Here's how Austin is rethinking its permitting process

Austin-based developer Stratus Properties is building Amarra Villas, a residential development off Southwest Parkway, in Southwest Austin.

Austin-based developer Stratus Properties is building Amarra Villas, a residential development off Southwest Parkway, in Southwest Austin.

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Update, Nov. 2: 

City of Austin staff has asked for more time to finalize draft guidelines for a new process that would allow business owners to pay a fee to have building permits expedited.

Original story, posted Oct. 25:

The blue, 1920s-era house on Manchaca Road slated to become South Austin Beer Garden is still vacant more than a year after co-owners Ryan Thomas, Davey Pearce and Chris Cantu unveiled plans. The owners aim to transform it into a bar with regional beers, food trailers and live music, Thomas said.

On the South Austin Beer Garden Facebook page, future patrons ask: “Any update?” “When are y’all opening?” Is this still gonna happen? I definitely hope so.” Thomas said the business has not set an opening date in part because ownership is still in the midst of the city’s permitting process with challenges related to sewage lines at the 1-acre property.


If the city had offered a permitting fast track when the business first applied, Thomas said he would take advantage.


“I would have paid for it in a heartbeat,” he said.


Some businesses could soon have access to such a process that would help projects move through the city’s notoriously long permitting process faster.




Commercial building permits issued in Southwest Austin, FY 2015-16 Commercial building permits issued in Southwest Austin, FY 2015-16[/caption]

By November, city staff will include provisions for protecting construction workers for nonresidential development projects in draft program guidelines that Austin City Council will consider as part of plans for expedited permitting.   


In The Shops at Arbor Trails and Escarpment Village shopping centers, Christopher Commercial Inc., which owns and operates commercial real estate and manages leasing for the two Southwest Austin shopping centers, already helps tenants work with expedited permitting firms to speed the process, CCI broker Joseph Christopher said.


“Delays in the permitting process are very costly to [businesses]. If you don’t have all your ducks in a row, you’re going to get stuck. … And you can find yourself paying rent on an unopened space,” Christopher said.


The idea of a city-led expedited permitting process has been received enthusiastically by the construction industry, said Phil Thoden, president of the Austin chapter of the Associated General Contractors of America.


“It takes a long time to get a project from the drawing board to ground breaking here in Austin, more so than in any other Central Texas city,” he said.


But much of what the new permitting process will look like is still undecided.



How it will work


Austin City Council approved funds to staff an expedited permitting program in the city’s fiscal year 2016-17 budget, and the program would launch March 1, said Rodney Gonzales, director of the city’s development services department.


The new process will not replace the existing process, but it will aim to speed up the timeline for some projects.


“The premise is that [business owners will be] having a time value savings that is greater than what the dollar cost is for going through expedited permitting,” Gonzales said. “If you got a loan for your project and the clock is ticking—or you’ve got contractors lined up … an extra 30 days [waiting for a permit] means another 30 days that you could be open for business and gaining revenue.”




How long does it take to get a permit? How long does it take to get a permit?[/caption]

To obtain city permits, applicants must go through multiple reviews with different departments, such as watershed protection and planning and development services, Austin City Council   Member Ann Kitchen said.


“What can happen today is a sort of pingpong [game] between those departments as opposed to a more coordinated approach, and that is a major, major problem,” Kitchen said. “It slows things down … and causes a financial burden on developers.”


Expedited permitting would aim to streamline the process by allowing the applicant to meet with reviewers from all departments at once to address site plan changes, Gonzales said. In exchange a business owner will pay a cost of $160-$200 per hour per expertise area, such as building, mechanical, plumbing, electric, fire, health, industrial waste, arboreal and zoning specialties.  


The process could help alleviate some of the current workload for permitting staff, as expedited permitting will be handled by a separate team, he said.


Commercial as well as multifamily projects, which are classified as nonresidential, will be able to take advantage of expedited permitting, which could help businesses open sooner and  bring more supply of needed rental housing into Austin, Gonzales said.


Mitch Schwartz, owner of Schwartz Custom Homes, is constructing 10 condominium buildings as part of the Haven development on Manchaca Road and targeting opening by the first quarter of 2017. The property was purchased in late 2013, and he received approval to develop in August 2015. Schwartz said people will pay to get permits faster.


