Austin’s Development Services Department (DSD) has long been recognized as one of the slowest in the state, impacting housing affordability and development. In 2022, then-mayoral candidate Kirk Watson highlighted the need for a performance review of the department, noting a lack of positive feedback during his campaign.

A History of Criticism

The DSD, responsible for permits and construction inspections, has faced criticism for years. A 2019 report found the department didn’t actively track plan review times or collect reliable data on delays. Developers and housing advocates consistently voiced concerns about the labyrinthine process and its impact on costs.

The Zucker Report & Initial Responses

The “Zucker Report” in 2019 identified 464 areas for improvement, from cultural shifts to specific process changes like prompt return of phone calls. While city leaders promised to implement recommendations and separated planning functions, a subsequent 2019 audit revealed the review process remained slow.

Developers like Cody Carr noted increasing complexity and paperwork, especially after the shift to online services during COVID-19. He stated, “Processes that had previously taken an hour or a day started taking four to six weeks or longer.”

McKinsey & Company Audit

In early 2023, Mayor Watson commissioned McKinsey & Company to audit the DSD. He emphasized the need to avoid hindering affordability goals with excessive red tape. “I didn’t want Austin getting in its own way,” Watson said. “We would say out of one side of our mouth, ‘We want more housing that is affordable.’ But then we would turn around and tie you up in red tape that added to the cost of building.”

Key Findings of the McKinsey Report

The McKinsey report, released in August 2023, revealed low customer satisfaction with the site plan review process, with 76% of 178 surveyed customers reporting dissatisfaction. The report identified involvement from up to 11 city departments, a lack of a unified vision, and inconsistent, unstandardized procedures.

The report highlighted a significant increase in review times, with the average applicant waiting 345 days in 2022, nearly doubling from 98 to 183 days between 2021 and 2023. 80% of customers reported waiting over a year for a permit.

Impact on Housing Development

The delays particularly impact “missing middle” housing – townhomes, cottage courts, and small developments – which are crucial for affordability. Carr explained, “Time kills missing middle and small projects…If you have a limited budget on a small project and it takes a year or two, the carrying costs of that project, a lot of times, will make it financially unfeasible.”

Research cited by Taylor Jackson of the Home Builders Association of Greater Austin and Taylor Smith of the Austin Board of Realtors indicates that permitting delays add significant costs to housing, impacting affordability for essential workers.

New Leadership and a Focus on Outcomes

Following the McKinsey report, José Roig stepped down as DSD Director, and Keith Mars was appointed to the position in December. Mars, a long-time city employee with a background in environmental review and arboriculture, emphasized a relationship-focused approach.

“I love relationships,” Mars stated. “I love being able to work on outcomes. That’s where the social science part of me really comes in – focusing on the outcomes that we are trying to get to, and not the means to an end.” He aims to build trust and address the underlying concerns of developers beyond specific regulations.