Permitting Delays In Houston Are Costing Developers Millions

The difficulty in acquiring the necessary permits for development has increased since the onset of the coronavirus pandemic, resulting in serious financial consequences and delayed projects, Houston developers say.

MLB Capital Partners principal Todd Mason said that it has become very difficult to work with the city of Houston to acquire necessary permits. On numerous occasions, his company met with city staff and were told one thing, only for the guidance to change within a matter of weeks.

“It's cost us at least a year, and a couple of million dollars of additional expenses that weren't that way when we first applied for our first permits, and it's been very, very challenging,” Mason said during a Bisnow webinar Aug. 4.

MLB Partners acquired the Houston Farmers Market in 2017, and is in the process of modernizing and upgrading the site. The completion of the project was originally slated for 2020.

The Houston Permitting Center, which falls under the umbrella of Houston Public Works, enforces building, fire and energy codes. Prior to the pandemic, some permitting processes still required in-person submissions. The center moved most of its services online on March 23, and only resumed appointment-only services on July 6.

The Deal Co. founder John Deal said that the permitting process is “challenging at best.” His company has learned to work with the city of Houston to get projects approved, though there are different levels of challenge associated with repurposing existing structures.

“Unfortunately, with the COVID, what was a challenging situation became near impossible for some period of time,” Deal said. “These unnecessary delays, in my opinion, cost tens, sometimes hundreds of thousands of dollars in interest carried.”

The Deal Co. was involved in the redevelopment of the Sawyer Yards campus, including Spring Street, Winter Street and The Silos, which houses a large number of working artists and regularly hosts public programs.

To receive fast and competent service, Deal said he would be happy to pay five times what he pays for a permit right now.

“They could easily operate it as a business, and I've told them that many times,” Deal said. “From time to time, we sit here and wonder why we continue to do it in Houston, and don't move somewhere else.”

Developers were already facing longer project timelines in April for both planned and current construction, owing to growing issues with permitting and inspections, as well as personnel shortages. Though the move to online services has helped to streamline some tasks, complaints about slow processing and inconsistent feedback have continued.

“It's the most disorganized of the three Texas cities that I operate in,” Urban Genesis principal Matt Shafiezadeh said.

Contact Christie Moffat at christie.moffat@bisnow.com.