By Adam Pagnucco.
I will begin this post with three statements. Montgomery County government has no idea how many housing units it has permitted prior to 2019. The director of the Department of Permitting Services (DPS) has admitted to me that unit data provided to me last year was inaccurate. And given our lack of historical data, it is difficult at best to determine whether we are producing enough housing for current and future residents.
First, a retrospective. In June 2023, I wrote a post using data from the U.S. Census Building Permit Survey (BPS) stating that Montgomery County had its worst year on record in 2022 on permitting housing units. Two days later, the county claimed the census data was inaccurate and provided its own unit data going back to 2000 showing that units permitted from 2019 on were in fact some of the best years for housing production over the period. The mismatch of census data and the county’s data was due to the fact that the county had not been reporting its data to the Census Bureau for years, thereby causing the bureau to construct faulty estimates. The county council became concerned about this issue and assigned its Office of Legislative Oversight (OLO) to examine housing permits from 2000 on.
OLO’s report was released in June and contained this key finding: “Revised data prior to 2019 are not available. DPS’s internal systems prior to 2019 did not allow for tracking of trends in numbers of units authorized by permit.” The report also states, “Corrected BPS data are not available for the period from 2000-2019.”
But wait a minute. If revised data prior to 2019 does not exist, then what about the data that the county sent me going back to 2000 that I published last year? I asked DPS staff about this over a two week period starting in late June. After a bit of back and forth, I asked, “So was the building permit information supplied by DPS and the executive branch to my site in June 2023 accurate or not? This is the post on which it was published: https://montgomeryperspective.com/2023/06/15/county-government-census-building-permit-data-is-wrong/.”
DPS Director Rabbiah Sabbakhan replied, “This data issue is irrespective of any county branch of government. We are all one government trying to be as open and transparent as possible. What was provided in June 2023 was later recognized to contain inaccuracies and was subsequently ameliorated. The data published in the OLO report is deemed correct.”
So let’s review this. The county had not been reporting unit permits to the Census Bureau for years. When I published the census data, the county refuted it with data that it now admits is inaccurate. That inaccurate data provided by the county was allowed to languish on my site for over a year. I obtained an admission of inaccuracy only after OLO published its report, which would not have happened except for action by the county council, and I subjected the county government to weeks of questions.
This is cause for displeasure.
But there is more. OLO reported this:
In 2023, Executive Branch staff worked with staff from the City of Gaithersburg and the City of Rockville to develop revised estimates of newly permitted housing units for 2019-2022 and to establish accurate BPS reporting processes moving forward. However, the Census Bureau’s publicly reported data from 2019-2022 do not reflect these revised estimates because the Census Bureau does not have a process that allows for revisions after datasets are finalized.
So neither the county government, nor the Census Bureau, nor anyone else has any idea how many housing units we permitted before 2019. Let’s remember that the prior two decades contained a historic real estate boom, the Great Recession, and an uneven recovery that strengthened until the pandemic. That’s a fair sampling of points across two business cycles that provide a benchmark for housing production.
There are alternatives like the Census Bureau’s decennial census and its American Community Survey, but both have lag times (the former comes out only once a decade), measure net housing stock rather than additions and have error rates that grow larger with small geographies. They are no substitute for the granular data available from building permit series.
And so deprived of our history, we have no idea whether we are producing enough housing now. Think of all the housing targets we have in our master plans and before the Metropolitan Washington Council of Governments, which establishes housing targets for the region. There is no way to judge whether we are doing more, less or about right compared to what we have been doing.
It’s an astonishing failure of our ability to measure economic data. And it affects housing production, which is one of the highest priorities of our elected leaders.
I get that DPS may never be able to audit all of its records. There has to be many thousands of them, and DPS staff is busy processing new permit applications that come in. After all, that’s why owners pay fees to DPS.
But county leaders must consider whether a contractor should be hired to examine the building permit records and develop a solid statistical history from them. Sure, it would cost money and take time. But the alternative is that we will be flying blind on housing production for many years to come. Policy makers should find that prospect to be unacceptable.