AUSTIN, Texas — A study performed by consulting firm McKinsey & Company showed that the City of Austin needs to improve its development processes.
“Over the years, there have been a lot of audits and reports on the development review process, but nothing lasting seemed to come of them. This one is different. McKinsey started at the most fundamental level of documenting each laborious step in the review process, which shockingly had never been in any of those past efforts,” Austin Mayor Kirk Watson said in a public letter.
Austin City Council documents show presentation slides that have been prepared for the Aug. 31 meeting.
“The assessment focused upon how to improve overall customer experience and efficiency. The assessment employed a range of approaches, including surveys of staff and customers, workshops, interviews, process mapping, inventorying technologies, and identification of potential points of duplication or overlap in interpreting the Land Development Code,” the executive summary shows.
It lists six points for the review:
- customer experience
- strategy
- processes
- people
- structure
- potential initiatives
The time it takes for a development to pass each review stage creates challenges for builders, according to the study.
Some developers, like Scott Turner with Riverside Homes, agree.
“It’s really a combination of all of these different regulations. Each one, individually, we might agree with. But when you take them all in total, it really creates a big barrier to producing homes that don’t cost two or three times the national average,” Turner said.
In 2022, the average total review days per application was approximately 345 days, the results show.
That time, the report shows, contributes to the rising home prices.
“That’s why people just build one house, even though you might have a lot that you could subdivide into two to get more housing, right, and we do that pretty routinely. But subdividing take two years. So to go from one lot with two units to two lots with four units takes two years. You know, it’s easier to just build a big, single family home on that 'big ol’ lot' and sell it for a couple of million dollars,” Turner said.
The report shows a single-family residential redevelopment costs a developer nearly $10,000 a month to hold onto a property.
Multi-family developments, like large housing complexes, can carry more than $500,000 a month.
McKinsey and Company suggests a “comprehensive transformation” to fix the problems, with transparency and clearly defined government roles and responsibilities.
Some of the changes, the presentation shows, could happen in less than three months.
The council members will take a vote Aug. 31 to spend $2,500,000 on a contract with McKinsey & Company, Inc. for a six-month term.
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