Off Limits

BROOKFIELD SAN DIEGO Builders has initiated five master planned communities in the past five years. Those projects should carry this division of Del Mar, Calif.–based Brookfield Homes through to 2008. But the division hasn't bought land in two years, and its president, Stephen Doyle, wonders if its supply of entitled real estate will last the decade, as the regulatory approval process in Southern California markets now takes at least five years to complete.

Builders and developers from west coast to east lay a good measure of the blame for procedural delays on zoning regulations that many communities are wielding to contain their growth as much as sustain it. Political and environmental winds that blow zoning every which way can leave developments dangling or in protracted litigation and landowners steaming over assets suddenly made less marketable. And builders are being forced to jump through hoops to comply with zoning that some say is out of step with current land-use trends, home and lot designs, and buyer demands.

“Dealing with zoning regulations is like being Sisyphus,” says Debbie Bassert, assistant staff vice president of land-use policy for the NAHB. It's taking the builders she's spoken with up to two years to push their rock up the zoning hill, compared with three to six months several years ago. Tamara Kolstad, land acquisition manager for Technical Olympic USA's (TOUSA's) Las Vegas division Trophy Homes, notes that public companies like hers must stay alert about not keeping land assets on their books for extended periods “so that it doesn't kill you if the [approval] process takes longer.” Todd Stutz, president of The Rottlund Co.'s Minnesota division, calls zoning the “undercurrent” that builders struggle against to find land at prices that make sense.

Some builders see zoning as an anti-growth cudgel, especially in markets where there's scant evidence of long-range regional planning that would arbitrate development and controlled growth more reasonably. Local planning and zoning bureaucracies can be unfathomable, say builders, in that they say they favor growth for their communities but incongruously resist residential construction that would support economic expansion because it would put pressure on their schools, roads, public services, utilities, and tax revenues.

“People are voting based on their perceptions of what they see in the morning driving to work and at night driving home,” says Joe Riggs, president of Hovnanian Enterprises' division in Edison, N.J. “Many people look at more traffic and blocked views, and their uneducated first reaction is that [development is] bad, whether it's vertical, horizontal, or underground. But when you equate growth and standards of living, their response is very different.”

More than one million people have poured into the Atlanta market in the past decade, “but there hasn't been one major roadway built,” says Thomas Krobat, president of Ashton Woods Homes in Roswell, Ga. As a result of that poor planning, Atlanta now ranks fifth in the nation for traffic delays, and those snarls have helped trigger what Krobat calls “a tremendous backlash against development within the general populace. Citizens' response is not to build anything, and people don't want anything rezoned.”

Atlanta's DeKalb County now considers only a limited number of development applications and issues approvals only two times a year. This has forced local builders to, in Krobat's words, “go up the highway” to towns where zoning may be more manageable, which he acknowledges exacerbates sprawl and its attendant traffic problems.

Sprawl is also being “legislated,” say builders, by zoning that favors spacious homes on massive lots. Krobat recalls a zoning issue that Ashton Woods faced a few years ago, when it wanted to build homes around Atlanta that would have sold for $80,000 more than the current resale market rate, only to be rebuffed by local owners who demanded that the new homes be $180,000 more.

This not-in-my-backyard (NIMBY) mentality, and the aversion in many communities to multifamily construction, is nothing new, although opposition has gained ferocity in recent years, say builders, as owners protect the ever-increasing values of their homes and shield their communities from what many perceive as avaricious developers. “NIMBY is still a factor, but it's gone under cover,” observes Karen Anderson, the mayor of Minnetonka, Minn., and former president of the National League of Cities. “It's no longer politically correct to say, ‘We don't want these people in our neighborhood.' What you hear instead are complaints about density, traffic, and drainage,” which builders agree are zoning's unholy trinity.

City councils in Minnesota are required by law to render zoning approval decisions based strictly on land-use laws, says Anderson. Minnetonka's zoning includes ordinances that protect wetlands and trees and limit what's built on steep slopes. “None of these prevents development, but [builders] have to know the rules and play by them.”

But the rules, say builders, keep changing, and the result usually means less land for housing, legal challenges notwithstanding. Two-fifths of California's 100 million acres are inaccessible, according to Doyle. And pro-environment and antigrowth legislation, enthusiastically endorsed by New Jersey's past three governors, has cordoned off three-fifths of that state's land.

“The solution has been, ‘Let's manage [land] by not letting anyone use it,'” scoffs Mary Anderson, owner of Lynwood, N.J.–based Homes by Mary B. Anderson, which constructs 12 to 15 homes a year. “My response to that is, ‘Where will people live in 10 years?'” Michael Karmatz, senior vice president with Orleans Homebuilders, says restrictive zoning is one of the reasons why his company shells out $70,000 per house to get through the Garden State's regulatory thicket. Within the past three years, Bensalem, Pa.–based Orleans has started building in Florida, North Carolina, Virginia, Georgia, and New York.

