Brewer's Dictionary of Phrase and Fable says the term "red tape" is "so called because lawyers and government officials tie their papers together with red tape. Charles Dickens introduced the phrase."
Red tape makes property developers, builders, architects and ultimately homeowners turn red with rage when it creates unnecessary delays in the building approvals process. As long as building and planning regulations have been around, those hoping to build homes or commercial buildings have been complaining about the length of time it takes to get approvals.
Most recently, Edmonton builders complained that it takes months for the city to issue building permits, creating delays that cost between $100 and $500 a day. "The length of time in order for us to build a home in the City of Edmonton is a big concern…When we have time delays that the consumer pays for, it's a huge problem," Dan Brazinha, president of the local branch of the Canadian Home Builders' Association, told the Edmonton Journal.
In response, city planning manager Scott Mackie told the Journal, "It's something the industry has valid concerns about, but as a city we need to find a balance between rules and regulations protecting the public's interest and what the business interests are."
Last fall the Ontario Association of Architects (OAA) issued what it calls "the first report to quantify the cost of delays in the site plan approval process in Ontario." It reviewed 500 site plan applications across the province and determined that the process is often delayed by six to 12 months, with more than 35 per cent of the applications taking longer than nine months. Bill Birdsell, president of the OAA, says, "Unnecessary delays, inefficiencies and lack of a co-ordinated process are creating additional costs."
For example, the report says that for every additional month the site plan approval for a 100-unit building is delayed, it costs residential developers $193,000. That includes additional taxes, financing and inflation on construction costs and materials. Over a six- to 12-month period, the cost of the delay is $1.16 million to $2.3 million, says the OAA.
For individual homeowners, the monthly cost is about $2,375 including costs passed on through higher prices, lost equity by not beginning a mortgage sooner and additional rental costs, the report says.
For a 50,000-square-foot commercial building, delays cost developers $113,000 including additional taxes, financing, inflation on construction costs and materials. Over a six- to 12-month period, the additional cost of the delay can be $680,000 to $1.36 million, says the OAA.
Local municipalities also suffer. Using the 100-unit residential building as an example, the municipality loses $159,900 to $241,600 per month in lost tax revenues, which can be $959,000 to $2.9 million over a six- to 12-month period.
"The research indicated that the fees for site plan applications and resubmissions can be substantial, vary significantly from one municipality to the next, and that there is no consistent method and approach to calculating or charging site plan approval fees," says the report.
It says the top three reasons for the delays are the circulation time of the submission between municipal departments; slow or lack of response from municipal staff and conflicting comments from different departments and agencies. The report says most municipalities are aware of the need to have an efficient site plan approval process and were undergoing or had recently completed a review of their process.
Not all the delays in the process can be blamed on the municipalities, however. The study also surveyed planning directors who listed their top three reasons for the delays: slow or lack of response from applicants with respect to suggested revisions; incomplete applications and slow or lack of response to the circulation time frame from outside agencies.
The OAA report says that while the provincial Planning Act sets out the basic parameters for site plan approval, the process is not implemented consistently by the municipalities. "This results in unpredictability, confusion and frustrations for applicants and consultants as the process differs considerably among (and often within) municipalities. The research also highlighted particular concert with the length of time, and consequently the cost, associated with the site plan approval process."
The association's report concludes that the problem is not with the Planning Act itself but with the way it is being administered. It's urging the province to show a leadership role and issue a provincial guideline for municipalities.
"The guideline could clarify the purpose and intent of the site plan approval process as well as formalize the process of setting site plan application fees. The guideline could set out ‘best practices' based on the experiences of municipalities."
The Canadian Home Builders' Association says that the federal government should consult with the provincial governments to "address the deterioration in housing affordability." It says prices are being driven up, in part, "by inexorably rising government-imposed costs and more burdensome regulation."
The builders' association adds: "For all new housing, we need to restore fairness to taxation, reduce inequitable land development charges and avoid new charges further damaging housing affordability."