With the speedy urban development in Taichung city, the demand for business district has increased. In 00 , the Taichung city government allowed nineteen areas to simplify the process of development permit deliberation, turning urban planning residential district into business district, so as to shorten the time and reduce the risk for land development. In the view of institutional economics, the final purpose of institution design is to reduce transaction cost of land development, and achieve institution benefit. So, we discuss the institution background, and then apply land development transaction cost theory to questionnaire survey and depth interview method. We survey the existing institution practice, and then provide specific improvement strategies for the imperfect institution. There are five transaction cost items of land use permit system (residential to business district) in Taichung city: (a) searching cost, (b) negotiating cost, (c) judging cost, (d) executing cost, and (e) supervising cost. The analysis results showed that negotiating cost is the most uncertainly, impacting the land development process. Although, we simplify the process of development permit deliberation. There are four improvement strategies to achieve institution benefit: (1) the open, transparent and clear information, (2) public sector business integration, (3)feedback fees for its specified purpose, (4) appropriate planning restrictive way.