What vexes builders in these and other markets is when planners yield to NIMBY-ism and reject zoning variances for development schemes like clustering and mixed-use combinations that, these builders insist, would produce more affordable housing, provide for more open space and environmental protection, and relieve traffic congestion by limiting sprawl, all of which are among the most frequently stated goals of many towns and cities. “Instead of thinking all or nothing, I'd like to see municipalities think more about mixed-use, multifamily, different lot sizes,” says Jay Kopel, executive vice president for Centex Homes' Dallas-based southwest region.

Under “current zoning patterns,” Long Island, N.Y., would be completely built out within 30 years, predicted Robert Yaro, president of the Regional Plan Association, during a recent televised “town hall” meeting about smart growth. Some 90,000 acres on the island are at stake, and their development will require “a new paradigm to see how local zoning fits into a broader context,” says Nassau County executive Thomas Suozzi, who joined fellow panelists in calling for better coordination between the island's towns and villages to strike a sensible balance between growth, the island's environmental integrity, and its increasing need for affordable housing.

That's music to the ears of most builders and developers, who complain that municipal zoning has become a maze of competing and conflicting interests. In central Ohio, Columbus-based M/I Homes deals with “at least 20 zoning authorities,” says Stephen Kaplinger, that builder's vice president of land operations. “You wouldn't believe the number of people who have a say in what we do,” notes Doyle of Brookfield San Diego, which must answer to between 12 and 15 jurisdictions, to say nothing of boards that oversee schools and water use.

The approval process has always been an exercise in community relations. But now, builders say, homeowners and town planners are taking far more active and vocal roles in determining how their communities are shaped and can throw a monkey wrench into the approval machinery if they aren't mollified. So builders spend a lot of time taking the pulse of communities to arrive at some unanimity about their development plans, which isn't always forthcoming. “I've had 200 people show up at a meeting to oppose us,” says Steve Check, president of land acquisition and development for Alpharetta, Ga.–based MDC Homes. “We try not to approach zoning with unrealistic expectations and to meet with homeowner organizations, which are very organized. But if people are unreasonable, we can usually get political support by pinpointing or isolating the absurdities.”

After being appointed by the city council of Roseville, Minn., to be the master developer of a 280-acre redevelopment project, Rottlund spent six months talking to different constituencies—residents, property holders, chamber organizations—to get their buy-in before presenting its plan to Roseville's planning board. Through this process, the builder managed to increase the number of housing units in the first 80-acre phase of the project to 730 from 430, and to reduce the amount of retail space to 300,000 square feet from 400,000. While Stutz acknowledged in October that the city and his company were at loggerheads over land-use and financing issues, they've reached a basic agreement about the redevelopment's direction.

Developers in Arlington, Va., now waltz through the zoning approval process within 55 days, thanks to new “form-based” codes that specify the shape and composition of buildings and where they can be placed on property along major thoroughfare Columbia Pike. Arlington, which had been losing development to other towns along the rail corridor leading to Washington, held 200 meetings with homeowner and business groups to devise those codes, which it wrote into its zoning language in February 2003. Through October 2004, the city had approved over $300 million in new projects, says Tim Lynch, executive director of the Columbia Pike Revitalization Organization, a nonprofit coalition that works with the county. Lynch says developers have been attracted by the codes' “predictability,” which makes it much easier for them to show the community that their plans are in compliance. “It's an entirely different way of zoning,” says Lynch.

He's got that right, if one accepts builders' claims about the haphazard manner in which some towns apply zoning regulations. In mid-construction, one city made Brookfield barricade part of a circulation route serving a community it was building until all of the development's homes were completed. For two years, owners living in the first two sections of that development had to drive five miles to get their kids to a school in the third section a half mile away, says Doyle.

Brookfield's experience speaks to more contentious issues relating to the connection between zoning approval and demands by communities on builders and developers to ante up more for infrastructure improvements and environmental protection. Prince George's County, Md., for example, imposes an impact fee of $12,000 per house for schools and is contemplating an $8,000 fee for police and fire, says Bill Knight, managing partner for the Upper Marlboro, Md.–based law firm Knight, Manzi, Nussbaum & La Placa, whose clients include Ryan Homes, NVR, and Washington Homes. In Washington state, local developers had to join forces to negotiate a deal where each would share the cost of widening an intersection to five lanes from two, which state officials mandated before they'd OK construction in the area.

