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May 27, 2017

Working Paper

Did ePlans Speed Up Permit Issuance?


Questor Lau, AIA

EXECUTIVE SUMMARY
Building permit delays make housing more expensive.1 When permitting takes longer, developers risks and
costs are higher, which means less housing gets built. 2 In 2012, the Department of Planning and Permitting
(DPP) introduced ePlans, and online plan submittal and review system to streamline building permit
issuance. 3 Despite public concerns and news coverage that ePlans was having the opposite effect and
slowing permit processing, complaints are largely anecdotal and comprehensive information about permit
processing times remains out of reach.

This paper reviewed residential City-provided building permit data (2005-2016) and finds that median
building permit processing time for small (Mom & Pop) developers is about 4.5 months longer since ePlans
became mandatory for new buildings (Figure 1). However, the median building permit processing time for
Large Developers only increased by about 9 days (Figure 4).

Only new single- and two-family dwellings are reviewed here but similar delays may exist for other
permits as well. 4

ePlans optional 7/2012


ePlans mandatory 10/2013

Figure 1: Permit issuance time for Mom & Pop Developers escalated dramatically since ePlans became
mandatory (yellow zone).

1
Honolulu: Late and Last; and Permit Delays Cost Millions
2Permit Delays Choke Housing Supply (Wall Street Journal); and Expedite This!
3 Permit submittals via ePlans remained optional until October 01, 2013, when it became mandatory for all new commercial and

residential buildings; hardcopy blueprints were no longer accepted.


4 Preliminary data show that new Apartment buildings in Honolulu have a median building permit processing time of about 1 year

(317 calendar days, based on quarterly permit issuance intervals).

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Introduction
This working paper provides an overview of building permit processing time for new single-and two-family
homes (2005 thru 2016), based on City-provided open data. 5 These permits were categorized to
differentiate between large and small developers. Large Developers have a different approval process a
master tract that is not available to smaller custom home builders. 6 Large Developers include companies
like Gentry, Castle and Cooke, or D.R. Horton. Small developers include everyone else; referred to in this
paper as, Mom and Pop developers.

Mom & Pop (small developers)


Before ePlans, permits for new single- and two-family homes by small Mom & Pop developers took a
median of 64 days (Figure 1). For the 7 years preceding ePlans, red dots in Figure 1 remained mostly within
the upper and lower bounds (horizontal black lines). In the time since ePlans became mandatory for all new
buildings (Oct 2013), median permit processing time has more than doubled.

The pink bars at the bottom of Figure 1 show the volume of permits for new Mom & Pop residences was
slightly higher in 2005-2007 and remained relatively steady despite fluctuations in permit approval time.
Permit times in 2014-2016 have taken substantially longer, despite a lower number of new residential
permits issued than in years past. Statistically, median permit issuance time and the volume of new
residential permits issued for Mom & Pop developments, are not correlated (r = 0.046).

Will this trend continue? A closer look at 2016 data shows that for Mom & Pop developments, the new
normal is a median permit processing time of 200 calendar days (6.6 months), Figure 2.

Figure 2: In 2016,
median permit wait
time for a new
home was 200
days.

5 Honolulu has an Open Data law: Ord 13-39s purpose is to: [D]rive increased government efficiency and civic engagement,
leading to social and economic benefits as a result of innovative citizen interaction with government.
6
Large residential developments that feature the same home copied several times on vacant lots around the neighborhood,
often use a master tract system. Permit approval includes reviewing the detailed building plans once and thereafter only a site
plan for each iteration of the same home (i.e., to verify setbacks and assign addresses). Caveat: While considerable effort was
taken to differentiate residential building permits that were processed under a master tract, there was not a comprehensive data
field available to set as the filtering criteria. Search criteria included: single- and two-family occupancy, new buildings, private
ownership, issued 2005 to 2016. The most commonly occurring plan makers and contractors that also had several concurrent
permits for the same floor area, was used as the basis of establishing the list of large developer permits. Data should be vetted
further with DPP.

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For reference, historical data provided by the City shows average permit issuance time for Dwellings
never exceeded 50 days (1994-2003). Figure 3 shows permit processing time creeping up after 2000. The
Citys POSSE (Public One Stop ServicE) precursor to ePlans, was fully implemented in late 1999. 7

Figure 3: Historic data


Average Days for permit
processing. Dwellings did
not exceed 50 days (1994-
2003).

