Home  Sustainable Land Development Today July/August 2007
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Keep Local Changes on Your Radar |
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Written by Erica Leatham
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Wednesday, 01 August 2007 |
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Keeping a sharp eye on local regulations can keep projects on track.
As major metropolitan areas are quickly reaching physical expansion limits and are significantly redeveloping existing areas, local policymakers are struggling to keep up. Consequently, they are overhauling outdated zoning regulations and procedures. In the process, development professionals and property owners are sometimes on the outside looking in, or worse, completely blindsided by the changes, which can significantly affect their plans and their bottom lines.
An important element of a developer’s risk management plan is staying on top of, and being a part of shaping, the changing land use environment.
Although government structures and issues vary from locale to locale, particularly depending on the agency holding the planning and zoning power, land use and development is primarily a local matter. As a result, decisions are made at a level in which access to the politicians and policy makers is relatively straightforward. Almost anyone can, if properly informed, meet with the decision-makers and potentially influence the decisions. The key, of course, is to stay informed and react to an unfavorable land use policy before it takes effect, as well as develop effective arguments and engage supporters.
Local actions that can impact development generally fall into three distinct areas: land use policy, such as zoning standards, growth controls, master plans and affordable housing resources; specific project-related decisions, either approval or denial of a zoning request; and, environmental regulations, as most jurisdictions are free to adopt laws/regulations stricter than those in place by the state.
Land Use Policy
Policy issues generally garner the most attention from the industry and the media, particularly in regions where land use is a hot-button political issue. Of the policy issues, growth controls and affordable housing often generate the most debate and, therefore, are generally highly visible issues that can lead to discussions between the industry and the decision-makers.
Recently, the city of Gaithersburg, a municipal corporation in Montgomery County (Maryland), enacted a new affordable housing program requiring 15 percent of the units in any new residential development of a certain size be set aside as affordable units. However, out of multiple responses to a request for proposal for development within the city, only one developer was aware of the legislation and modified their offer accordingly. The one developer that was aware of the program was made aware via conferences with counsel and elected to retract the proposal. Only at that point, were the property owner and other bidders made aware of the issue.
Blindness to such a major change can be disastrous. The legislation was initiated and implemented quickly in response to recent redevelopment projects in the city, but not without the required advertisements and public hearing opportunities. The local media also carried stories on the issue. Even though the public process was followed, it was easy for the developers to overlook the issue because it happened relatively quickly and because there are many, many factors to consider when looking for suitable development opportunities. Were it not for capable counsel, this particular developer may have submitted an unrealistic, and likely unsustainable, offer.
Growth control legislation through any of its various forms – moratoria to allow infrastructure to “catch up,” adequate public facilities ordinances, growth policies, etc. – are generally on every developer’s radar screen for the simple reason that if one is already in place, the project manager is used to working with it and knows its schedule for updates. Or, if it is a new concept, it may also have a certain “buzz” surrounding it that is hard to miss. However, knowing that the issue is on the horizon is only half the battle. Too often, developers focus on the overarching question, “What is the growth policy being proposed?” rather than what it really means.
Understanding the impact of the proposal, not just on an individual project, but also the “big picture” view of developing in that area, is critical to managing the process. This may include lobbying for or against the measure, proposing changes or starting a project earlier than anticipated to avoid being caught in the new standards.
Again, in Montgomery County, the county council is considering an impact tax to fund infrastructure development. In one proposal, it suggests charging more than $24 per square foot for retail space. In this case, the knee-jerk reaction is to say that the amount is too high. However, a better argument would include why the developer should not be shouldered with the burden of paying for new infrastructure, i.e., because the most needed transportation improvements are generated by the existing development, not new development and the government bears some responsibility to fund such public works. The best presentation of this argument is by a uniform, cohesive, and respectful group of interested parties.
Large-scale policy issues that often go unnoticed until after the fact involve comprehensive changes to the master plan and/or zoning ordinance and administrative procedures. Although these are lengthy public processes, sometimes lasting years, with attempts to engage the community, often property owners or interested developers let opportunities pass by without participating and having their voice heard. Master plans can dramatically alter the redevelopment potential of a particular site or even an entire area. Advocacy by the property owner or interested party can often lead to enhanced opportunities. Conversely, inattention can mean missed opportunities as densities can shift to other sites.
Project-Related Decisions
Specific project-related decisions, either a rezoning action or a project-specific zoning text amendment (though such legislation is specifically prohibited in more jurisdictions) are generally not valued other than for computing comparable sales prices. However, these individual actions can have a profound impact by raising public consciousness on particular issues. The Gaithersburg affordable housing regulations were promulgated directly as a result of a very large planned unit development proposal when law-makers realized that there was nothing in place to require affordable units in the project. In other circumstances, these approvals may set a precedent, positive or negative for future cases.
On a smaller scale, development approvals unpopular with the local community can make future approvals within the area even more of a challenge. Today, the citizenry are both more sophisticated with the process and more willing to “pick a fight.” In this instance alone, in order to properly manage the entitlement process, it is crucial to have a recent history of legislative action related to prior projects, as well as identifying the most active participants in those projects.
Environmental Regulations
Finally, environmental regulations also have an enormous impact on redevelopment. In most jurisdictions, counties or municipalities are free to implement stricter environmental standards than those implemented by the superior government. Changes to the forest conservation laws, for example, those that require more on-site forestation/reforestation, can dramatically impact a property’s yield. Often these are the regulations that are most unnoticed by the development professionals and yet can have a huge impact.
There are instances of more “media-friendly” initiatives, such as when Montgomery County (Maryland) and Washington, D.C., among others in the area, legislated that all future construction in the jurisdictions would have to meet certain minimum green building Leadership in Energy and Environmental Design (LEED) standards. The degree of press in the mainstream media, in addition to the industry-focused journals, ensured that a wide swath of the development community was aware of this particular legislation and how it would affect specific projects. But, even so, there remains some confusion over the implementation even among design professionals.
Manage the Risk
In order to manage risk when it comes to the ever-changing local laws, it is imperative to establish someone in an organization responsible for compiling and disseminating information on new legislation. The simplest way to stay informed is to join a local development industry organization whose mission includes lobbying the decision-makers on development issues. At the very least, the organization should publish a newsletter highlighting key issues. Joining relevant committees within the organization allows a more thorough understanding of issues, as do strategic partnerships with design professionals, lobbyists or local counsel. Certain regions also have industry-related, region-related journals that track specific projects and legislation, which is a valuable tool to highlight key initiatives.
Entering into a development project, of any size, requires that everyone involved be keenly aware of the various local land use issues, past, present or looming in the future, to ensure that the project proceeds as smoothly and efficiently as possible. The key to this is finding relationships with professionals who know where to look for the issues and who can clearly communicate the benefits and burdens. SLDT
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