Las Vegas builders pay $5.50 per acre for “tortoise remediation,” says Kolstad. In Tucson, Ariz., the federal government has pushed for larger-lot zoning to protect the environment, a mandate that, the NAHB's Bassert asserts, is at odds with some local governments' land-use policies. And don't get builders started about preventing stormwater runoff from their jobsites.

Several builders also expressed the opinion that zoning entrenches the status quo, and that planners can be deaf to innovation. Fort Mitchell, Ky.–based The Drees Co. found this out on a planned development it's been working on in Nashville, Tenn. Its plan calls for single-family homes with frontages of 50, 80, 90, and 120 feet. City planners, though, didn't want front-loaded garages on the 50s and recommended that the garages be pushed back to the rear of the houses. Drees sought a compromise by suggesting an alley-loaded design, but three planning commissioners vowed to vote against its plan if the garages weren't set back. “They thought they were fixing a problem, but they are creating a very bad-looking product,” says Tom Miller, Drees' senior vice president of corporate land.

That rigidity, though, is becoming passé, as more city planners take a longer view of their communities' development and tweak their zoning to accommodate new ideas that include infill redevelopments and smart growth with live/work/play components. To navigate these uncharted waters, city officials have been turning to builders and developers for advice. “That's a real positive,” says Darren Warren, vice president of land for Pulte Homes' year-old division in San Diego, “because we're getting support for what we want to do” in such areas as mixed-use development and more creative design. Warren adds that several towns where his division builds operate from so-called “2020 plans” that map out their growth for the next 10 to 20 years.

TOUSA's current projects in Las Vegas are planned-unit developments (PUDs) that give communities the option of regulating setbacks, parking, and open space. PUDs can call for more amenities, too, like pools, clubhouses, and trails. “We don't mind this at all,” says Kolstad, who empathizes with planners who are trying to get a better handle on their communities' growth “so that they don't end up with residential developments next to off-ramps.”

However, as more planning boards subscribe to a “less is more” philosophy, builders and developers must find new ways to achieve their production objectives. Two years ago, residents of Pierce County, Wash., decided to slow down a market that had been expanding rapidly but without much infrastructure in place. They approved the creation of three district planning areas, whose rezoning called for 20 percent set-asides for open space within any new development.

“These districts forced us to create almost urbanlike developments in what had been almost rural land,” says Chris Austin, director of land development for Puyallup, Wash.–based Premier Communities. To achieve the maximum density that the areas' zoning allowed—six houses per acre—Premier made compromises: Where it had been building on 5,000-square-foot lots five years ago, its lots now range from 2,700 to 4,600 square feet. These lots include more alleyways, and their side-yard setbacks are reduced to 3 feet from 5.

To receive approval for a 600-acre, 2,300-unit development called Evergreen Farms in Murfreesboro, Tenn., Ole South Properties scaled back its original plan for lot sizes of 10,000, 12,000, and 15,000 square feet and agreed to build on lots of 6,000 and 7,500 square feet. As part of the negotiating process, Ole South prepared a concept plan that included commercial and townhouse elements. “It's not New Urbanism per se, but it's something relatively new for this market,” states vice president of development Mike Lilly.

Three of M/I Homes' communities offer homes built to the specifications of a new Traditional Neighborhood Development plan that the city of Columbus, Ohio, has drawn up. That plan allows five units per acre, with about 20 percent of the units being townhouses. The smallest lot is 47 by 70 feet, and the homes range from 1,200 to 2,500 square feet and from $140,000 to $275,000. However, it costs M/I about 10 percent more to build within this plan because lot configurations call for narrower frontages that Kaplinger says make squeezing in utilities more expensive.

In October, planners from the Cincinnati suburb of Goshen Township toured one of these communities and “were very impressed,” says Kaplinger, who adds that developments like these could be the future for builders in more tightly regulated metropolitan areas. “What builders like us can do is build communities that make sense and use [those communities] as examples for creating better planning and architecture.”

John Caulfield is a freelance writer based in Old Bridge, N.J.

The shifting sentiments of voters and their elected officials can keep land development in play for decades. In two of America3s fastest-growing markets, that3s been a double-edged sword for residential construction.

In mid-October, the planning staff of Loudoun County, Va., recommended that the county's planning commission reject 16 of 20 amendments that developers had proposed to a long-range growth plan. The extent that the commission follows those recommendations could reveal its independence from a political process that ushered in a development-friendly board of supervisors last January, which has been reopening land-use gates that the previous board had started to close.

