days. Subsequent reforms have reduced those deadlines to 30 days for some applications.
If cities miss those deadlines, they have to refund applicants' permit fees. "As far as I know in 18 years, no one has ever gotten a refund," says Crone.
That's because cities like Dallas give applicants the option of waiving their rights to a refund if the city misses the state deadline. The alternative is the city can just deny your permit after the 45 days are up.
Crone says most builders end up taking that deal as the only way of getting their project approved. "You only have one way through if you're applying for a permit in a city. The city is the only vendor you can work with there," he tells Reason.
This year, the Texas legislature is considering injecting a little bit of competition into the issuance of building permits.
Working its way through the process currently is H.B. 14. Under the bill, if a city doesn't act on a development application or conduct a necessary inspection within 15 days of state-set deadlines, an applicant could hire a third party to perform the necessary reviews for them and sign off on their permits.
The third party could be a contractor hired by a regulatory agency. Or they could be a private party, provided they're a licensed engineer, or (if they're being hired to perform building inspections) certified by the International Code Council.
The bill requires that these third-party reviewers actually be a third party. They couldn't be the applicant or someone whose work is the subject of the application.
Supporters argue that speeding up the approval of new housing projects will route around Texas' existing layers of bureaucracy.
H.B. 14 creates a "market-based mechanism by which professionals who have already been licensed by the state can apply their talents in such a way that kind of circumvents the bottleneck that exists in municipal governments," says James Quintero, director of the Center for Local Governance at the Texas Public Policy Foundation.
The bill is part of a package of zoning reforms that would make already-affordable, development-friendly Texas an easier and cheaper place to build.
Another bill being considered this session would shrink minimum lot sizes to just 1,400 square feet, down from the 5,000 and 7,000 square feet some cities require. The idea is that by reducing the amount of land required for each house, homes can be delivered more cheaply. Houston's shrinking of minimum lot sizes down to 1,400 square feet is credited with kicking off a boom in the construction of smaller townhomes. The bill would only apply to cities in counties of 300,000 or more people.
Additionally, the legislature is considering bills that would allow homeowners to build accessory dwelling units on their property by right and pare back local height restrictions.
The idea is to "get government out of the way and allow the private sector to increase the supply of housing and meet demand and bring down the cost of living," says Quintero.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.
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Reminds me of having my water heater replaced in 2016. Codes compliance showed up to check it 11 months later.
I rebuilt my house myself in 2012. My plan is just to be eternally under construction and never have a final inspection. Seems to be working.
Your neighbors must love you.
I fit in just fine. And “under construction” mostly just means I haven’t finished all the interior trim yet.
Gunshots, chainsaws and broken cars in the yard aren’t anything to be concerned about in my neighborhood, if that gives you some idea.
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“get government out of the way and allow the private sector to increase the supply of housing and meet demand and bring down the cost of living,”
That’ll never work.
/Gavin Newsom
At least, that was true before COVID, which shut down Dallas’ in-person system.
Just to clarify, COVID didn’t shut down shit.
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Residential permits only got permitted that fast if you paid the “fast track” fee.
NO virus has, or ever will, shut down anything. Government reaction, which is often OVER-reaction shuts things down. I believe that is your point.
“Just to clarify, COVID didn’t shut down shit.”
Like making it clear that the ‘public’ schoo0ls are actually government schools, this can’t be repeated often enough.
Newsom and Breek sure the hell shut down major parts of the economy, and were they ever surprised when they flipped the switch the other way and nothing happened.
There are a number of smaller municipalities that I’ve come across in my professional experience that use 3rd-party building code consulting firms, engineering or architecture firms for their plan review. And there are some state agencies that do the same for projects under their jurisdiction (gaming commissions, other various departments, etc).
But I’ve never seen a plan to implement it as an option statewide. I wonder how that would work. Would the municipality have any say in approving the 3rd party review? If so, how would that potentially differ from what the system offers now? If not, local residents might feel that they have no democratic input in the process.
