Discretionary vs. By-Right Approval: Which is Faster?

Planners have long argued about the merits of discretionary and by-right approval. But absent much evidence, this debate has been largely conjectural. In "Does Discretion Delay Development? The Impact of Approval Pathways on Multifamily Housing's Time to Permit" (Journal of the American Planning Association, Vol. 89, No. 3), authors Michael Manville, Paavo Monkkonen, Nolan Gray, and Shane Phillips set out to examine the matter empirically. More precisely, they used data from Los Angeles to test the hypothesis that by-right approvals are faster than discretionary approvals in terms of time to permit.

Examining Housing Approval Pathways Empirically

The authors assembled a dataset of projects from the Los Angeles Transit-Oriented Communities (TOC) program from January 2018 to March 2020. Instituted after the approval of Measure JJJ in 2016, TOC encouraged development near transit by lowering parking requirements and raising the unit threshold for discretionary review. The latter provision provided researchers a rare opportunity to examine by-right and discretionary projects that were the same size (by-right projects are usually smaller, which confounds analyses).

The dataset included 352 multifamily projects: 40 by-right TOC, 50 discretionary TOC, 84 by-right non-TOC, and 178 discretionary non-TOC. The authors examined the association between the approval pathway and approval time, controlling for several other characteristics, including project size, required parking, retail, neighborhood composition, employment, and city council district.

Figure 1: Approval time in days by project approval pathway.

Advocating for Faster Housing Approvals

The authors found that by-right projects were permitted faster than discretionary projects, both with and without TOC. With TOC, by-right projects were permitted 60 days faster than discretionary projects, and without TOC, they were permitted 248 days faster. They also found that by-right projects had less variation than discretionary projects in their approval times, both with and without TOC. With TOC, the standard deviation of a by-right project was 56 days fewer than a discretionary project, and without TOC, it was 196 days fewer.

Based on these findings, the authors urge planners to adopt by-right approval processes for multifamily housing. They reason that "Faster and more certain approvals can reduce carrying costs, help developers secure financing, and allow developers to bid more for land or budget for lower returns, all of which can help projects pencil and increase the supply of new housing overall." They suggest future research into the impact of the approval pathway on the time developers spend before submission as well as the time between granting a permit and issuing a certificate of occupancy.

The authors also recommend further research into the question of whether "the amenities [discretionary approval] secures are worth the delays it imposes." In Los Angeles, the authors suggest that the answer is no, with the by-right pathway yielding more affordable units than a discretionary pathway. But here I wonder if the alignment between the permitted project and the type of exaction matters. That is, when the exaction is not affordable housing but public space, infrastructure, or workforce development might it be worth the delay of discretionary review? Of course, local context matters, and the answer ultimately depends on the needs of the jurisdiction in question.

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