Phoenix’s building permit privatization could help reverse Illinois’ housing woes

Phoenix, Arizona, established a program to streamline building permits for certain projects. It has seen results. It could help Illinois’ drop in housing permits.

Illinois is suffering from low housing production, building 113,000 fewer units than it needed, according to a 2023 report by Up for Growth.

Part of the problem is government is getting in the way. Building permit approvals for new housing units in Illinois have been dropping since 2017. As of 2023, the state approved the fewest permits per capita in the Midwest and the third-fewest of any state in the country.

Whether building your dream home, starting a new business or doing renovations on existing structures, the process to get a building permit can add months of delays and cost thousands of dollars. Local government will require evidence plans comply with the law before building permits are issued and any construction may start. But it takes time to review building plans, especially if the government unit is short-staffed.

Illinois and its local governments should look for ways to increase permits and deal with the lag in housing production.

On the business side, Illinois has seen several major employers flee the state: In 2021 the state lost 208 firms on net to other states. With the second-highest corporate income tax and commercial property tax rates in the country, any unnecessary wait for a building permit adds to the cost of choosing to be in Illinois. Streamlining the process for permitting is a small step that would lessen the strain on businesses.

Phoenix, Arizona, adopted a solution that could work elsewhere. Phoenix has developed a self-certification program that has proven successful in reducing permit review times and reducing the workload on its staff. The program allows a registered architect or engineer to certify a project complies with municipal building construction codes. The program began in June 2010 and was originally limited to smaller buildings. By 2012 it was expanded to include all buildings except high-rises, stadiums and similar structures, and buildings containing manufacturing or other hazards.

Chicago has its own self-certification program. As of 2023, the Chicago metro area saw more new housing units per capita than almost all other Illinois metro areas. But Chicago has not seen the growth that Phoenix has. Illinois cities at large should look to adapt Phoenix’s model to their own situations.

As Illinois sees a housing bust, Phoenix deals with a boom

While Illinois has seen continuous population loss in no small part because of housing affordability and related issues, Phoenix has become one of the fastest-growing cities in the country, growing by almost 16% between 2012 and 2022. In that time, it added 10% to its housing supply, which amounts to 60,473 new housing units. As of 2020, the city had approved over 4,000 self-certification permits.

The growth spread to and can also be seen in the numbers of new housing units approved in the larger metro area and the state. Not only did the Phoenix metropolitan statistical area see a jump in the number of new privately-owned housing units approved during the past 15 years, but its share of the state’s new housing units increased. Phoenix helped buoy the Maricopa County housing market during the COVID-19 pandemic while homebuilding dropped across the rest of the country.

Of the top 10 most-populous metropolitan statistical areas in the country, the Phoenix MSA approved the second-highest total privately-owned housing units per capita in 2023.

Local leaders credit the self-certification program with easing the burden on their staff during the surge of building in the state, enabling them to redirect resources where they most make sense.

How it works

According to the self-certification rules and regulations, in order to be eligible for self-certification, a self-certifying architect or engineer must:

• Have a minimum of three years’ work experience in building code compliance.
• Be registered in the state.
• Take the self-certified training course offered by the city. Trainings must be renewed every three years, including obtaining sufficient liability insurance coverage and completing a training class.

Additionally, in order to self-certify a project, the architect or engineer must provide:

• Evidence they maintain sufficient professional liability insurance.
• A statement certifying they are eligible for self-certification, have not been convicted of or found liable for fraud or similar infractions, and that the project complies with the requirements of self-certification.
• A letter from the owner or tenant certifying they have authorized the work and will correct any errors or misrepresentations and will take any remedial measures to bring the project in compliance with the law.
• A “hold harmless” letter indemnifying the city from any costs or damages “connected with the design, construction, code compliance review or issuance of a building permit for the project identified in the building permit application.”
• The completed self-certification application.

Audits and inspections

Depending on the project, some developments will be subject to random or automatic audits of the project plans to ensure compliance. All projects will at a minimum be subjected to a random audit, which occurs in approximately 10% of the self-certification applications. For building plans, the city will automatically audit:

• Remodels of 25,000 square feet and above.
• Shell buildings of 25,000 square feet and above.
• New buildings of 10,000 square feet and above.
• All new electrical and instrumentation occupancies .
• All new occupancies for public assembly with an occupant load of 300 or more.
• All medical marijuana facilities.
• All ambulatory care facilities.
• All standard plans meant to be reused on a regular basis.

Sometime after the plans are approved and work begins, self-certified projects still undergo inspection to ensure the construction matches the approved plans. The combination of audits and inspections makes sure any compliance issues that arise with the self-certification process can be caught and corrected.

Once a qualifying developer meets the requirements, the permit process can be approved in 1-5 days.

Conclusion

Illinois underproduces housing and lags the rest of the country in issuing new permits. Business and residents are fleeing, in part because of these housing issues. It all contributes to a vicious cycle of decline.

One way the state’s local governments can help reverse the trends is to ease the process to build a home or business in their jurisdictions. Local governments should look to Phoenix as a model to do just that.