Democratic input in deciding what others can do with their property.
It’s not libertarian, but we do it all the time. Planning and Zoning Departments and the accompanying regulations. Building codes, building inspections, and even building permits. Homeowners’ Associations.
People seem to like that stuff. They lose their shit when you suggest that zoning should be abolished, for instance. And, it doesn’t always have to only go in the one direction that it typically seems to – more regulation – either. Look above at how Houston is loosening their requirements on minimum lot size and accessory buildings. The county I live in recently decided that a home owner no longer needs a permit to build a patio (still need one for the smallest of decks, though!). Etc.
Yeah, I get that. And personally I like being in a town that has had a minimum lot size for subdivision. But I still signed a petition to lower the size on principle.
if a city doesn’t act on a development application or conduct a necessary inspection within 15 days of state-set deadlines
They have their chance for input, but they need to get off their fat asses and get to work if they want it.
I’m not sure how I feel about my competition getting to determine if my permit gets approved.
It would work EXACTLY the same as it does in the municipalities you reference, with ONE exception. Applicant’s wouldn’t have to wait for the municipality to decide to use the contractors. That should be BLATANTLY OBVIOUS to anyone with even minimal experience in the field.
How about get rid of building permits? Private owners building their own houses should be able to do as good or shitty a job as they want. Or as their insurance companies will allow. Contractors and developers will have to make their insurers happy.
Building codes are a fucking racket. They keep adding new bullshit every year so they can sell updates.
Not only that but the process creates price floors in housing (no pun intended) which results in homelessness. Add in hikes to minimum wage and I don’t think the government could fuck over the poor more if it tried.
Ya, the great middle-class ripoff. I can afford to keep a house that is worth 200-300k, but that keeps a lot of people out of the market. And rentals are getting pretty insane too these days.
Oh they could.
Every 3 years. Your point still stands, though.
Would you propose getting rid of both the commercial building code and the residential one, or just the residential one? What about high rise apartment buildings?
As mentioned, let the insurance companies (or the banks putting up the money) set the standards.
Example: My county doesn’t care if I install a wood stove, but my insurance company demands $400 more annually. I have a choice and no government required.
I think that in the absence of government-enforced building codes, you would end up with a private set of industry-wide standards that is agreed upon by architects, engineers, bankers, insurers, contractors, etc.
Which is pretty similar to how the building codes are written currently, it’s just a different enforcement mechanism for making sure that they are followed.
I could possibly be convinced that some kind of code is necessary or desirable in denser urban areas. There your effects on neighboring properties are far more direct and potentially dangerous. Similar for large residential structures or developments.
Both. The ICC operates as a non-profit and forces contractors, architects, engineers, and other tradesmen to purchase very expensive code books just to access the building codes. A set of code book is over $1500. And these codes are required. The ICC sued a company for trying to make building codes easier to access (upcodes)
You can read all of the codes online for free, but it’s all protected as far as saving or printing unless you purchase a subscription.
My firm does not buy physical code books anymore.
I haven’t bought a physical code book since 2003.
(Edit) The problem isn’t necessarily the cost of the books, it’s that they have to justify their existence so they “update” them every 3 years, adding in more restrictions (personal favorites are saying that single family residential should be built with fire sprinklers, and the fucking energy code).
In addition to those two, the new accessibility code changed the diameter of the turning circle to 5′-6″.
We have several AHJ’s that are still using the 2009 energy conservation code because the new one is so ridiculous.
99
Every 3 years MAY be the norm wherever you are. Every 3 months may be the norm in other jurisdictions. YOUR point isn’t valid at all. Zeb is correct either way.
The International Code Council, which publishes the most widely used set of building codes used in the US (and a couple of other places) publishes updated code books every 3 years. That is a fact.
AHJ’s (Authorities having jurisdiction) such as Municipalities or states, usually do not update their ordinances that often. For instance, the state of Indiana is still using the 2012 IBC, and I only have one project currently that is under the most recently published code (2021).
