Effective December 31, 2012, Senate Bill 1598 (“SB 1598”) required all cities, counties, and county flood control districts (collectively, “municipalities”) to establish a time frame to either grant or deny a license or permit application.  If permits were not granted or denied within these time frames, municipalities were required to refund all permitting fees.  But just months after SB 1598’s licensing time frame requirements went into effect, the Arizona Legislature amended the previously enacted requirements with the passage of House Bill 2443 (“HB 2443”).    

HB 2443 is intended to address at least three significant issues.  First, it exempts any permit necessary for the construction or development of a residential lot, master planned community, or subdivision.  For these types of development, the licensing time frames do not apply, and municipalities and are not required to approve or deny an application within a certain time frame.  

Second, HB 2443 prohibits municipalities from allowing applicants to waive their right to receive a refund of fees charged for reviewing and acting on the application.  This is significant because many municipalities were encouraging applicants to opt-out of the licensing time frames.  For instance the City of Tucson established time frames allowing it 85 calendar day to grant or deny a permit for new construction; if the City did not grant or deny the permit within that time, it was required to refund all fees.  But if the applicant agreed to waive the right to receive the refund if the application was not timely processed, Tucson agreed to process the same new construction permit application in just 20 calendar days.  Under HB 2443, municipalities such as the City of Tucson are prohibited from requesting that applicants waive the right to receive a refund if the application is not timely processed.  Applicants similarly cannot voluntarily choose to opt-out of the licensing time frames. 

Third, HB 2443 attempts to fix unforeseen problems that arose with the SB 1598 permitting time frames.  For instance, the licensing time frames did not expressly allow applicants to voluntarily amend or modify their application after initial submission.  Some municipalities took the position that the amendment of or modification to a permit application was not permitted under SB 1598 and would result in a denial of the application, thereby restarting the time frames and requiring an additional permit application and fees.  But now HB 2443 permits applicants to amend their application so long as it remains consistent with the purposes of the original application.  In such cases, municipalities are allowed up to an additional 50% of the allowable substantive review time frame to make a decision to grant or deny the permit or license. 

Other notable “fixes” include:

  • Allowing municipalities to make a second request for corrections if an application is amended or supplemented, as opposed to just one request under SB 1598;
  • Permitting applicants and municipalities, upon mutual agreement, to extend the substantive review and overall time frame by 50% of the overall time frame, as opposed to just 25% under SB 1598;
  • Prohibiting municipalities from initiating discussions about waiving any of the “regulatory rights” contained in SB 1598;
  • Limiting the fees municipalities may charge if an application is denied or withdrawn; and
  • Requiring municipalities to post all applicable time frames online. 

HB 2443 will be effective September 2013, and municipalities will be required to quickly revise their SB 1598 time frames to ensure compliance.  Applicants should be prepared for these changes and may need to adjust permitting strategies and practices in light of these revisions.