The Value of a Quick Look | 10 Steps to Master the Land Development Process
December 1st, 2020 | Land Development
Ten Steps to Master in the Land Development Process
This multi-part Blog series will highlight how to mitigate risk and avoid issues that commonly plague land development projects. We will help you understand how to properly navigate the main phases of the land development process to help avoid cost overruns and delays (and a whole lot of stress and anxiety). This is a collection of observations, recommendations, and advice from the perspective of a civil engineer who has worked side-by-side with a diverse set of developers on hundreds of land development projects over the past 25 years.
If you are a real estate developer, broker, or land use attorney you will find the series to be of particular interest.
Topics for the series include:
1. Informal Site Assessments
2. Doing your Due Diligence
3. Preliminary Design
4. Assembling the Right Team
5. Land Development Design
6. Planning your Design/Permitting Strategy
7. Municipal Land Development Approvals
8. Outside Governmental Agency Permitting (D.O.T., D.E.P., Utilities, etc.)
9. Pre-Construction Planning
10. Construction Phase Considerations
Topic 1: Informal Site Assessments – The Role of Initial Consultations for a Land Development Deal
As a developer, it happens all the time; you see a site and have a vision for what it could be. Maybe it’s a vision for the redevelopment of an aging shopping center or industrial property; maybe it’s a vacant parcel that you think could be an assisted living facility or residential community where the local market has a need. Regardless of your vision, at some point you need to make the decision of whether your idea is worth spending time and money to vet in a more detailed way. You need to consider an informal site assessment. This is the time for you to tap into the collective knowledge and experience of a seasoned development professional. This can take the form of talking with your banking contacts, brokers, developer colleagues, architects, etc. A good starting point, however, is a civil engineer. After all, they are often the ones that will be able to give you the best sense of likely development yield, if a certain tenant prototype will fit on a given parcel, and provide you with a sense of the development obstacles you should anticipate.
“I’ve been developing sites for the past 25 years, and I’ve seen it all.” While your years of experience are impressive, consider the numbers. For instance, a good, seasoned civil engineering project manager can average 40+ projects a year that they are directly involved with some form of due diligence, design, permitting and construction oversight. Given that they likely also have on average 20 years of experience, they’ve been involved with over 800 projects and can bring that level of expertise to your envisioned project. Few developers have been directly involved in that many projects. The point is, there is knowledge to be tapped that will likely be insightful to your vision.
“I’m not willing to spend money at this phase.” You just want to get a decent feel about your vision’s viability first. We understand. However, a few hours of time can sometimes provide outsized insight and value that the development community should leverage. That is why Landcore believes that providing a complimentary consultation is so important to the development community. A free consultation typically consists of discussing your project to understand your vision and goals, and then spending a couple hours of our time to see what layers we can peel back to provide you with some practical insight and information.
“What can you really do in a few hours?” While this is certainly not an exhaustive research exercise that should replace standard due diligence practices, it can cover a lot of bases and sometimes uncover “deal-killer” issues that are much better to know at this point, rather than after you are well down the road on your deal.
Typical things that are done during an initial consultation may include:
• Determining a site’s zoning designation as well as permitted uses and cursory review of general zoning criteria.
• Performing a desktop review of any available web-based mapping to assess the possible presence of wetlands, streams
and other features that would impact development feasibility/yield.
• Performing a rough dimensional “fit” analysis and yield estimation. Depending on site size/complexity, this can vary.
• Providing some rough guidance on likely permitting timeframes, sitework costs, and fees.
• In general, providing insights and recommendations based on our experience.
Every site is different so the above scope may vary, but the bottom line is that a good engineering consultant will have the experience and tools accumulated over hundreds and hundreds of projects that you should utilize. Too many times in our experience, developers call us after they have closed on a property and request us to do design and permitting services that are based on assumptions that simply turn out to be incorrect. For instance, you purchase a property based partly on the assumption that there are no issues providing it with sewer service since it is currently served. However, with a 5-minute call to an engineer with experience in that location, you may find out that the sewerage treatment plant that services the site is at capacity and that your project and its increased flows will trigger large capital improvements that have major impacts on your budget and timing (and likely kill your deal). Many of these situations could have been avoided by taking advantage of a free consultation by a civil engineer.
Another value of an initial consultation is that it can guide how you focus your due diligence efforts (due diligence will be covered in more detail in our next Blog series post). There is no escaping the need to spend money to figure out if your deal works, but when you do spend that money, you want it to be focused on the most critical items first. For instance, if it appears from our desktop review that wetlands are present over a large part of your site, then you should focus on a wetlands delineation first to see if that is a deal-killer before spending money on other items.
Also, knowing certain things up front can help you structure your purchase contract or agreement of sale terms accordingly. For instance, finding out that your project will require a lengthy outside agency permit will allow you to have the proper timing discussions and negotiations with the seller and/or tenants up front.
After you take advantage of such a consultation and vet some of the large-impact issues, you are ready to dive into more formal and detailed due diligence efforts. Watch for our next post, where we will discuss “Doing Your Due Diligence” and how doing this the right way can put your project on the path to success.
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The above article is the first in our series of “10 Steps to Master in the Land Development Process”. Subscribe to the Blog to be notified of future articles in the series.
Landcore’s staff have been through thousands of projects – reach out to us to leverage our knowledge on your next deal.
To take advantage of Landcore’s free consultation click here or reach out to me at mrutt@landcoreconsulting.com or call me at 215-836-2510 x1. I look forward to the conversation.