I do not know of any place anywhere that updates the building codes as often as you claim. The code officials need more time than that to learn the new rules.
According to Robert W. Poole’s Cutting Back City Hall, that is precis3ly how even Socialist France in the Eighties handled construction. Inspection was entirely handled by private insurers. If it didn’t pass, the insurers wouldn’t insure it and the owner took their own risks and was still liable for torts to others.
I don’t know if France is still like that, but it makes sense. France also has plaster-dipped straw bale constructed homes that have stood for centuries.
“The bill would only apply to cities in counties of 300,000 or more people.”
Then it’s bullshit. No just law requires exemptions.
Equal treatment and all that jazz.
So will the contractors be paid from the permitting department pension fund?
Maybe fire one employee at random each time the deadline is missed?
Typically the permitting fees are paid by the person seeking the permit, and ultimately the owner of the building / property.
In the cases where we have a municipality that uses a 3rd party company for plan reviews, they typically have an arrangement where the reviewing company is paid one of three ways:
1. Directly from the permit seeker
2. Hourly from the municipality when their services are engaged
3. A flat monthly fee paid by the city, with some caveats / bonuses for times when there is either little to no activity or lots of work to review
In the case laid out in this Texas law, I would suspect that the contractor / owner would pay the 3rd party reviewer directly if they selected them, and indirectly if the city has someone on contract.
If the city is paying or not collecting permit fees due to frequent use of 3rd-party review, I suspect that their building department will shrink or cease to exist. Perhaps with the exception of inspectors.
Sarait, I think this article needs more about arepas.
I know I’ve told this story before. Anyway.
A couple decades ago my dad wanted to add an addition to his house. The house came with a nice greenhouse out back with a wood stove and humidity control. What it didn’t have was the blessing of the local government official. Because of this the county would only issue a permit for the addition if the greenhouse was torn down. Petty tyrants.
My little sister had a car drive though her wooden fence, destroying a significant portion of it. They required her to get a permit to fix it. But, they wouldn’t issue the permit, because the fence had technically been built on the wrong side of the property line, by a previous owner. (Apparently they were not familiar with adverse possession)
She could not contact the owner of the other parcel of property that hers bordered, so her fence went unrepaired for a couple of months. Then the city issued her a ticket for her fence being in poor repair.
Couldn’t she just take down the rest of it?
Not if it’s not on her side of the property line.
If I hire a third party to get the job done, can I get that money deducted from my taxes?
I think that you get it deducted from your permitting fees.
California needs something like this way more than Texas. Even living in Austin I never had any issue getting building permits. Sure the process is a pain in the ass but I was never denied on any of the construction sites I filed paperwork on other than a few minor fixes. People having issues with building permits are tobacco chawing idiots who don’t do their research or hire people who know what they’re doing.
California has their own statewide building code, too, which establishes the same rules for San Diego as it does for rural towns high in the Sierras. Completely different climate considerations, logistics, etc.
So that one-size-fits-all approach gets pretty stupid sometimes.
One size fits all doesn’t “get pretty stupid sometimes”. It IS extremely stupid 100% of the time.
Well, then at least you can relate to it.
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“The third party could be a contractor hired by a regulatory agency. Or they could be a private party, provided they’re a licensed engineer”
Hon, it’s not privatizing if the contractor is hired by the government, or using an engineer “licensed” by a government agency.
“…using an engineer “licensed” by a government agency.”
So all those airlines are not “private”? As idiotic as the practice is, the gal who cuts my hair is licensed, so she’s a government agent?
Yes, by the fact that she voluntarily submitted herself to a government-approved educational and licensing regimen.
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“Working its way through the process currently is H.B. 14. Under the bill, if a city doesn’t act on a development application or conduct a necessary inspection within 15 days of state-set deadlines, an applicant could hire a third party to perform the necessary reviews for them and sign off on their permits.”
Imagine a building permit agency which saw those seeking permits as CUSTOMERS!