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Entitlement Process

Let’s just get it out of the way. No, this isn’t a piece about a lost generation of millennials in the workplace. This is a article about the pre-dirt real estate development process of entitlement. Simply put, an extensive approval process whereby a developer seeks consent for his vision from multiple regulatory bodies. These federal, state and municipal  jurisdictions use codes, zoning, licensing, permits and building standards to ensure that the highest and best use is placed upon the raw land.

TIMEFRAME
This can vary extensively from city to city as each municipality has its own 10 year city plan in which they structure out the growth, density and development goals of the community. Realistically you are looking at anywhere from 6 weeks to 36 months. The scope of your project, team resources, financing  and relationships will have a large part in this sliding scale. For example, a building a single family residence one off on a 1 acre lot in a unincorporated zone, from approved and stamped plans of a local builder with preexisting relationships with the planning office might take 6 weeks. Whereas a 6 acre parcel being subdivided into a 42 townhome PUD built from original architectural plans with multiple revisions, which has its own HOA might take 12-18+ months from rendering to breaking dirt. Often times a good planning office will have a development guide which delineates the the various steps and timeline from conceptual review to city stamps. I should mention you can save a tremendous amount of time in this process by first visiting the planning desk during hours with a concept rendering. This will ensure that you have a clear understanding of the cities intended usage and vision, which will require little variance and debate from the locals.

BANKING & LOANS
Some banks will lend on raw land as long as there is an approved development agreement, insurances and/ or stamped plans associated in the purchase. You can aide the escrow length, liquidity and add value to raw land by having an approved concept or set of plans along with your land offering. In a commercial setting, for example, where a buyer is purchasing acreage via a SBA loan for the development of  apartments. If the project or proposed use have not been approved prior, then the SBA will make financing contingent upon this approval. Given that this could take 6 months, this could be a very long contingency and escrow. One could always counter timeline or set a course for graduated investitures along the milestones of the entitlement process to make  extended escrow duration mutually beneficial to both parties.

Having an approved concept can also help you back into a per door cost to determine, ROI, vertical build cost per sqft, offering and resale price. All  are variables that are instrumental in guiding the success of your forecasts.

OTHER CONSIDERATIONS
When picking a project to develop it is always best to have a clear course of action prior to acquisition. Taking your time in finding a pro development community within which to become an expert is ideal. Steering clear of cities which require extensive courtship and prohibitive build costs like astronomical tap fees is crucial.

If you or your team are considering a new real estate venture and need assistance in navigating and negotiating the in and outs of the pre-dirt entitlement process please feel free to contact MORE Real Estates’ development consultation group direct. We have a network of professional architects and engineers we work with and offer services like owner’s rep to see your project through to completion.

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