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Research / Discovery

Real estate study reveals major differences across cities, counties in first-of-its-kind Front Range study

March 25, 2009

Commercial building permit and plan review fees in 20 cities and counties along Colorado's Front Range vary from high - Boulder County at $72,465 - to low - Greeley at $31,275, according to a new study from the Colorado State University Everitt Real Estate Center.


Estimated approval of building plans could take three to five days if you're in Greenwood Village. In Westminster, count on up to 10 weeks if you're going through the non-fast track option.

Customer service could be excellent in Castle Rock and Fort Collins to below average in Aurora, according to the study.

Building permit approvals and fees

The wide variation in building permit approvals and fees across the Front Range could contribute to a decline in new office and industrial building construction in the economic downturn, according to the "Colorado Front Range Comparative Study and Scorecard" conducted by Steve Laposa, director of the Everitt Real Estate Center, and his students.

The study, the first of its kind for the Colorado Front Range, was funded by the Colorado chapter of the Society of Industrial and Office Realtors with support from the Metro Denver Economic Development Corp. (Metro Denver EDC).

"This study is very important from a competitive standpoint," said Tom Clark, executive vice president of the Metro Denver EDC. "The findings will help our municipalities and counties review and refine their internal operations to enhance client service." 

Impacts on office/industrial building construction

The study examined approval times and fees for a hypothetical $8.3 million 51,000-square-foot office building and an $8.4 million 100,000-square-foot industrial warehouse in the following cities: Arvada, Aurora, Boulder, Brighton, Castle Rock, Fort Collins, Golden, Greeley, Greenwood Village, Littleton, Longmont, Loveland and Westminster. Counties included in the study were Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson and Larimer.

The Everitt Real Estate Center selected sample cities and counties based on a cross-section of geographies and city sizes among other factors.

Some communities have unique value range tables that influence the total building permit and plan review fees. Fort Collins and Broomfield, for example, have low fees for the first $1 million in property value. But Broomfield's fee for each additional $1,000 in value is the highest at $4.75 per $1,000 of building value. Golden has the lowest percentage for the plan review fee calculation. Aurora's plan fee percentage at 100 percent results in a plan review fee equal to the building permit fee.

New construction cycle has changed

"If you look where we are with the office and industrial cycle, there's not a lot of new construction coming up," said Steve Laposa, director of the Everitt Real Estate Center and former global real estate director for PricewaterhouseCoopers. "There will probably be a lot more tenant improvement or capital improvements. Things aren't going to be the way they have been.

"We hope local governments will do some self-examination and ask, 'what is this process like, is it very efficient, can someone come in and know where to go for information?'"

Construction growth lags economic recovery

Moody's Economy.com forecasts a gradual economic recovery by 2010 and even expansion in the 2011 and 2012, but construction growth appears to lag economic recovery by five quarters over that time period, Laposa said.

"We hope cities and counties will look long and hard at their processes to ensure that they're doing what is best for their communities," said Peter Kast, president of the Colorado chapter of the Society of Industrial and Office Realtors and partner in Realtec in Fort Collins.

Other recommendations in the study

  • Governments should focus on making websites one-stop shopping with integrated pull-down permits, utilities and other associated fee menus.
  • Allow website users to link to 'hidden' fee calculations eliminating any black boxes currently on several websites.
  • Consider a role for the Denver Regional Council of Governments and economic development agencies to standardize permit and fee language.
  • Consider internal training of staff during the slowdown to minimize sending customers to multiple offices.
  • Counties could use improvements to their processes to inform users of options for water, fire and general public services. A Geographic Information System, or GIS, could help users identify utility service providers.

Students integral to study

A three-step approach was used to contact governments, Laposa said. Students supplied governments with building plans, requested fees and timelines for each project and gathered as much information as possible about the timing and Web resources available to estimate fees. They then compared "apples" to "apples" fees and showed those separately from those that are not comparable.

Even with repeated attempts to follow up with government agencies and physical visits to verify numbers, numerous local governments did not respond, citing various and unknown reasons, Laposa said. The study examined only the length of time needed for building plan approvals since other permitting processes vary too widely.

EREC Front Range Study
 


Contact: Emily Wilmsen
E-mail: Emily.Wilmsen@colostate.edu
Phone: (970) 491-2336