Surprise: An implicit development tax!

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Recently, the plan checkers at Department of Building and Safety were issued the following edict: The only plans that can be approved over the counter are for additions of less than 500 sq ft and renovation / remodeling of single story buildings. Anything else goes behind the counter.

What does “going behind the counter” mean? 25 days to get plan corrections, then 1-2 weeks to get appointments with your plan checker to review. “Going behind the counter” basically means being taken to the woodshed.

So, why is this an implicit tax on development?

In our business, time is money, literally. Whether you finance a project with debt or equity, there is some cost of capital. The longer a project takes to be approved, the more your capital for the project costs, and therefore the more the project costs.

This has the effect of discouraging development… which is exactly the opposite of what the city intends!

What’s the solution? Pretty simple: More plan checkers. If the city needs higher permit fees to cover the cost, they should charge higher permit fees. There’s no way that city government should be impeding economic activity during a period where jobs are scarce.

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