5 CAN’T MISS DUE DILIGENCE ITEMS IN LAND DEVELOPMENT
No one wants to design a site and turn it over for construction only to later learn a pipeline company has a planned extension in the next three years which will necessitate a 30-50’ wide easement through the developed property. Having that knowledge before the project started would have, at the minimum, allowed you to design the site around the future easement and, at most, possibly prompted the client to choose a different site for development. So how do you find out the important information that saves you and your client time and money? A solid due diligence investigation will identify the risk and cost items that our land development clients use to consider moving forward with a project. Below are examples of critical due diligence items that influence our clients’ go/no go decisions.
Zoning. It’s important to understand if your client’s proposed use of the site is allowed under the local zoning requirements. If it’s not, what is the likelihood a rezoning process would be successful? This is also the time to check if the local municipality has adopted an overlay district on top of the base zoning that may affect building materials, site design, and project costs. Also consider if there are variances to the development code required prior to the site being able to obtain permits and if the site is subject to any requirements of a historical district, homeowner’s association, or architectural review board. Sometimes the challenges presented by zoning make a site less desirable for a client.
Utility service/stormwater requirements. Does the site have adequate utility service for water, sanitary sewer, gas, electric, and phone? If not, where is the closest connection point and what is the cost and timing to extend service to the site? From the example above, this is also when to ask about any existing or planned easements on the property that could affect the building or parking lot placement or require utility relocation or an encroachment agreement.
Access. Our clients will often require a minimum number or types of access points for the development to move forward. Obtaining feedback from the local and state Transportation Department on the proposed site access points in the due diligence phase is critical to determining if any issues are anticipated or if a traffic impact study or infrastructure improvements are necessary in order to grant the access permits. Additionally, road widening projects may be planned for adjacent roadways fronting the site location requiring right of way taking and a reduction of the buildable site area. Confirming this information in advance allows the client to determine if the site is still desirable and the engineer to plan the site design around the future site parameters.
Platting. A plat is a map, drawn to scale, showing the divisions of a piece of land. It’s important to know if the site property has been platted. This tells you if the property is one overall parcel or multiple tracts that need to be combined prior to development. If a property has not been previously platted, certain jurisdictions typically require platting as a condition of permit approval and for connection to the public water and sanitary sewer systems. Depending on the jurisdiction, the platting process could be a minor administrative process or a lengthy process involving planning commission and city council hearings. Knowing the plat status of the property is critical when confirming if the timeline the developer has set for the project is achievable.
Adjacent properties. While the focus of a due diligence investigation is the subject property, it’s equally important to review the adjacent properties for clues that can affect your site. An example of this is an adjacent property being a residential use and requiring a landscape buffer that reduces your site’s buildable area. Or an adjacent use might be a church, school, or hospital with distance requirements that could restrict alcohol sales – not good news for your client’s proposed restaurant. Is there a competing use in close proximity to the project? Also consider if there are recently constructed developments that can be used for comparison to verify building materials, landscaping, utility connection locations, or unusual design elements that may affect your site.
Our clients rely on us to present a highly detailed due diligence investigation that identifies any “snake in the grass” items which pose risks to the development proceeding. Having a strong understanding of the specifics to ask about at each turn before the project begins saves time and money for all parties.
About Brian Morris, PE
Brian F. Morris, PE, is a Senior Project Manager for the Land Development – West Division in Dallas, Texas. Brian graduated from the Georgia Institute of Technology with a Bachelor’s Degree in Civil Engineering in 2004 and has over 16 years of experience in commercial land development with a special interest in ADA compliance. Brian enjoys working closely with clients from initial design through the final stages of construction.