In September, the township council of Old Bridge, N.J., approved, by a 6–3 vote, a plan for a mixed-use, 500-acre redevelopment called Crossroads, which would include several hundred age-restricted housing units. This plan is moving forward despite objections from residents who have reminded uncomfortable council members and the town's new mayor that they had ridden into office on “no-growth” platforms.

The politics of land use has become a multilayered process of attrition, with shifting, malleable agendas. No one group—developers, local residents, environmentalists—can claim to have the upper hand completely. And the longer that land remains in play, the more unpredictable its fate is likely to be.

Developers have been pushing into Loudoun County since the early 1980s; it is now one of Washington's fastest-growing suburbs. In recent years, public officials have tried to rein in the county's residential construction “to the densities we think we can afford,” says planning director Julie Pastor. In July 2001, Loudoun's board of supervisors approved a revised comprehensive plan to serve as a guide for development over the next 20 years. In the process, that board reduced by 80,000 units the number of homes that could be built during this period. (All told, the plan called for a 103,000-unit build-out, Pastor says.)

Last January, though, voters installed a new board whose members are far more open to growth—its chairman, Scott York, heads the Virginia High-Growth Coalition—and wasted little time asserting itself by voting to allow public water and sewer lines to extend throughout 23,000 acres known as the county's “transition area,” which Pastor says has huge parcels of undeveloped land. The comprehensive plan called for only around 12,000 homes to be built in that area, but the new board's utilities vote instigated the blizzard of amendment proposals for higher housing thresholds from hopeful developers.

Many of those proposals “aren't new ideas and had already been vetted,” says Pastor, which may explain why her staff recommended that the planning commission reject so many of them. A few days before, the Army Corps of Engineers settled a lawsuit filed by several environmental groups by suspending a wetlands and stream crossing permit, which raised questions about the future of a 277-unit housing development within the county.

While she declines to speculate on the pace of Loudoun's future growth, Pastor does note that approval of any changes to the county's plan would be contingent on “the provision of capital—how do you provide the services and infrastructure?” She doesn't expect her job will get easier, though. “Getting plans and ordinances in sync is a never-ending process,” Pastor says.

Wetlands protection has played a critical role in the development of a 2,500-acre parcel in Old Bridge, N.J., which made local headlines in the mid-1980s when Olympia & York owned it and wanted to build 10,264 housing units. Those plans fell apart when the state passed wetlands protection legislation that closed off significant parts of this land to development. After O&Y went bankrupt, the county of Middlesex took ownership of the property. And in 1997, Old Bridge paid the county $1.9 million to acquire 500 acres, which it intended to rezone for commercial development. Developers, though, showed little interest because wetlands laws cut off access to portions of that land's highway frontage.

This development remained in limbo for several years, while new-home construction in and around Old Bridge boomed to the point where local residents started complaining about the pressure overdevelopment was placing on traffic and schools (the latter currently absorbs 60 percent of the township's annual budget). Politicians exploited that frustration, none more so than Jim Phillips, who was sworn in as Old Bridge's mayor on Jan. 1, 2004, after running a campaign that promised more set-asides for open space and recreation.

Two years earlier, the township council asked the Old Bridge Economic Development Corp. (EDC), a private, nonprofit body, to draw up a redevelopment plan for the 500 acres. It conducted what Russell Azzarello, EDC's executive director, calls a “mini charrette” with 22 developers that included Pulte and Hovnanian, “and they told us this [land] would be perfect for mixed use.”

EDC commissioned a plan that called for 750 units of age-restricted housing, a hotel and conference center, and office and warehouse space. Azzarello says 280 acres of Crossroads, as this development has been named, would still be left open in compliance with wetlands protection provisions. Phillips emerged, surprisingly, as Crossroads' biggest booster, even as some residents chided his endorsement as a betrayal. “The issue to me is simple: It's about property-tax relief,” he said during a raucous, four-hour-long town meeting attended by an estimated 150 local residents. Crossroads' proponents project that selling the property to developers could fetch $40 million, and that, properly developed, Crossroads could produce a ratable of $189 million and annual taxes of $5 million. “We want the best and cleanest ratable we can generate, and the best services,” says Azzarello, who is part of a redevelopment agency the council set up to weigh proposals from developers and builders.

If, however, the township doesn't achieve those numbers, the political fallout could be radioactive. There's a vocal, if small, NIMBY component that rejects any development. Other residents challenge EDC's assumptions about tax revenues and the land's value as too optimistic. And a sizable group of residents questions the wisdom of adding more housing—and more traffic—to a community where nearly 1,000 new units had already been approved for construction on other parcels. One opposing councilman threatened to investigate the legality of a retroactive referendum to allow residents to vote on Crossroads. He also vowed to keep the issue alive into the next election.