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AUSTIN BUSINESS JOURNAL- City Hall Overwhelmed- and The Bastrop County Fires

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City Hall overwhelmed
Backlog in planning dept. frustrates many
Premium content from Austin Business Journal by Cody Lyon, Staff writer
Date: Friday, January 20, 2012, 5:00am CST

Cody Lyon
Staff writer- Austin Business Journal
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Planners at Austin City Hall are buried under construction permit applications, and the delays are angering commercial real estate professionals as their clients worry whether they’ll be able to move into new space on their timeline.
The slow process is particularly worrisome for tenants that need to finish out existing space in a short time frame.
“I’ve been in this business for 30 years, and I’d say it’s the slowest I’ve seen it,” said Jim Knight, chief development officer at engineering firm Bury + Partners Inc.
He said his company recently worked on a project that should have been permitted in August, but it was held up until December.
The backlog is traced to a shortage of staff that’s been trying to juggle an increasingly heavy workload as the recession eases.
Chief Planning Examiner J.B. Meir said the city reviewed 4,800 projects equaling more than 60 million square feet in 2010. In 2011, the city reviewed 5,234 new projects equaling 70,000 million square feet, a 12 percent square-footage increase.
“We did all that with the same amount of staff,” he said.
Meir called the work of planning officials a juggling act, where staff not only spend time reviewing the thin lines and the complex numbers of project drawings but also thousands of hours consulting with customers.
“Next year will likely be even more busy. We’ve got big projects in the pipeline that include buildings as high as 50 stories,” he said.
In early January, the commercial review department was 69 projects behind, while the fire department was 55 projects past due.
Austin has 17 people reviewing permits. Ten of them review plumbing, building, mechanical and electrical plans and seven work with the Fire Department to ensure proposals meet fire codes.
Fire officials have requested two additional engineers to help with the backlog, and Planning and Development Review Department Assistant Director Don Birkner said he has requested additional personnel, too — even if they’re temporary.
“We’ve been meeting down at City Hall, trying to figure out what to do, hoping to get some money so we can hire some more folks to help with the situation,” Birkner said.
During one phone call made to an engineer who reviews commercial drawings for new projects, a voicemail message warned that calls would likely not be returned soon due to what he called an extreme backlog of project submissions. He was never reached for comment.
In an ideal world, staff review plans within the stipulated seven business days and return with initial comment for interior build-out projects. Twenty-one days is normal for standard building permits.
From start to finish, building consultants expect to obtain an interior permit in three weeks.
“Instead, it’s taking up to two months for an interior-build-out permit,” said architect Joe La Rocca of GSC Architects.
He said a client recently told him they would have passed on a projected move to downtown Austin if they had known the time it takes to get a build-out permit approved. La Rocca added that the client was forced into a state of location limbo, where one lease was ending yet it couldn’t move into new space.
Flynn Construction Inc. CEO and President Patrick Flynn is seeing much of the same.
“We have a group out of California that submitted for a permit. They’re taking 40,000 square feet at Walnut Creek Business Park. We started the permit process in mid-December and haven’t even gotten our first comments back yet,” he said.
Flynn said he understood the permit department was overwhelmed, but he said the harsh reality is that architects, engineers and construction firms are getting fed up; and if something doesn’t change, job growth will slow because companies may start shying away from Austin.
Another group of businesses being hurt by the slow review process: building owners and managers.
Pat Groener of the Building Owners and Managers Association is chairing a permit task force that’s working with the city to improve the situation.
“A solution needs to happen sooner rather than later if Austin is to avoid losing these businesses to surrounding communities,” Groener said.
Assistant City Manager Sue Edwards is currently looking at options to add more staff, spokesman Kyle Carville said.