“It’s like a tax, or extra regulations,” he said. “Every little amount [businesses have to pay] puts affordability out of reach, but it’s going to be considered a cost of doing business in Austin.”


North of Southwest Parkway, Stratus Properties is developing mixed-use project Tecoma, which includes The Santal apartments. Also off Southwest Parkway, it took about 18 months to get permitted through the city for Amarra Villas, a 20-unit project consisting of detached condominiums in the $1 million range, Stratus CEO Beau Armstrong said.


Area growth has been unprecedented, making it hard for city staff to keep up with demand for permits, he said.


“I’ve been doing this for a long time now, and the city process has over the years grown increasingly complex, and it has had an impact on affordability,” he said. “Any effort to make it a more efficient process that results in cost savings is welcome.”


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City staff introduced draft program guidelines to stakeholders Oct. 5, according to Bo Delp, Better Builder director with the Workers Defense Project. The WDP, along with Austin Interfaith, the Central Texas Building Trade Unions, Liberal Austin Democrats, developers and contractors, held a rally previously to ask the city to ensure workers receive protections in expedited permitting.


“Some of the biggest projects that the city of Austin will see will have to meet these [new] worker protection standards,” he said, explaining projects valued at $7.5 million or 75,000 square feet or below will be exempt from worker protections as outlined in the city’s draft guidelines.


“The reason that we’re supportive of expedited permitting and requiring worker protections as minimum standards for participation in this program is we believe the city of Austin should reward businesses who are willing to make some very common-sense investments in their workforce and to ensure that as Austin grows the men and women who build our city have access to good and safe jobs,” Delp said.



Cost challenges


In September, the council approved worker protections such as provision of a living wage, safety training and workers’ compensation as requirements for only commercial projects that use the expedited permitting process. Kitchen sponsored the resolution.


Despite many entrepreneurs, contractors and consumers asking for a more streamlined system, not everyone is satisfied with the proposal.




Worker protections Worker protections[/caption]

Rebecca Melancon, executive director of the Austin Independent Business Alliance, said she takes issue with the costs associated with worker protections being tacked on to the expedited permitting process. Initially she was concerned monitoring costs would create a burden on small businesses, but exemptions for smaller and less expensive projects in the current draft guidelines will alleviate that concern “if they stay that way,” she said.


On top of per-expert costs, business owners will be contractually obligated to be monitored to ensure they meet worker protections standards. Based on projects the WDP has monitored, an average industry cost of monitoring is  $1.25 per square foot with a cost cap of $60,000 per year—so, for a 5,000-square-foot building valued at more than $7.5 million, monitoring would cost $6,035 annually, Gonzales said. The business would also have to pay for Occupational Safety and Health Administration safety training, workers compensation and other costs, Gonzales said.


There are other options, Melancon said.


“We want Austin’s construction workers to be treated fairly, reasonably, the way they should be. There are better ways [than this] to do that,” she said.


Thoden said costs associated with the worker protections could negatively impact entrepreneurs, contractors and developers who may decide to take their business outside of Austin.


Council approved FY 2016-17 funding for staff to carry out expedited permitting, but Kitchen noted council has not yet weighed in on expedited permitting itself. The council wanted to ensure protections were in place first, she said.


“It is important that our workers have conditions under which they are protected,” she said.


Southwest Austin resident David Johnson, executive director of Independent Electrical Contractors in Austin, said one downside of the expedited permitting worker protections resolution is a provision that requires 30 percent of a project’s labor hours to come from Department of Labor-registered apprenticeships, which excludes participants in local training programs from Goodwill Industries of Central Texas and Austin Community College at the Pinnacle and South Austin campuses.


“We worry that this is going to keep our students from being competitive,” said Traci Berry, senior vice president of community engagement and education with Goodwill Industries of Central Texas.


Goodwill is looking to expand its school and training programs in Southwest Austin near I-35, she said.


“We know that there is a high need in that part of the city,” she said.


A statement from ACC said it shares in the safety goals of the city of Austin.


“Simply put, this may limit employment opportunities for ACC’s well-qualified graduates, as well as discourage some students from achieving a college education. ACC believes all residents deserve an opportunity to pursue an education that will lead to a good career regardless of whether they choose a DOL-registered program, ACC, or one of the many other affordable training programs available in the region.”


The council is slated to review an update from staff on the permitting process by Nov. 1.



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