The Long and Winding Road

NO BUILDER OR DEVELOPER needs to be reminded that plan approval and land entitlement get longer, thornier, and more expensive every day. John Wieland Homes and Neighborhoods is in year five of trying to get 290 lots for the same number of homes entitled in Peachtree City, Ga., near Atlanta. Standard Pacific Homes labored through several years, including 30 months of litigation, for the privilege of building 286 homes in Walnut, Calif., on a site where it initially wanted to build 2,700. And Florida-based developer South-Star Development Partners had to commit to $40 million in off-site road construction and build a regional elementary school in order to get approval for two projects in Jacksonville, Fla.

It might still be relatively rare for builders' construction plans to be stopped cold. But land development and zoning regulations ranked highest nationwide among the industry's major concerns in the NAHB's annual “Critical Issues” survey, based on 169 responses from officers of state and local HBAs and covering the period from October 2004 through December 2005. “Regulatory approvals”—specifically, countywide ordinances that relate to wet-lands—“have become a major problem because counties create their own rules,” says Russ Vogel, Midwest regional president/community development for Kimball Hill Homes, based in Rolling Meadows, Ill. He notes that counties have been known to identify land where crops are grown as “wetlands.”

Barriers to development are typically being thrown up by three problematic constituencies: municipalities whose understaffed and inexperienced planning and zoning departments are swamped by the sheer number of permit applications; the Army Corps of Engineers, which some builders contend takes its mandate to protect the nation's water resources to unreasonable lengths (see “All Wet,” below); and well-organized homeowners and community associations that rarely sign off on adjacent development without strings attached, that encourage implicit redlining by their opposition to entry-level or smaller-lot projects, and that at the drop of a hat will pressure public officials they know can consign any subdivision to limbo.

TAKING THE LEAD: Reynen & Bardis was the first of 15 builders to option land in a project called Laguna Ridge, a 7,800-home community in Elk Grove, Calif., where R&B fortified its position by agreeing to do much of the legwork to get the land ready for development for itself and other builders.

Greg Snow, co-owner of Meridian Pointe Homes in Redding, Calif., says the latest catchword to describe homeowners' resistance to development is BANANA (Build Absolutely Nothing Anywhere Near Anything). Entitlement usually takes Meridian at least a year, and it's been working on an infill project in Redding for five years. “We had it approved, it was appealed, and now we're going back to the planning commission,” said Snow in late April. Another California builder, Sacramento-based Reynen & Bardis, finds that it's taking at least seven years to go from optioning land to grading it for construction. “It's a game, but in California, if you try to do entitlements part time, you're going to get smoked,” says vice president of land acquisition Mike Winn.

Seven Reynen & Bardis employees, including a wildlife biologist, are dedicated full time to entitlements and planning. The expertise of their staffs and their connections with city planners often allow builders to keep approval and entitlement moving forward. Builders and developers are also joining forces on projects to form united fronts and, more frequently, take over functions, such as engineering surveys and mapping, from cash- and people-strapped local governments. Neighborhood outreach and an astute appreciation of a market's political environment are also essential. “All zoning is political,” asserts Michael Saint, CEO of Hingham, Mass.–based The Saint Consulting Group, which specializes in the politics of contested projects and recently completed a nationwide survey about land-use issues (see “Digging Deeper,” page 176).

Builders try many tactics to gain access to land quicker: demanding that entitlement be a condition of approval, avoiding wetlands or other contentious property, and buying smaller and scattered entitled lots. But even those that confine their purchases to entitled land can find themselves put on hold. “Developers here are running a year behind schedule due to all the delays,” says Alex Sololik, director of land development for Melbourne, Fla.–based Holiday Builders, who estimates that the time it takes to get land entitled has nearly tripled, to up to 30 months, over the past few years. Mike Edge, vice president of real estate for Choice Homes, which also buys only entitled land, says approval of a variance his company sought on property in Arlington, Texas, for 150 to 200 townhomes (which is zoned for retail and residential), was held up “by a few people,” existing homeowners who objected to the plan's density.

Vocal opposition to residential development, no matter how small, inevitably will find a receptive ear in elected officials whose jobs hinge on which way they swing on market growth. “Almost everything we do is geared around the timing of elections,” says Doug Krah, Standard Pacific's regional president for Northern California. Aproject that Capital Pacific Homes worked on in Elsinore, Calif., got derailed last year by anti-growth forces that ushered in a new slate of planners, recalls Bob Henrickson, Capital's vice president of land acquisition. And on the outskirts of Chicago, Lakewood Homes' plan to build 2.5 entry-level homes per acre on 3,000-plus lots “got caught up in the election cycle,” says Lakewood president Buz Hoffman. “Our name was mentioned on the radio and in the newspaper every day, and the first planning commission meeting caused such a stir that I pulled the land off the table.”

