Cincinnati Sprints to Reform Its Development Approval Processes

Editor's Note: This article was originally published on April 6, 2015, as part of "The Roadmap," a multi-part Route Fifty series featuring stories from across the country. Click here to download the full series.

In an era where everything we do has speeded up, and often become easier to accomplish, government processes are the great exception to the rule. Often stuck in 20th-century mode, they tend to be bureaucratic, slow, unresponsive and opaque.

That’s especially true in the field of property development, even though construction brings shortand long-term benefits to any community.

Cincinnati has been a classic example. But now, new leaders are making a concerted effort to shift the paradigm—to change City Hall from an obstacle to be overcome to a partner in development. In a fast-track process, the Cincinnati City Council has passed needed ordinances, city officials are scrubbing processes with an eye to efficiency and a major reorganization is under way.

“I want the permitting line to be the shortest line in the city,” Mayor John Cranley said in an interview.

That line has been a long line for a very long time. And it’s not a straight line, since following it entails many detours to bureaucratic fiefdoms along the way. “These are the complaints I get all the time: delays, red tape, the sense of a bureaucracy slow to respond,” Cranley added.

Cranley, in office the past 17 months, sought and hired a city manager, Harry Black, who pledged rapid reform and early this year the city began its sprint toward a July 1 unveiling of a reengineered process for approving and overseeing development projects.

The reforms are overdue. As Cranley observed, Cincinnati is benefitting from “a construction boom right now.” In 2014, some $770 million was invested in real estate development, according to municipal records that actually understate the amount spent, according to local developers.

Just last year, new projects brought 5,000 permanent jobs to the city, City Councilman Kevin Flynn said in an interview. The two biggest developments were a new building downtown for the nationwide back-office functions of General Electric Aircraft Engines and a new headquarters building for Mercy Health, which runs a network of five hospitals and dozens of clinics in the metropolitan area.

Moreover, Cranley observed, residential trends have turned around. The city lost people to the suburbs for decades, but now its population recently stabilized at about 300,000 residents, and is seeking to attract more young people and empty-nesters to live downtown.

The Challenge for Cincinnati

Cranley and Flynn both have private-sector development experience, so both know the truth in the old adage: “You can’t fight City Hall.”

But their own zeal to reform the city’s development processes also stems from a drumbeat of criticism that has come from people whose full-time business is in real estate.

Dan Schimberg, a major player in Cincinnati real estate, is an articulate observer of the government’s processes. His firm, Uptown Rental Properties LLC, has invested about $100 million in the city since the major recession ended.

Among major commitments he has made is to revitalization of the Short Vine neighborhood near the University of Cincinnati campus. Views on Vine, a mixed-use project on the site of an abandoned school, has a bank, restaurants and 104 apartments with 240 residents. Nearby, his VP3 project has 160 apartments for 300 residents. They are part of his plan to bring 1,500 new residents to the rundown area over a five-year period.

“There are so many pieces to the puzzle,” Schimberg said of city processes. “Zoning, planning, permitting, financing: the city treats all these sequentially instead of concurrently. That is my biggest complaint about municipalities in general and Cincinnati in particular.”

Developers come prepared to attack all of these processes at the same time. “But the city will say, once your sewer plan is approved, we can turn to water, or once your tax abatement is approved, then we can proceed to permitting. The city is not multi-tasking like the developer. The overall process needs to move at the pace of the developer.”

Schimberg likened the city’s approval regime to an hourglass: he and other developers’ permitting documents fill the top of the glass but are bottlenecked at the middle before finally squeaking through so that money can flow to build their projects. “The city has a noose around the neck of progress,” he said. “And time kills deals.”

Developers often spend tens or even hundreds of thousands of dollars even before applying to City Hall, so they are understandably anxious to see better, more transparent processes that have less chance of derailing their plans.

A consultant’s report a few years back talked of “latestage deal-killers,” that could emerge as zoning changes, historic designations or other unforeseen obstacles emerged in a journey that was said to involve 47 permits at its worst in Cincinnati.

And Flynn added that developers often found a startling lack of consistency in the decisions of permitting officials. “You might start with Examiner A, and later find that Examiner B was overruling his opinion,” the city councilman said.

Cincinnati City Hall (Photo by Max Herman / Shutterstock.com)

The Response

Harry Black and a key aide, Chad Kenney, came from Baltimore, where they had worked under the performance focused regime started by Mayor (later Gov.) Martin O’Malley and continued by subsequent mayoral administrations.

From Baltimore, they brought a statistical approach to measuring problems and their solutions, and the idea of conducting “Innovation Labs” to address particularly thorny procedural challenges.

After months of studying the organization of the city’s permitting bureaucracy, they determined that a reorganization should be undertaking involving five important departments among the city’s 18. That determination was accompanied by a city council resolution, prepared by Flynn’s committee, to authorize the steps Black would oversee. It was passed in midFebruary, only a few weeks after its unveiling.

“That was remarkable,” Black said. “Ordinarily, in other places, you’d need a year.”

Black described the restructuring as “very aggressive and ambitious.” About 130 city employees will move to and from five departments, all of which will need to adjust their chains of command, said Black. As part of this process, the city’s Planning & Buildings division will gain the most people and clout in the permitting maze. (That division will eventually split into a separate Planning Department and Buildings & Inspections Department.)

In late April, Black and Kenney will convene an Innovation Lab to examine the various processes developers must endure. Front-line inspectors and plan examiners will be among a group of about 15 people who will meet for four days to find ways to “reduce waste and streamline the processes,” Kenney said. At the end, some of the participants will be designated as “process owners” with the mission of pursuing agreed-upon reforms.

Staffing decisions will await the results of this review. At the moment, departments involved in development decisions are understaffed, a hangover of the recession, when development activity didn’t justify larger staffs and the city was faced with declining revenues. Black has authorized the hiring of temporary workers while a more permanent staffing plan is devised.

In the meantime, Black’s information technology staff is deploying new software to facilitate online permitting, electronic recording of field inspections and other functions. The software package, Accela Permits-Plus, has been successfully implemented in other cities, such as Lancaster, California.

New Attitude

The Holy Grail of some reformers is simplification of development approval processes so as to reduce the number of officials who have the power to say “No.” The leading proponent of this is New York attorney and Common Good founder Phillip K. Howard, who wrote the book “The Rule of Nobody.”

It’s too early to say if the reforms initiated by Cranley and Flynn will achieve that result. Flynn observed that “eliminating processes can be a two-edged sword. Most ordinances and regulations were adopted because they were needed at the time. You have to take great care in eliminating them, lest you unleash unintended, unwanted consequences.”

Still, Flynn may give it a try, in the wake of his successful recent effort to revamp the Cincinnati City Charter.

But progress is already evident—even before the reorganization plan goes live in July.

Schimberg said: “What’s even more important is that people working in City Hall have heard the message about better service. In the old days, you couldn’t get a phone call returned. But now, the message is, you don’t check out at 4:30, but stay until your work is done. They are getting the message: you’d better pick up the phone and answer your emails. A new sheriff is in town.”