Data for 1999 was not


available due to transitions
in systems.

(Source: C&C of Honolulu,


Office of the City Auditor,
Report 04-02)

Large Developers
Despite a few spikes, permit processing times for Large Developers of new single- and two-family homes
are only slightly higher (Figure 4). Before ePlans, median permit processing time for Large Developers was
83 calendar days. That number rose to 92 calendar days in 2016. Large developers did see a few periods of
higher permit issuance time (i.e., at the start of ePlans). However, its not clear from this data why there
were also slower permit issuance rates in 2014 and 2015.

The high volume of permits issued in 2005 and 2006 (blue bars at the bottom-left of Figure 4) is not
associated with longer processing time. Also, the extremely low monthly volume of new residential permits
by Large Developers in 2016 (Figure 5) was not correlated with faster permit processing. Statistical analysis
confirms that the number of permits issued is not correlated with the length of processing time (r = -0.05).

Figure 4: Large
Developers also
ePlans optional 7/2012
experienced
ePlans mandatory 10/2013
delays in
permit
approvals,
starting when
ePlans began
(dashed
vertical line).

7
DPP Annual Report FY1999-2000. To be fair, only a little over 1,000 residential permits were issued each year (1996
to 1998) and increased to 1,673, 1,964 and 2,910 from 2001 to 2003 respectively (HUD User data). The point is that
permit issuance times have not returned to pre-POSSE average times, despite fluctuations in permit volume.

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Median permit issuance time for Large Developers was 92 days in 2016 (Figure 5). Review of the February
2016 permit data showed that the spike in permit issuance time was due to one project: 37 homes were
issued building permits after a 768-day long delay. If not for that project, median permit issuance time for
Feb 2016 would have been 121 days. Therefore, it appears that processing time for new residences by Large
Developers has also stabilized.

Figure 5: In 2016,
median permit
wait time for a
new home was
92 days.

Conclusion & Suggestions


While building permit processing time for Large Developers of new single-and two-family dwellings
remains largely unchanged, before and after ePlans, small (Mom & Pop) developers have experienced an
additional delay of about 4.5 months (Table 1) since ePlans became mandatory for new buildings. While
this paper only reviewed permit issuance times for new residential permits, similar delays may exist for
other permits as well. 8

Table 1: Median Permit Issuance Time (calendar days), new Single- and Two-Family Homes
Before ePlans After ePlans
Difference
Jan 2005 - Sep2013 Oct 2013 Dec 2016
(days)
(days) (days)
Large Developers 83 92 +9

Small Developers 64 200 +136


(Mom & Pop)

Anecdotal comments from DPP staff attribute escalating delays to planmakers incomplete submittals. But
incomplete submittals are a longstanding issue, preceding ePlans. A 2004 City Auditor's report of DPP
noted that over 33% of applications received, were incomplete:
To their credit, staff realize that the process can be confusing, especially given the lack of
published guides, and often spend extra time assisting new applicants.

8
Preliminary data show that new Apartment buildings in Honolulu have a median building permit processing time of
about 1 year (317 calendar days, based on quarterly permit issuance intervals).

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However, permitting staff often spend similar amounts of time with 'professional' applicants who
submit incomplete and/or inadequate applications. For example, a professional applicant may
submit plans that are stamped '80 percent complete,' when it is known that plans must be
stamped as 100 percent complete. Such attempts result in staff wasting time attempting to
process applications that professional applicants already know are unacceptable. Other
professionals may submit inadequate or 'sloppy work,' banking on staff spending extra time and
effort to correct their materials. Some insist their applications be submitted even when they are
advised they are incomplete. While staff emphasized that many professionals make a good faith
effort to submit correctly prepared applications, those who do not cause more delays for the
remaining applicants. (Office of the City Auditor, 2004)

If delays were primarily due to incomplete submittals a condition that existed before and presumably
after ePlans was started then one would expect no change in permit issuance time. Instead, Figure 1
shows issuance time continued higher every quarter from 2013 Q3 to 2015 Q2. And thereafter, issuance
times fluctuated but remain elevated far above their historical range. As the quality of submittals is
unlikely to have changed simply because the method of submittal changed (i.e., from hardcopy to online
ePlans), the quality of submittals is therefore not likely to be the primary culprit of permit issuance delays.

