Management Data

Contracting Out The Permit Process

Dear Management Doctor:

Do you know of any city or county that has virtually farmed its permit processing out to private contractors? That question has come up here in Kent. I know many jurisdictions will contract out during peak periods they consider to be temporary, but I'm wondering if any have farmed most or all of it out.

Hope you're doing well.

Fred N. Satterstrom, AICP

Dear Fred,

I have made a few phone calls on this and so far haven't been able to come up with a solid example. I am hoping our Emailers will give us the answer. However, here are a few thoughts:

Supplemental Staff
In California, during the times of high development activity, a high percent of planning departments had what we called a blended staff. They had a base staff and supplemented it as needed with consultants. Some of these consultants were one person firms where the planner worked either full or part time as a consultant. However, a number of consulting firms became very large doing contract permit processing. Currently, as city and county budgets have dried up, many of these contracts have been eliminated.
Consulting Firms
Some of the big players included Pacific Municipal Consultants, Hogle-Ireland Inc., Willdan, and CH2MHill.
New Cities
It was very common in California that new cities initially used consultants, not only for the permit process but for all the planning. Generally these took place for a year or two and were gradually phased out to municipal staff. We at Zucker Systems did this for one city. We placed two planners in the city on site, I was the nominal planning director who showed up occasionally. Eventually we helped the city hire a planning director who then hired the two staff we had working in the city.
Contract Planning Departments
I have not been able to find any of these but was told that CH2MHill has two or three communities outside Atlanta. I was unable to get through the receptionist to talk to anyone. Great customer service, they must not need the business. However, here are three other examples:
1. A number of years ago we were asked by a local city to begin to help them process applications. Each time one of their planners left, they asked us to take on more. Eventually we did all of their application processing with two full time staff. They worked on site along with city receptionist and clerical staff. Eventually, the city decided to turn it all over to us. Again, I was the equivalent planning director but working part time off site. My two planners then managed the receptionist and clerical who remained city staff. This process worked very well. We charged our services 100% back to the applicants. Although in some cases the fees were higher than the normal city fee schedule, we never had any complaints. We provided timely and objective service without the usual planning department political hang ups. After two years and a new city manager, the city went back to normal staffing.
2. One of my early jobs was the equivalency of Planning Director for Brookline, Massachusetts. However, I actually worked for a consulting firm; Adams, Howard and Greeley. They had an annual contract with the Town. I managed all the staff, who were also employees of the consulting firm. This arrangement worked for many years but was eventually replaced by city staff. This may have happened when the partner and dean of planning, Jack Howard, retired.
3. Seven years ago I was conducting a study of the building department for San Carlos, California. As part of this study I interviewed the planning director. It turned out that she and the entire department were actually consultants. This arrangement appeared to work very well but has since been replaced by city staff.
Issues
When I was a planning director, I said that contracting out planning and permitting would never work. However, I have changed my mind. So long as the city or county knows how to manage consultants, I see no reason why it can't work. Should it be done? That is a different question that would require a more detailed analysis. One of the consulting firms listed above suggested that they see some talk about this with their clients. One of the issues is how it could impact the city's retirement system. I do think that a blended staff makes sense. The city has a base planning staff supplemented by contract planners. I actually operate my own firm this way and it works well.

The Management Doctor

Reader Responses

Thanks for your follow up on my question. I am very impressed. And, the information gathered is helpful as well. Seems like you've had some personal experience with the scenario proposed.

Best wishes to you!

Fred N. Satterstrom, AICP
Kent, WA

There are indeed a number of new (and a few older) cities in the Atlanta region that have contracted out their permitting process and indeed their entire planning department function.

The best example for Fred may be the City of Chamblee, Georgia which employs a Development Director, but contracts out it permitting/review process on a 5-year contract.

CH2MHill holds contracts with the recently incorporated cities of Sandy Springs and John’s Creek, GA (both north of Atlanta). CH2MHill also held a similar contract with the recently incorporate city of Milton, GA.

Georgia’s newest city, Dunwoody, GA developed three RFP’s and have three different firms executing government services for Planning, Public Works, and HR/Finance.

Eric S Bosman, AICP

Last year at the City of Gulfport, Florida, our City Council looked at completely disbanding our Building Department. The City investigated and received proposals from independent firms and contractors, the City of St. Petersburg, and Pinellas County for the plans review, permitting, and inspections. Pinellas County was the most cost effective for taking over all duties that our Building Division performs.

The County’s Building Department can perform site plan review, building plans review, inspections, and issue all required permits. The City used the County for building plans review, inspections, and the issuance of building permits. As it turned out, the County could not and did not provide the quality of service that the City’s Building Division provides. All building plans had to be submitted in the County’s Building Department in Clearwater, nearly 20 miles away and a 45 minute drive each way. County Building Inspectors inspected all applicable inspections. If any problem occurred, a “Stop Work” order was issued, plus a re-inspection fee was charged. The citizens and contractors spoke out. The City’s Building Division works with the contractors and home owners to solve problems and plan alterations without “Stop Work Orders” and re-inspection fees. Council decided to retain the Building Division.

If the City were to contract out Building Division services, Pinellas County is the most cost efficient outside of having its own Building Division. The City has its Planning and Zoning Division consisting of three planners (including the Department Head), who performs all Comp Plan and Zoning Code related tasks.

Hope this helps your reader!
Michael Taylor

The City of Petaluma has done this. Here's an article about it:

The Architect's Newspaper

Erik J. Pearson, AICP
City of Hayward, CA

The City of Northglenn, Colorado just recently farmed out their building permit function to a private consulting firm.

Greg Thompson
City of Thornton

Check with Gallatin County Montana. I heard they did this when their staff was working on long-range planning.

Susan Johnson
Teton County Planning and Development

I believe the Town of Orange Park, Florida (located just south of Jacksonville) contracts out their planning work. The little towns of Tavares and Mascotte, FL do as well - at least they did in 2004.

Catherine Hartley
St. Pete Beach

You might look into the City of Sandy Springs, Georgia, a suburb of Atlanta which was created in 2005 and overnight had a city population of about 85,000 of formerly unincorporated residents. USA Today a few years ago ran a story about how all the public works and planning services for the city are contracted with a private firm for something like $45 million annually. The number of actual city employment was quite small. I don't know if that's still the case.

Robert Myers, AICP
City of Urbana, IL

Many cities allow for "Third Party Review."

In the City and County of Honolulu, once certified by our department, private companies/individuals contract directly with building permit applicants to process applications, certifying to us that the plans meet our codes. Each Third Party entity must show competency in the applicable codes. So far, no company has been certified to review plans for zoning conformance. But sign-offs on building code, plumbing code, etc, is commonplace.

This works because private parties are charging on top of the building permit fee, and the cost can be significant, but it does speed up the review time. Staff (and union) hasn't objected because we are overwhelmed with backlogged applications in a healthy economy, so it doesn't threaten city staffing. In a down economy, tendency is not to use Third Party Review.

The applicant gets a building permit from us, and we still perform inspections out in the field.

Kathy K. Sokugawa
Honolulu

Regarding farming out the permitting process: CH2MHill does this type of work for Johns Creek, GA and for the city of Milton, GA.

Lee Chastain
Thomasville