After the village grew into a prosperous city, the king declared it the jewel of his kingdom. He seized the land for his private hunting grounds. In poor health, with no place left to ply his craft, the old builder died of a broken heart. Best Defense: Research Your Options.
No Clear Path
Land. You gotta have it--but not at any price.
By Christina B. Farnsworth
It's no secret: Finding, acquiring, and wrestling the right land through the approval process is one of the trickiest aspects of successful home building.
And for those who both develop land and build homes, the danger looms that, done badly, land development can damage one's reputation as a builder. Crystal Lake, Ill., home builder Tom Stephani says, "Land development can tarnish reputation in a way that simply building homes doesn't because you're responsible for developing land people want left alone." Many view developers as the evil rich guys causing all that sprawl.
The largest public builders remain wary of having land on their books. That creates opportunities for specialists like NAHB president Gary Garczynski, president of the National Capital Land and Development Co., in Woodbridge, Va., to build businesses devoted to prospecting for land and shepherding it through approvals. These pros know how to get it done without stepping on toes or making mistakes or enemies.
For builders, the downside of outside land development is the additional overall cost, which potentially cuts margins.
In Tucson, Ariz., as in much of the rest of the country, development costs and cycle time are both rising, says John Strobeck of locally based Bright Future Business Consultants. What used to take six to eight months now takes two or more years.
Stephani urges his fellow builders to be constantly alert to opportunities: Take time to chat up Realtors, scout potential sites, and even mail targeted invitations to potential sellers.
Once you've found a potential parcel, inspect it with a fine-tooth comb. Strobeck remembers vividly a beautiful "developable" Tucson property that, on closer inspection, revealed a partially unbuildable nature preserve buffer, a potential home to an endangered animal, and it was subject to hillside building ordinances. It even had a natural spring mandating its own preservation area and protection.
Experts caution anyone developing land to include contingencies in the contracts they buy and be flexible on dates because the approval process can take longer than expected. After all, Stephani says, you don't want to be stuck with land if you can't get the zoning.
As motivational speaker and consultant Dale Carnegie used to say, it is important to make friends and influence people. In land development, that means any conceivable government official, the public at large, and any and all neighbors.
Fred Jarvis, of LDR International, in Columbia, Md., and Mark Friis, of Rodgers & Associates, in Gaithersburg, Md., speaking at the International Builders' Show this past February, pointed out that, ironically, some jurisdictions, thinking they are protecting themselves, actually make overall sprawl worse. Two examples: Some jurisdictions refuse to approve projects that increase density in already built-up areas, forcing development to the community's fringes. Others are so slow in their approval processes that developers leapfrog to the next available and easier jurisdiction.
Jarvis and Friis suggest you focus your land hunt on the less usual places, such as brownfields (where some agency might offer an economic incentive for restoration and cleanup), obsolete industrial properties and schools, and high-density areas where intense development may meet less resistance.
The pair also suggests exploring niche markets that are an easier public sell. Active adult communities, for example, contribute tax dollars without stressing school capacity.
Volunteering to include affordable housing within a proposed project can win points and potential help from local governments as housing affordability continues to grow as a nationwide concern. Creative design can also help "sell" a project through the zoning approval process.
Land developers and builders may find they have to educate governmental entities about smart growth. The NAHB has just released its "members only" guide to making that process pay off.
To gain public approval rather than typical public opposition, it is important to engage the public early and often. It may even become necessary to commission a "buildable land" study to demonstrate there's not as much local land available for residential development as the public and government think.
Ask potential project neighbors and the local general public what they want in a new development. Make sure the proposed density at project boundaries is compatible with the immediate surrounding areas. Listen to and address potential objections. Incorporate into your plans as many suggestions as possible, in order to turn land development into a "we" process rather than an "us vs. them" ordeal.
What remains clear is that land development will continue to be a major housing challenge. As with other extinction threats, those who plan to evolve and adapt will survive, and those who don't will be little remembered.
Land Development Strategies
Look for underutilized lots in strategic locations (such as brownfields, obsolete industrial properties, or abandoned sites, including old schools).
Look for niche markets, like lofts, live/work, or infill opportunities.
Voluntarily include affordable housing within a project to win points from the local government.
Use creative design as a vehicle for zoning approval (for example, wrapping townhomes around a parking garage).
Use creative financing to pay for infrastructure and other costs (for example, a special taxing district to pay for road improvements).
Pick the "must-haves" of your project, (such as design, product type, and overall density), and negotiate on everything else.
Educate local government officials about the realities of smart growth. (They may not realize that infill development is more expensive and more difficult and that their "suburban" zoning requirements conflict with the "urban" vision they say they want.)
If necessary, commission a "buildable land" study to demonstrate that there's probably not as much land available for residential development as the public and government think there is.
Source: Fred Jarvis, LDR International, and Mark Friis, Rodgers & Associates