From the Home-Builders' Perspective

No, we don't need to abolish planning commissions, but reform is needed

There is a bill to abolish the Metropolitan Planning Commission that may pass out of a House subcommittee in Nashville this week. The bill was not expected to even get a vote this year, but it has drawn a surprising amount of support. It will likely not survive a full committee vote but it is something of a bellwether that it got this far.

Home builders, chambers of commerce, Realtors, and others involved in development are frustrated. Times are hard and deals are even harder to get done. The sentiment to loosen regulation and speed up the process to get projects done has never been stronger.

The bill is the "nuclear option" and, of course, it is not the answer to some of the problems developers cite. Urban areas have to have some sort of planning when it comes to development. But herewith some concerns I have heard about MPCs in general, including Knoxville, Nashville, and Memphis.

These are the one-sided views of business people, hurting in a recession and suffering through the collapse in the housing market. Some of the anger in Knox County is the result of the new hilltop regulations, which the business community thinks go too far in ruling out huge portions of Knox County for development. But I offer them to explain why the "nuclear option" bill in Nashville is being viewed sympathetically by a surprisingly large group of influential people.

Time is money. But more importantly in the development business, time may result in there being no money. In these days of tight credit, developers often have a narrow window for a line of credit for a project. Often, a planning agency board will desultorily postpone a vote and a decision until next month. Then maybe another month. While bureaucrats diddle, the window at the bank shuts. Rates go up, conditions change. Bankers change their requirements.

When a developer puts together a deal it is a balancing act between the land cost, the building cost, the infrastructure costs, and the costs of financing. The formula determines the cost per unit, whether houses or condos or apartments. When the bureaucrats change their mind and decide the developer has too many units on the land and reduces them, it screws the formula. The complicated deal becomes even more complex.

If a project is controversial it winds up before City Council or County Commission for a final decision. Often the developer can win the vote. But going through the planning process and getting to the legislative branch could cost $30,000 in legal fees. And if City Council or County Commission decides to postpone a vote for a month or two, it adds even more time to get the project done and, again, it imperils the line of credit. Or other conditions have changed. Perhaps it's now into bad weather for construction.

Cities can run their own planning departments and give more direction to its planning staff on what's allowed, giving the City Council fewer headaches they have to resolve

Planning is often an abstract set of principles that do not fit very well in the real world. There are also trends in planning nationwide, and often a planning commission is making decisions that will be consistent with such thinking if it eventually becomes law. Pity the developer who is not aware of new trends in planning and had counted on decisions made in past years.

Developers need consistency and they need a quick, firm decision.

The nuke option doesn't need to get out of committee, but there does need to be a serious study about what regulations are necessary. What can be done to speed up the process? Can we have more consistency from decision to decision and from year to year?

Home building is an essential driver of the local economy and the industry is suffering. Isn't it time elected officials did something to help them out? No, we don't need to abolish planning. But we do need to have local regulations that are concerned with real-world solutions so everyone knows what's allowed and what's not.

And please speed up the process.