by Tony Ozanich, PE, Land Development Director
Land Development is a mysterious process for most people not to mention Land Developers. It would seem, from the all the developed properties in this great country, that this would be a simple process where if you had access to developable property you could develop it. Not so fast future developers. For starters let’s define a few terms. From the web, some generic definitions:
- Grow or cause to grow and become more mature, advanced, or elaborate.
One could equate this to having one parcel and growing (dividing) it into several more or to placing a building on the property thereby making it more elaborate.
- The process of developing or being developed.
- The process of starting to experience or suffer from an ailment or feeling.
Out of the two above definitions most land developers would tend to agree that the second definition is the more appropriate of the two. You will understand this comment by the end of the article.
Wikipedia has a listing for several types of “Development,” however for this article we will look at the two most common that concern us in Civil Engineering, Land Development and Real Estate Development:
- Altering the landscape in any number of ways.
- Changing landforms from a natural or semi-natural state for the purpose such as agriculture or housing.
- Subdividing real estate into lots, typically for the purpose of building homes.
Real Estate Development
- Is a business process, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of developed land or parcels to others.
In the Land Development and Real Estate Development business all the above definitions are appropriate but none of the definitions provide insight into the process, which is part of the mystery.
So how does one go from owning a property to developing that property? First, just because the property may have the correct zoning for a parcelization or subdivision does not imply it can be or should be developed. There are many items to consider when selecting a parcel for development, some physical and some political. Take for instance a property which is comprised of hilly terrain. The slopes may be too steep to get proper access or may be too steep to create building areas. A parcel may also have environmental concerns such as designated wetlands, endangered species or visual constraints such as view corridors.
These are just a few of the many items that need to be addressed prior to developing. Due diligence is a process in which someone completely evaluates the property to eliminate all or at least some of the potential no-go concerns thereby a creating sense of development success. In other words proper evaluation of a parcel prior to starting the process of development is key to a successful development. Unsuccessful developers jump right in, spend a lot of money at governing agencies only to find out there are too many constraints to make it financially feasible. After all Land Development is not a hobby, Land Developers need to make a profit. The economy also has a large effect on the success of a project. Prior to 2006 the economy was booming, costs and constraints were of little concern to developers but the risk was in the economy falling apart, which it did! Between the years 2007 to about 2016 developers and the industry had a very difficult time. Many developers lost everything. It wasn’t only the private industry that suffered. Local governments had to cut back staff to reduce overhead. There was no development, no homes being built and little money coming into the Cities and Counties coffers from land development projects, they were required to cut overhead costs and some employees lost their jobs. In my 35 plus years, as a civil engineer, I have seen this unfortunate event occur several times and it’s not a fun time in the industry.
The Three Essential Steps in Land Development
Zoning is the first thing a developer should look into. The big question, is the property zoned for the future intended use? If not then the developer could try to get the current zoning changed for the intended use. However, this process called “rezoning” can be very cumbersome. However, rezoning can also be very lucrative.
Rezoning a parcel will require the governing agencies approval. This process in a nut shell is as follows.
Complete the application. Pray the environmental determination is favorable. NOTE: The applicant or any interested party may appeal the environmental determination as part of the public hearing considering the rezone. The Planning Commission will hold a public hearing and make one of three recommendations to the Board of Supervisors.
- Deny requested rezone.
- Recommend approval of requested rezone.
- Recommend to conditionally grant the requested rezone.
The Board of Supervisors will make their determination and if number 2 is granted it’s a win for the developer. If number 3 is granted the developer must consider the conditions and whether or not they can meet the conditions and make a profit, if so it’s a win and of course if number 1 is selected they live with the current zoning or abandon the project on that parcel.
However, prior to filling out the application for a rezone the developer should consider the physical and political considerations. If the zoning and physical constrains can be overcome the political constrains may be a hindrance to the success of the rezone. Yes, there are many properties in this country which could be rezoned and developed based on the physical characteristics of the land. However, those same properties may have what we call political constraints. When word gets out, which it will, that a property is going to be rezoned to a higher density or more intense use, droves of citizens and entities will come forward to question the reason for the rezone. Appeals, as noted above, are not uncommon and I have seen lawsuits filed against the developer and the governing agency because of a potential rezone.
Because constituents influence the board of supervisors and the board members will ultimately make the decision on the rezone, it is important to build neighborhood support for the rezone prior to filling the application.
If the developer has the gumption to try for a rezone, building a team of experts will be key. This should include civil engineers, environmental consultants, surveyors, traffic engineers and possibly Land Use Attorneys. The developer’s willingness to do some leg work can reduce the costs of these consultants but open communication and honesty is a must.
