Which Jurisdictions Top NAIOP’s Development Approvals Index?

Fairfax County, Virginia, finishes No. 1 among 100 jurisdictions in the NAIOP Development Approvals Index.

Photo of Tysons by Vicki Reeve courtesy of Fairfax County Economic Development Authority

Last month the NAIOP Research Foundation released an update to a tool created two years ago called the Development Approvals Index, designed to provide a systematic method to evaluate and compare local development approvals processes by focusing on site and building plan reviews, permitting and inspections (but not zoning).

“A user can enter publicly available data on these elements into the Index,” the NAIOP report explains, “and compare them across several key metrics, which are weighted and summarized under three broad ‘pillar’ categories: transparency, accountability and consistency — all of which affect the duration and cost of approvals, and the risk that a project goes uncompleted.”

With the assistance of George Mason University, the NAIOP Research Foundation has expanded the scope of the index from 30 jurisdictions in 16 U.S. states to 100 jurisdictions in 30 states plus the Canadian province of Ontario. The results? Based on data collected in fall 2022, out of a possible 120 points, Fairfax County, Virginia, tallied 69 to rank No. 1. San Antonio, Texas — one of three Texas communities in the top six — is runner-up, followed by a third-place finish for Charlotte/Mecklenburg County, whose neighboring jurisdiction of Huntersville/Mecklenburg County is No. 7. Here are the Top 10 and their scores across the three pillars:

Top 10 Jurisdictions, 2023 Development Approvals Index

Source: NAIOP Research Foundation

The report is authored by C. Kat Grimsley, Ph.D., a visiting scholar in the Housing Economics and Real Estate Sector Research Group at the University of Alicante in Spain who was recently appointed as an advisory peer to the U.S. Department of State’s Bureau of Overseas Buildings Operations as part of their Industry Advisory Group and whoserved as the first Thomas J. Bisacquino NAIOP Distinguished Fellow while director of the MRED program at George Mason University.

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Noting that some processes may have changed since the data collection period, the researchers point out that “jurisdictions whose processes are opaque may be penalized across one or more measures because not enough information about their operations is publicly available.” Notably, data collection was refined by including site plan review processes and accounting for a greater range of approaches to review processes across an expanded number of jurisdictions. “For example,” says the NAIOP research brief, “a new prompt was created to reflect the possibility of concurrent site and building plan submission in some jurisdictions. Another change accounts for approvals completed by a single department that might be tasked with the entire review process.” Among the findings:

• “The largest relative difference between the highest and lowest 30% of jurisdictions appears in the Accountability scores,” the report states, “which measure a jurisdiction’s commitment to responsibility for its handling of applications and inspections. The metrics in this pillar tend to require more innovative procedural reforms in order for a jurisdiction to score well, such as the creation of third-party review and inspection programs, expedited review, data tracking, and performance measurement. The highest-scoring 30% have, at some point, undertaken some of these reforms. However, there is noticeable room for improvement for all jurisdictions regardless of their rank,” the researchers note, with even the highest-scoring jurisdictions, with capture rates between 46% and 58%, capturing only a portion of total possible points.
• “In the absence of a consistent correlation between population or population density and score, urbanization alone may be a poor predictor of the transparency, accountability and consistency of municipal approvals processes.”
• “The average median household income is 26% higher for the 10 highest-scoring jurisdictions than for the 10 lowest-scoring, and 12.9% higher for the top 30% than for the bottom 30%.”
• The manufacturing sector accounted for a full 65% of greenfield FDI with a total of $5.3 billion, led by computer and electronic products ($1.8 billion). By state, California is cited with the highest level of greenfield investment ($1.5 billion), but again, that leaves out such multibillion-dollar FDI recipients as Georgia and Arizona.
• Exemplars showcased for their best practices by pillar include Goodyear, Arizona, for transparency; Fairfax County for accountability; and Georgetown, Texas, for consistency.

The report notes that while Georgetown deserves credit for its practices, development across all of Texas is supported by Texas House Bill 3167, the “shot clock” bill, which requires municipalities to approve or deny site plan applications within 30 days of their submission.

The report makes no other connection to state policies’ impact on local approvals processes, but it got me to thinking: In states where three or more jurisdictions were evaluated, which had the highest average rank? A few calculations later, here are the top finishers, with Texas, North Carolina and Arizona standing out with average ranks in the top 50% even with a high number of evaluated communities:

Top 10 Jurisdictions, 2023 Development Approvals Index*

*three or more communities evaluated

Visit naiop.org/research-foundation for more information about this index and other valuable business intelligence.— Adam Bruns