Reforms to building permit process could increase housing supply

A recently adopted bill in Idaho has the potential to increase much needed housing supply. Senate Bill 1164 is a supply-focused proposal, recognizing that regulatory hurdles are one of the main obstacles to adequately meeting housing demand. SB 1164 will require local governments to notify applicants if an application is complete within 10 days of submission. Red tape and slow permit processing times are a huge obstacle for home builders and result in a large cost to future home buyers. A study by the National Association of Home Builders found that regulatory costs equaled 23.8% of the final cost of a home, or over $90,000 on average.

In the mountain west region, where home prices saw increases by over 40% from 2020 to 2024, policies offering pricing and supply relief are critical. Efforts, like Senate Bill 1164, are necessary to speed up housing applications, decrease regulatory costs, and speed up the building rate of new homes. SB 1164 states:

“If an application is deemed incomplete, the local government shall, within ten (10) business days of receipt of a residential building permit application and within twenty (20) business days of receipt of a commercial building permit application, provide written notice to the applicant specifying any missing information necessary to proceed.”

“A local government’s determination that an application is complete shall not constitute approval but shall authorize the application to proceed to formal plan review.”

The testimony on March 18th introduced parties both in support and opposed to the proposal. Sponsor Senator Codi Galloway said,

“Idahoans are frustrated at the shortage and high cost of housing, so today I bring you Senate Bill 1164. In essence, it asks for a timely review of building permit submissions so the process to build does not turn into a paperwork death spiral. It asks building permit boards to respond on completeness of an application within 10 days.”

Ken Burgess of the Idaho Home Builders Association testified in support of the bill:

“I will relay anecdotally that there are certainly instances where I know a number of our members have had development applications that have been submitted to cities and counties … in which they’ll wait a couple weeks, a month, sometimes as much as two months, and then when they’re trying to press the issue to try to get their development application reviewed then they will come back and say oh well by the way, we finally reviewed this and you’re missing X in your development application packet. Then you know you have to go back and redo the packet and end up getting stuck back into the bottom of the pile.”

Lance Sayers of the Association of Idaho Cities, testified in opposition to the bill:

“We had some cities concerned about what does it mean for completeness and that could be possible litigation issues… The shot clock could be problematic because the fact it’s a one-size-fits-all, that’s not the way our state is really set up.”

The testimonies highlighted the need for avoiding bureaucratic delays to paperwork, the need to fix housing, and the desire to work with the cities to ensure the process was collaborative, not punitive. Concerns were raised in defining completeness and if cities of varying sizes could possibly meet the stated timelines. To address some of these concerns, we should look towards other states and what has worked to expedite building permits.

Building permit delays are estimated to be 6.5 months in Washington and cost homebuyers $35,000. The Wharton Index, which measures housing regulatory hurdles, ranks Idaho as slightly worse than Washington, so this is a problem that should not be ignored in Idaho. The best remedy for building permit delays is a recent policy change in Florida. In 2021, Florida adopted a bill that required local jurisdictions to post online their permitting process, the status of permit applications, and created a fiscal consequence for the local jurisdiction if the permits were not processed in a timely manner.

The new law is fixing the housing challenges in Florida. The Foundation for Government Accountability found that before the law was passed in October 2021, a suburb of Orlando processed less than half of the permit applications within 30 business days. After the law passed, about 80 percent of applications were processed in 30 days. In Santa Rosa County less than half were processed in 30 days before the law, but after the law the rate rose to 100 percent for 347 new homes. Housing permits have also grown by nearly half in some counties since October 2021.

The drafters of SB 1164 recognize that it will not do what Florida’s model has accomplished. However, SB 1164 has a chance to smooth out this process as solutions from Senate Concurrent Resolution 103 are forthcoming. SCR 103 forms a committee, modeled after Montana’s Housing Task Force, that will look at the policy options for improving housing supply in Idaho and will report back to the legislature next session. In closing comments during the hearing on SB 1164, Senator Galloway said,

“We’re trying to use a free market approach to improve the cost and affordability of housing and make sure that it’s easier for builders to build. We know that when we have a restrained supply, it makes everything more expensive, so we are really trying to coordinate this process and this legislation has been brought intentionally not having an enforcement clause in an effort to be palatable to the cities… It’s an effort to work collaboratively and find ways that we can make this process more smooth for all partners involved.”

Senate Bill 1164 moves the needle towards fixing regulatory permit delays, but still needs additional measures included to create the full efficacy of what was accomplished in Florida. Additional steps should be addressed between sessions to strengthen permit application reform in Idaho and to look at other opportunities for improving Idaho’s housing supply.