Once the developer has completed their due diligence, assembled their team, evaluated the concepts, filed the proper applications, performed all the studies, and finally, acquired the proper zoning, they can move onto the next step, Starting Plans.
Starting the Plans is an exciting part of Land Development. It is where all the conceptual cocktail napkin ideas come to life, at least on legible paper.
Once it is determined that a parcel can be divided/developed a determination on whether a tentative parcel map (four parcels or less) or subdivision map (five parcels or more) will be necessary. Most of the time, this has been determined in the zoning phase. If not, then the developer would prepare the appropriate tentative map and submit to the governing body for approval.
Once reviewed by all the appropriate agencies including but not limited to; Planning, Engineering, Environmental Health and Fire, a set of “Conditions of Approval” (COA) will be created. These COA’s will spell out everything the developer needs to do prior to construction, during construction and after construction. Land surveys and civil improvement plans will need to be prepared, studies will need to be performed, and utility easements will need to be granted and/or acquired. The list can be very extensive and may include bonds, offer of dedications for right-of way, etc.
Most items in the COA’s are typical and not a surprise to experienced developers. The developer does have the right, during the public hearing, to challenge any condition which they feel is inappropriate or extensive. The developer should carefully read and understand all conditions imposed on the development and if they challenge a condition, should be prepared with justification for that conditions removal. Hint, rarely is the excessive cost to fulfill that condition a justifiable reason for removal. The developers team members should be present during the hearing to help explain the complexity of the conditions to the developer or to support the developer in on a challenged condition. Developers need to understand that their team will not argue against a governing body on a condition unless it does not follow the agencies land use code. We as engineers have to continue to work within that jurisdiction and our success and that of the developers depends on a good working relationship with the agency.
As mentioned above it is very important for a successful development to get the team of experts assembled early in the process and imperative to have the civil engineer involved as early as possible. I know what you are thinking, “that’s because you are a Civil Engineer and want to make as much money as possible”. This is partially true but we don’t continue to make money unless the project is approved and successful. Therefore, it only makes sense to have a good civil engineer on board from the start. A Civil that understands the process and has experience can be one of the most valuable assets to a developer. We know the planning process, the studies required, the codes and standards and can recommend sub consultants that do their job very well. It not uncommon for an experienced Civil to design a project that can save the developer more money than the cost for their service. This cost saving is almost impossible to prove because typically a developer does not realize if the design is optimal or if it is a poor design.
Now that your design team has created an optimal design it is time to move on to the final step, Permits and Construction.
Permits and Construction
This step is almost as exciting as Starting Plans because the project moves from paper plans to pushing dirt with big toys.
Prior to moving dirt the developer needs to select a good contractor. The developer has the opportunity to take the project “out to bid” for construction or to simply negotiate with a contractor that they have worked with on prior projects or one who is highly recommended by the Civil or the developers colleagues. Many developers will use a contractor they have a relationship with, especially if the project is similar to a prior project and was successful. Take for instance a developer builds gas stations and has had previous successful gas station projects with a certain contractor, there would be very little reason for the developer to bid the project and take a chance with a new contractor since the previous contractor has much more experience in building that product and most likely will have worked out all the construction kinks.
Permits to perform the work will need to be acquired from the governing agency. This typically starts with a grading permit and/or a building permit depending on the project. All required permits must be acquired prior to doing anything on the site. You don’t want to start the construction process on the wrong foot and create an image of being difficult to work with.
Construction staking will be performed by the project surveyor and this is where the developer usually finds out if their civil engineer has designed an optimal project or not. Correcting a poor design is expensive.
During construction, inspections will need to be performed by both the governing body and by the resident engineer and/or soils engineer. Depending on the type of development, soils compaction tests, concrete tests, structure inspections, etc. will be required, documented, and logged throughout the duration of the construction.
A resident engineer, typically the design engineer, is there to help protect the developer and help assure the project is built to the approved plans. The resident engineer or architect will keep detailed records of the construction including documenting any required changes.
A final inspection and review of all construction documentation will be performed by the governing agency prior to building and/or occupancy of residential, commercial or industrial buildings.
As-builts of the construction, especially for civil work will need to be prepared and approved by the governing agency.
Now that construction is complete the developer, hopefully, can start making money on their investment in time and money. And this takes us back to the second definition of development “The process of starting to experience or suffer from an ailment or feeling”. I don’t know any developers who don’t suffer from the excitement of creating a development. Development is necessary for a thriving economy and if it were not for these tenacious developers, we may well still be living in caves.
In summary the mystery of a successful Land Development project is to gather a team of experienced professionals and perform the three essential steps.
Following is a flowchart which will help developers and engineers with understanding the Essential Steps in the Land Development Process:
For more information about land development engineering services, please contact Tony Ozanich at (916) 783-4100.