Denver Permit Times Cut In Half As Project Volume Wanes, City Staffs Up
Denver’s average plan review time has been cut nearly in half since November 2022, providing some relief to a common complaint among the city’s development community that worsened during the pandemic but is benefiting from city hiring efforts and a slower construction pipeline.
Plan review times for commercial projects have declined from about seven weeks in November 2022 to nearly four weeks as of April 2023, according to Laura Swartz, a spokesperson for Denver Community Planning and Development. Review times for residential construction projects have similarly declined from an average of 16 weeks to about eight weeks.
The declining review times come on the heels of several efforts by CPD to increase staffing, improve efficiency and partner with third-party entities like Bureau Veritas, a testing and certification company with a North American division headquartered in New York, to more expeditiously complete plan reviews.
While these improvements are certainly an accomplishment, Swartz said CPD still has more work to do.
“We are encouraged by these positive trends, but we are still not at our target review time,” Swartz told Bisnow in an interview. “So, we’re not losing sight of that goal, which is to eventually get our review times back down to between two and four weeks.”
Permit review times skyrocketed in Denver during the pandemic for reasons that are fairly easy to spot. Between March 2020 and April 2022, Swartz said CPD had approximately 50 vacant positions out of a total staff of nearly 300. That nearly 18% vacancy rate was one of the highest for any city department and also left CPD with fewer people to properly and efficiently review plans, Swartz said.
At the same time, developers paused many of their projects due to rising economic uncertainty. Once those fears began to fade in early 2021, Swartz said, all of those paused construction projects suddenly resumed. This left CPD in a tough position where it had more work to do but fewer skilled employees to handle the workload, which was a cause of mounting concerns within the department, Swartz added.
“This has been as challenging for our staff as it has been for our customers,” Swartz said. “It’s something that really wears on you.”
Denver is not the only city facing a large permit review backlog. In San Francisco, developers are waiting an average of 627 days to have their permits approved, according to the San Francisco Chronicle. Permit review times in Portland have stretched upward of 200 days, Oregon Public Broadcasting reported.
Permit backlogs can pose big problems for developers, holding up construction timelines and adding uncertainty to their pro formas. This problem has been especially acute in recent years as rapid construction cost escalation means a delay of even a week or two could add significantly to a project’s price tag.
In the current economic climate, many developers have pressed pause on their projects, but one area where sped-up permitting could provide a needed boost is in Denver’s multifamily market, where developers are pushing to keep up with demand.
In 2022, Denver developers delivered more than 9,400 units, which was about the same as they did in 2021, according to Yardi Matrix. Developers have more than 31,900 units under construction and another 132,000 in the permitting stage, which Yardi said “points to low sensitivity to the current economic woes.”
Meanwhile, the average cost per unit increased by 10.7% year-over-year to more than $336K, according to Yardi data.
For Denver developers like Max Muller, a vice president at Wood Partners, the city’s permit backlog has been as costly as it is frustrating. Muller told the Denver Business Journal in February about one project called Alta Mile High that faced significant cost increases because of permitting delays.
Alta Mile High is a 216-unit apartment complex near Empower Field in southwest Denver. The project was initially submitted for review in March 2021, Muller said, but groundbreaking didn’t occur for another year and eight months. One reason for the delay was a “curveball” that Wood Partners received from Denver’s Wastewater Management Division, which said that stormwater needed to be conveyed throughout the site. This change added three months of planning and up to $300K in additional costs, Muller said.
Chris Payne, a vice president with Riverside Investment Partners, echoed Muller’s sentiments during an April 13 Bisnow event. Payne added that Denver’s entitlement process — which includes permitting, zoning and other approvals — needs to be more flexible so that developers can add supply to make Denver’s housing market more affordable.
“Right now, it’s really difficult to get projects to pencil out because interest rates and construction costs are so high,” Payne said. “This is a perfect storm for a slowdown, unfortunately. I think the way we overcome this is by working with all of the respective partners to get us to groundbreaking even faster.”
Denver Deputy Mayor Laura Aldrete said during Bisnow’s event on April 13 that the city is considering moving certain permits through the pipeline faster. For instance, adaptive reuse projects for unused office spaces could move through the entitlement process. City employees are also looking for ways to be more creative with building codes for egress, fire and other elements that may be outdated.
“If we can shave a month off of the permitting process, then we are saving a lot of time and money for developers,” Aldrete said.
CPD has taken several steps to make sure this momentum is continued into the future, Swartz said. For instance, it is using an app built by the National Renewable Energy Lab in Boulder to review rooftop solar permits. Swartz said this technology has helped shave nearly a month off the permit review time for these projects.
The department has also begun allowing its zoning inspectors to perform administrative modifications of projects while they’re out in the field. Beforehand, zoning inspectors would simply tell a developer if a part of their project was not code compliant and then make them go through the design review process again. Now, these issues can be addressed on-site, which Swartz said will help keep the construction process flowing.
“We’ve really spent a lot of time over the last six to eight months training our staff and creating a supportive culture, and I think that’s starting to pay off,” Swartz said. “It’s really starting to show up in our plan review times.”