As evidence mounts that the $787 billion stimulus package passed by Congress last February is doing little to improve the economy, federal and state lawmakers are considering further action to avert a prolonged job and wage slump. White House economists have floated the idea of a second round of stimulus spending. That’s an obvious approach from Washington where they have the luxury of printing money. But Massachusetts doesn’t have that option, and given that revenues keep plunging, spending money from the state budget to stimulate jobs and business investment seems unlikely.
So what can the Legislature do to boost the state’s economy? Although there is no magic bullet to cure our economic woes, there is a bill on Beacon Hill that could help when the recovery finally begins. The Permit Extension Act of 2009 would allow those real estate developments that have received all necessary state and local permits—but are on hold due to the recession—to remain valid for two additional years. The legislation would apply to permits in effect or existence between January 1, 2008 and January 1, 2010.
An alarmingly growing number of approved projects have permits that are expiring or lapsing as a direct result of the tightening of credit, the depressed housing market or the lack of retail business activity. Many of those projects are unable to obtain or keep the financing they need to go forward. Without this emergency legislation, these projects will be delayed years once the market improves—if they get built at all. Such a result will only prolong the recession in Massachusetts.
It is a truism in real estate development that time is money. Securing state and local land use permits is difficult, expensive and time-consuming. Indeed, numerous studies conducted by the National Association of Home Builders, among others, have shown that the permitting process often unnecessarily adds thousands of dollars to the cost of a new home. It’s not unusual for a homebuilder in Massachusetts seeking to develop a single-family subdivision to have to seek the approval of the planning board, the conservation commission, the board of health, the zoning board of appeals, the board of selectmen or city council, the Department of Environmental Protection and MassHighway.
Leveling The Field
To require developments that have received all necessary permits but have not been built solely due to circumstances beyond the control of the developer to reapply is unfair. More importantly, to not extend the life of those permits until the onset of an economic turnaround would be to risk rendering them financially infeasible. The loss to the commonwealth of jobs, investment and tax revenue from such bona fide “shovel-ready” projects is incalculable.
Passage of the Permit Extension Act would not mean granting carte blanche to real estate developers to do as they please. That’s because all of these projects for which their permits would be extended have been thoroughly reviewed and approved by state and local boards, commissions and agencies. Indeed, this emergency law would relieve government officials from the burden of having to review and rehear developments that they’ve already given their blessing.
There are few signs that our economic crisis will be abating any time soon. Consequently, the commonwealth has a fiduciary obligation to its citizens to take whatever reasonable and necessary steps it can to encourage economic activity. Preserving the permitting decisions of state and local governmental bodies for a limited time will prevent the abandonment of numerous residential and commercial projects that will benefit the public.
The Permit Extension Act is the rare example of an economic stimulus that comes at no additional cost to the taxpayer. The Legislature should enact it promptly.
Benjamin Fierro III is a partner in the Boston law firm Lynch & Fierro and serves as counsel to the Home Builders Association of Massachusetts.
