Incentives Work Even for Bureaucracies

Incentives Work Even for Bureaucracies

By David Henderson, Aug 2 2022

 

More important, the reforms also created a system that strongly incentivizes cities and counties to approve new home permits in a timely way. When a builder or property owner submits an application to build a new home, cities and counties have 30 business days to process it or request corrections.

If the government offices fail to respond in that time frame, the locality must refund 10 percent of the application fee for every additional business day of silence. Application fees can vary widely by locality, but the average cost in Florida is nearly $1,000, according to HomeAdvisor.com. If officials request corrections to the application, they have 10 business days to approve or disapprove of the resubmitted application. Blowing past that deadline leads to an automatic 20 percent refund, with a further 10 percent added for each additional missed day, up to a five-day cap.

This is from Hayden Dublois, “Florida started penalizing bureaucratic delay. Housing permits spiked,” Washington Post, July 25, 2022.

The results:

In the years leading up to the new law, the rate of increase for new home construction in Florida was about the same as the national average. Though many factors can influence home building, and the law was in effect for only a portion of the year, Florida’s home building rate in 2021 was two-thirds higher than the national average. More than 30 percent more permits were issued in Florida last year compared with 2020. Reducing red tape surely aided the boom.

RELATED CONTENT
Jenny Schuetz on Land Regulation and the Housing Market
Jenny Schuetz of the Brookings Institution talks with EconTalk host Russ Roberts about zoning, boarding houses, real estate development, and the housing market.
Read This Article

RECENT POST

Aug 3 2022

Macroeconomics

Definitions of Recession

Is there an official definition? Journalist Clark Merrefield contacted me last week for a piece he was writing on the topic of recessions. His article appeared yesterday at The Journalist's Resource. It's titled "Are we in a recession? 4 things journalists should know when covering an economic downturn." In follo...

26
Read More

Aug 2 2022

Foreign Policy

History lessons

Imagine a US president facing the following decision:An Asian country has split into two parts. The southernmost part has a democratically elected president and a population of roughly 20 million. The northern region is controlled by the communist party and has a powerful military. Now the northern part of the country ...

14
Read More

Aug 2 2022

Incentives

Incentives Work Even for Bureaucracies

  More important, the reforms also created a system that strongly incentivizes cities and counties to approve new home permits in a timely way. When a builder or property owner submits an application to build a new home, cities and counties have 30 business days to process it or request corrections. ...

8
Read More