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Chapter 9 - Permitting

The last few years have seen an incredible explosion in construction in Costa Rica. Don’t let that fool you: Costa Rica is still one of the most difficult countries in the world to build in. In addition to being expensive in terms of fees and materials, the main hang-up that developers and home-builders face is the enormous variety of permits that must be obtained before building. To develop a property larger than 500 m2, you need the OK from at least half a dozen separate entities, probably more. Developing a subdivision or a condominium adds another layer of oversight from another regulatory body, and when all is said and done you’ll probably need to have hired at least seven state-certified professionals, including an architect, a civil engineer, a topographer, an environmental engineer, an archaeologist, an anthropologist, and a biologist. All that, and you haven’t even started construction yet.

All told, the permitting process for a small development can take anywhere from a six months to several years and cost the developer some percent of the total value of the project. Construction of individual homes on properties covering less than a half a hectare must pass through a similar process, but with substantially less regulation.

This chapter seeks to guide the amateur developer or home builder through the thicket of permitting requirements and regulation. It would be impossible for this book to spell out every detail of every permitting procedure. The regulations are constantly changing, they vary in each of the country’s 81 municipalities, and no matter how sure something seems, exceptions pile upon exceptions. This chapter, then, seeks to be only a detailed overview of construction permitting in Costa Rica, and is meant to compliment the expertise of a highly-recommended team of professionals that you should hire to handle the permitting process for you.

If all this sounds too complicated and expensive, and is tempting you to cut corners on permitting and environmental compliance of your development, you wouldn’t be the first. Government regulators have simply not kept pace with developers during the last decade, causing severe backlogs. That encouraged many developers – especially in Guanacaste and the Central Pacific – to throw up their hands and begin construction without all the necessary permits, muttering the mantra that it’s easier to ask forgiveness than permission. Other developers have turned to corruption, dolling out bribes to government officials to get things moving.

Both of these strategies have often worked. Today, however, cutting corners on permitting costs more than it saves, both in time and money. This is mainly because the government is finally improving enforcement, significantly increasing the chance that un-permitted construction will get shut down long before the developer has a chance to ask forgiveness. Indeed, the year 2008 saw a series of high-profile crackdowns on construction sites all over the country that got the developer community’s attention. Legally, the penalties can include everything from fines to even jail time. Along with the crackdowns, the government is also making a few key changes in the permitting process – particularly in the environmental review – that promise to make permitting move faster, meaning that bribes, in addition to being a crime, are no longer worth the risk.

Also, as with everything else in Costa Rica, if you think doing permitting the right way is onerous, wait and see what happens when you do it the wrong way. Without the meticulous attention to detail that the permitting process requires, you could end up unnecessarily delaying your product an extra year or two – a catastrophic development if your financing is time sensitive. Horror stories abound.

Finally, cutting corners on permitting hurts everyone in the long run. Improper waste water management, the illegal clearing of forest, and the interruption of biological corridors by private roads destroy the very reasons people want to live in Costa Rica in the first place – namely, jungle, wildlife, beautiful landscapes, and friendly local communities. Permitting in Costa Rica is complicated and frustrating, but it is intended to protect the goose laying the golden eggs. Even better, think of it as keeping your neighbor from building a monstrosity that would lower the value of your property.