THE LAND DEVELOPMENT PROCESS


 
 
 

THE CONCEPTUAL AND FEASIBILITY PHASE



The conceptual phase is where a developer’s intellectual ideas meet pencil and paper.  The developer compounds through a series of thought processes on a piece of land for a desired development.  This may include vacant land or large parcels with aged-buildings which can be demolished.  Once a prospective parcel of land or potential tear-down possibility is discovered, a developer will then determine the purpose the land would be built for, possible designs of the project, what legal entitlements are required for such a project design, as well as the short and long-term strategies for holding such an investment.


Feasibility studies are carried out to determine whether a particular development project will be successful.  Several factors which are taken into consideration in such a study include the existing walk score, pedestrian foot traffic, funding requirements, the financial input and the return of investment, estimated constructions costs, the environmental impact report requirements and governmental regulations. This helps a developer to avoid making wrong decisions about investing in a parcel of land. In fact, many developers of large scale projects conduct feasibility studies before land acquisition and development in order the determine the impact that a project may bring into a community.

THE DUE DILIGENCE PHASE



The due diligence phase is where extensive property research comes into play. This phase at many times go in synch with the acquisition phase. Many developers may not want to wait too long on placing an offer on a parcel of land. Thus, they may continue the property research before and during acquisition of a parcel of land.  


This phase also spans into the executory part of a land sales contract where the buyer has a specified amount of time to research the property and to review a seller's disclosures to determine whether to move forward with completing the acquisition. Some of the basic ones that come to mind include the visual inspection of land, natural hazard reports, the need for an environmental impact report, and the expected waiting-time process before the land can become shovel-ready.  


A majority of the a project’s entitlement often lies within a parcel’s zoning and land-use designation. It is important gain an understanding of a jurisdiction's zoning code and existing developments within the area. These factors can come into play to help a developer become familiar with the area of the land to be acquired.



THE LAND ACQUISITION PHASE



THE LEGISLATIVE BODY PHASE



THE CONSTRUCTION AND FINAL SIGN-OFF PHASE



Although the current zoning of land usually allows for certain types of projects by-right depending on approval of the project plans, many also require discretion by a legislative body. The local legislative body such a city, town, and county council members and commissioners to vote on certain proposals by a developer.  They constitute the legislative body that is given the authority by state constitution or law to make a local law (i.e. city ordinances and amendments) such as rezoning or subdividing land. Decisions by legislative bodies are what ultimately lead to obtaining approvals and building permits.  


This is perhaps one of the major turning points on any development project when it comes to the legal entitlement of a land parcel.  This is where a project may be given a yes, no, or even a delay due to the possible adverse response by a community.  This often times lengthy and challenging process requires patience on the part of the developer and all the team players involved in the process including the architects, real estate attorneys, engineers, and local planning department. 




This is where the developer makes the decision the write the offer to purchase a parcel of land. This is usually is followed by several back and forth negotiations through counteroffers and contingencies.  When there has been a meeting of the minds between the buyer and seller upon an acceptance, the land sales contract will then begin the executory portion which begins with the opening of escrow.


A developer may ask for certain contingencies to be met upon closing such as the rezoning of a property for the developer’s intended use (i.e. commercial to multi-family residential), staking land to determine lot lines, to conduct a perlocation test and drill exploratory holes to observe the soil conditions.


Important attention should be made to properties on the market which advertise themselves as having been approved by the local city council with all entitlements. Many approvals are given a 1-3 year period upon which their comments will then expire, due to changing surrounding conditions, which would require an acquiring landowner to reapply to maintain such entitlements. 






After the approval of a developer’s proposal by a legislative body, the land is considered shovel-ready and the developer’s chosen general contractor can then apply for building permits, based on the approved architectural and engineering plans, to begin the construction phase of the project.  


The construction process timeline can vary depending on how efficiently the general contractor can efficiently assemble the subcontractors to carry out their particular trades.  Common trades of development projects include foundation, framing, electrical, HVAC, drywall, flooring, tiling, roofing, landscaping and hardscaping.  


The local inspector makes periodic inspections throughout the process and after certain trades complete their projects. The final sign-off includes the local inspector’s final approval of the project in order to ensure it fulfills requirements for a certificate of occupancy.  During this time, the final sign-off by lenders for converting the construction loan into a permanent loan and for the developer to begin marketing the sale or leasing of units of their project to prospective owners or tenants.

The land development process of any project consists of a multitude of patient-driven and detail oriented phases.  This applies to ground up construction and remodeling projects.  Gaining a thorough understanding of the process in your local jurisdiction will guide you towards a smooth project.  The following is a breakdown of the common phases of the land development process.