It happens all the time. A client walks in with a survey and says, “I just bought this piece, how many lots can I fit on it?” Generally, I look at the survey, ask where it is located and start pulling up the data. I know what’s coming but my fingers are crossed (which is the same approach the developer took when buying property without a consultant!).
Inevitably we find flood zone and wetlands and any number of hurdles in the first thirty minutes. I want you to avoid making the mistakes on the front end, so I offer a six-step plan to getting a project off on the right foot. While focused on the private market the same potential is true of the municipal market.
Step 1-Build the Best Team
Engage a consultant! A consultant can help you navigate so many pitfalls of development. Even after you read the following steps you still need one. The good ones know how to “read” property, walk property and find the information it takes to determine development viability. I tend to think of myself as a partner in the process rather than a hired consultant. Keep in mind you may not like every bit of what I tell you but it will be in your best interest to heed my advice. Its what we do.
Step 2- Environmental Hurdles
Wetlands, wetlands, wetlands! Don’t touch them! I have heard it so many times, “There wasn’t any water standing. It’s not a swamp.”. Wetlands aren’t swamps and defining a wetland is a function of soils, vegetation and hydrology, not standing water. How many developers or City planners took a botany class? Plant life is regional and specific to the hydrology and soil types. Some plants are indicators of both wetland and upland, some only one. Identifying the vegetation indicators is a learned and practiced science.
Determining the soil type can be even more complex! And hydrology? Really, it’s easy right? Is there water standing or not standing? Wrong! In today’s environmental world, hydrology can exist underground as much as it can above ground.
Another is flood zones. Now this one is easy. Look up the map on FEMA and if the property is in a flood zone then you know what to do. But wait! A good engineer may know that new maps are being released in six months that will completely change the flood landscape in the area. Had you not talked to a consultant that change could be catastrophic! In addition, what can be done in the different zones to mitigate the flood insurance and how to handle each one is a little different. Just because there is a flood
zone doesn’t mean the project is dead. Talk to someone that knows!
Step 3- Local Permitting
Don’t get to far down the road without meeting with the local permitting authority to discuss the project. Involve them as part of the team and mediate the two party’s goals to a viable solution. Developers sometimes fight a losing battle when forcing a project and, let’s be honest, sometimes a permitting authority overreaches their statute. It takes an excellent engineer to navigate between two extremes and land on a profitable, beneficial project that glides right through the permitting process. Usually by now, you will need to have contracted with an engineer and produced some color renderings or light concepts.
Step 4- Zoning Regulations
This goes along with step three but I am listing it separately. Zoning is so important and often overlooked or misunderstood on the front end. A quick look at a zoning map and an understanding of a community’s comprehensive plan will usually pay dividends when searching for development property.
Step 5- Costs
Now that you understand environmental hurdles, permitting requirements and zoning regulations, and your engineer has generated a concept plan, its time to get an idea of costs. With the cost in hand the developer can compute a Performa and determine the viability of the project.
Step 6- Buy the property?
Maybe. I usually advise a term in the contract that if a site plan or rezoning is not approved then the buyer can walk away with the earnest money. This engages the seller to do anything they can to get the property to be accepted. Often times the seller has clout and contacts in the community and can influence their neighbors. If they are motivated by the contract to do so, they become a member of the team. So maybe you aren’t buying the property just yet, but you can certainly proceed with a little more
This was a summary of upfront work to be done prior to purchasing property. What else can you think of to do prior to purchase? Leave your ideas in the comments below.
Need someone to help you with a development? Let’s talk.