Bastrop’s land values decimated

‘Vulture investors’ on the hunt for fire sales

Premium content from Austin Business Journal by Cody Lyon, ABJ Staff

Date: Friday, September 23, 2011, 5:00am CDT

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Banking & Financial ServicesCommercial Real EstateResidential Real Estate

The wildfires that destroyed most of Bastrop County could drop property values by as much as 60 percent, one firm estimates. Land is already starting to trade hands and more transactions are expected as the smoke clears.
Nick Simonite

The wildfires that destroyed most of Bastrop County could drop property values by as much as 60 percent, one firm estimates. Land is already starting to trade hands and more transactions are expected as the smoke clears.

Bastrop County land values could be cut in half as the real estate market faces dramatic ups and downs resulting from the wildfires that scorched almost 35,000 acres.

Dramatic value dips would be problematic for many landowners, but they could yield opportunities for investors looking to employ a patient buy-hold strategy while this patch of Texas recovers.

“We’re confident there will be some devaluation in the acreage charred by the fires,” said Cameron Boone, director of research at Lewis Realty Advisors Inc. Lewis Realty estimates the value of land directly impacted by wildfires could drop by up to 60 percent.

This might open the door for what some call vulture investors, who swoop in and offer pennies on the dollar for damaged properties, Boone said.

Bastrop County will reappraise land values of affected properties soon, said Mark Boehnke, the Bastrop Central Appraisal District’s chief appraiser. He said the discounted tax bills would last for a quarter of the year, ending Jan. 1.

About 82 percent of the land that was burned is forested, according to the Texas Forest Service.

“If you include low-density housing areas that have trees, the percentage would creep up to 88 percent,” said Holly Huffman, spokeswoman at The Texas Forest Service.

The pine trees in Bastrop County — Loblolly trees — were a major contributor to land values. They’re the westernmost Loblollies in the United States, Texas Forest Service foresterDaniel Lewis said.

Experts are confident the trees will recover relatively soon.

“Pine trees generally thrive in fire-prone environments,” said Professor Charles LaFon, an associate professor in Texas A&M University’s geography department and a member of the Association for Fire Ecology. Pine seedlings usually establish soon after a fire, so he expects a “rapid recovery.”

Living or working in the shade of the big pines has been part of Bastrop County’s draw, along with its proximity to Austin.

“Trees add value to the land. That’s why there will be an impact on many of Bastrop County’s values,” said Charles Gilliland, rural land specialist at The Real Estate Center at Texas A&M University.

Still, until there is a market reading on what people are paying, “you’re just going to be speculating on what the impact is going to be,” he said.

Phones at some real estate brokerages have gone temporarily silent.

“The phone hasn’t been ringing for any of my listings,” said Brady Moore, broker at Big League Ranches LLC. None of the small ranches he was marketing in Bastrop were burned by the wildfires. He said those who might be looking to sell would probably not be able to do so quickly.

On the other hand, Moore said, “Bastrop County just shrunk by around 35,000 acres.”

Once some sense of normalcy returns to the area, demand may actually increase for Bastrop properties. Some are already seeing it.

“Based on the economics of supply and demand, I would predict that decreased supply and increased demand would result in higher prices. We have already seen increased activity in the area,” said Mishell Kneeland, principal at Moxie Realty Group who has done business in the Bastrop area.

Kneeland said 35 new Bastrop County properties have gone on the market in the last 10 days. Of those, seven are already under contract.

It might be difficult to predict whether property in Bastrop County will lose significant value, said Kenneth Klein, an associate professor at California Western School of Law and a Texas native.

“You would think that land values would initially drop,” said Klein, who teaches a class about legal lessons learned from Hurricane Katrina and other natural disasters.

Property values in post-Katrina New Orleans increased, he said.

“The nature of speculative investment is just that — speculative,” he said. “And land values in the wake of the fires are speculative.”

Despite the emotion of losing a home or property, those who were impacted by the fires need to treat dealings with banks, builders and insurers as a business matter, Klein said.

“Go slowly and carefully, and find good resources guidance and be willing to accept help,” he said.

Meanwhile, a few other issues might prove more complicated, he said.

For example, insurance does not cover mortgage debt, which means insurance money to rebuild may be held by the homeowner’s lender.

And for many — about 80 percent of homeowners, Klein estimates — insurance won’t cover the full cost of rebuilding.

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