Similarly, the ePlans system itself does not seem to be the primary cause. If the ePlans system itself was
the cause for permit delays, one might expect a constant delay factor, say 30 days, that fluctuates with
permit application volumes. However, historical data again show that from 2005 to 2012, permit issuance
times remained within a stable range through large variations in permit application volume (i.e., during
the boom and bust of the Great Recession).

It is more likely a multitude of factors, including adequate staffing and experience, that impair the quality
and timing of building permit reviews. According to a City Auditors report of the One-Stop Permit
system, 9 DPP pointed out in 2004 that the number of vacant positions had grown in previous years (Figure
6). In 2017, DPP continues to see the retirement of numerous key staff (Baby Boom generation) and may
be having trouble recruiting and retaining qualified staff.

If DPP requires additional appropriations for additional staff or higher salaries to recruit and retain
seasoned employees, the building industry may accept higher building permit fees, if it comes with
assurances of expedited permit review.

Figure 6: Charts show declining staffing at DPP. Source: City Auditor report (2004).

9
https://www.honolulu.gov/rep/site/oca/oca_docs/dpp_onestop_permit_centers_final_report.pdf

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Further studies could evaluate cost-of-living adjusted salaries of Honolulu planners/plan examiners to
their mainland counterparts. 10 What is the typical amount of staff based on comparable cities permit
volume? How do Honolulu staff compare to benchmark review times 11 and accuracy? As other cities use
an online permit tracking system, further studies could also compare permit issuance times of other
similarly sized municipalities.

Although third party review has emerged as an option to expedite permitting, it imposes a de facto tax on
developers and land owners (who must now hire a code consultant to perform a function the City used to
provide). Mom & Pop residential developers are least able to afford the added fees of third party review.
Ultimately, third party review costs are passed on to the homeowner, raising home prices. One architect
reported he was quoted $6,000 by third party reviewer for a new single-family residence. Third party
review shifts costs from DPP to the private sector and is a development tax from which the City collects
no revenue.

Permit approval delays exacerbate construction costs in Honolulu: [The] costs added to a home in Hawaii
that can be attributed to [regulatory barriers] may be as high as [$250,000]. 12 Meaning that if the
regulatory system were perfectly efficient, the median home price in Honolulu would be about $495,000. 13
Improvements in permit issuance time would be an economic stimulus and improve housing affordability.
Similarly, a PricewaterhouseCoopers study commissioned by the American Institute of Architects, found
that reduced permitting times will encourage economic development, and acceleration of construction
industry spending has broader [positive] economic consequences. 14

Permitting is a complex and nuanced process but not without best practices, benchmarks and room for
improvement. Clearly, more data and feedback is needed from DPP to better understand this black box
and how design professionals, the building industry and the general public can support this process.

Other uses of local permit data:


During the implementation of TOD Special Districts, building permit data can help measure the impact
and effectiveness of affordable housing policies and suggest opportunities for growth.
Supplement federal (statistically sampled) census data to accurately guide policy, infrastructure
investment and ultimately community reinvestment.
Further studies could 1) compare permit issuance times for third party review versus standard DPP
review and 2) provide a more detailed breakdown of how long each step takes in the plan approval
process: from initial processing, to each government agency and design professionals revision and
resubmittal time to identify bottlenecks in the approval process.

10
Government employee salaries are sometimes posted online via open data sources (i.e., http://transparentcalifornia.com/).
11
The International Accreditation Service, a subsidiary of the International Code Council (ICC) provides resources and training:
Best Practices: Lessons Learned from the Building Department Accreditation Program and Major Jurisdiction Committee, 2015.
12 State of Hawaii, "Affordable Housing Regulatory Barriers Task Force." Legislative Report, Hawaii, 2008, LINK. Original cost of

regulation was escalated using RSMeans historical cost index LINK and rounded. In 2017 dollars, the cost of regulation is $250K.
13 www.hicentral.com $755K median price of a single-family home in Honolulu (Feb 2017), minus $250K, computed per note 12.
14
The Economic Impact of Accelerating Permit Processes on Local Development and Government Revenues.

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