Public relations, for better or worse, can be a major factor in determining how quickly projects are approved and land is entitled. “There's not much you can do about any of this, except recognize what you're up against,” says Vogel of Kimball Hill Homes. “Part of that is the need to become a citizen of the community. We're constantly selling ourselves.” Krah of Standard Pacific notes that growth opponents are “better informed than in years past. It's not so much passion anymore as it is facts and figures.”

By touching base with planners and homeowners more frequently, builders and developers sometimes can neutralize antagonism toward their plans. John Wieland Homes and Neighborhoods conducted 21 meetings with county officials, adjacent property owners, and civic organizations for a project in Sandy Springs, Ga., where it recently started building 44 homes on 54 acres. Terry Russell, the builder's CEO, says that approval there took only seven months.

Last January, Coral Gables, Fla.–based SouthStar Development Partners submitted a proposal to Lee County, Fla., requesting the creation of a new town center district designation within the county's comprehensive land-use plan for The Fountains, a 2,769-acre New Urbanist community that, if approved, would include 4,215 homes, 900,000 square feet of retail space, 1.5 million square feet of commercial space, 300 acres for recreation, and 1,300 acres that will remain natural and undeveloped. To minimize unforeseen snags in the approval process, SouthStar sought input from any constituency that might impede its project.

The developer has conducted tours of the planned site and nearby wetlands with representatives from the Audubon Society and other environmental groups. It has held meetings with local residents, school boards, and HOAs to hear their concerns. Kimball Woodbury, SouthStar's managing partner, says these meetings definitely help defuse opposition. Local residents who adamantly opposed one of SouthStar's other projects in Jacksonville became allies after the developer, in response to their complaints, rerouted a road around their neighborhood, at a cost of more than $4 million.

Lee County is scheduled to hold hearings on The Fountains this fall, and Woodbury is confident that construction will begin on schedule in 2007.

In Colorado, Brittany Cos. conducted 10 meetings with four homeowner groups surrounding an infill project in Arvada, Colo., where Brittany wanted to build 26 single-family homes. Roger Ladd, Brittany's president, recalls meeting with more than 40 neighbors—“the ones I knew would give me the most trouble”—in a church, where he wrote down everything they objected to or wanted changed (which included adding more parks and trails). He took the homeowners' laundry list to several departments in Arvada's city government. “I told them this is what I want to do and asked how much flesh would it cost me.” After those sessions, Ladd designed his project, which he scaled back to 2.6 homes per acre from four. “I told the city that if they asked me to do more, I'd need more density.” The whole process took two years, but Ladd says it worked because the neighbors felt they had some say in the project's design, “and I was able to go to the city in a way that they could save face and come back with options.”

Ladd's company, which built 14 homes last year, is evolving into a developer in the mountains of Colorado and Wyoming, where entitlement isn't usually a factor. Even though this land has issues—he's being asked to install a 30,000-gallon water storage tank in Winter Park, Colo., where he recently took title to 15 lots on 120 acres—Ladd thinks more builders should consider a similar transition because “there's a shortage of land everywhere, and the entitlement process is wearying.”

Entitlement in some markets can be a 50-step process, says Hendrickson of Capital Pacific Homes, involving geologists, hydrologists, engineers, and other experts who cost money and require time. Many municipalities, though, simply don't have the money or people to keep pace with their markets' development activity.

COMMUNITY OUTREACH: John Wieland Homes and Neighborhoods expects construction to begin this fall at The Enclave of Jett Ferry Road, a community in Sandy Springs, Ga., that will have 44 homes on 54 acres. The builder held 21 meetings with local property owners and civic organizations and was able to get the project approved in seven months.

“It's taking two, sometimes three times longer than a few years ago to get land entitled because municipal governments don't have the budgets to handle all the permits out there, and they're losing people to private-sector consultants,” says Greg Meath, land development manager for Tampa, Fla.–based Taylor Woodrow Homes. Consequently, planning departments “are sending out misdirections that are driving developers crazy,” says Sololik of Holiday Builders. Buckeye, Ariz., west of Phoenix, has experienced “explosive growth” over the past few years, says Ed Smith, vice president of land acquisition and development for Capital Pacific's Phoenix division, which has a 1,000-acre master planned community in that town. But that town only has five planners, “the oldest being 25 years old, and only three have been there longer than six months,” Smith says. “We've found that it's critical to know what each municipality's limits and capabilities are.”

That's why Standard Pacific has been “staffing up” at the project-management level with people who have entitlement and governmental expertise, says Scott Stowell, the builder's regional president in Southern California. The company is also building time delays into its scheduling. “If we assume entitlement will take 18 months, we'll underwrite for double that period, and if it comes in early, that's gravy,” Stowell says.

Another maneuver builders and developers employ to keep permits from getting snared in red tape is to join forces on different projects, not only to marshal their collective strengths and influence, but also to provide much-needed relief to planners. In September, Taylor Woodrow Homes expects to start construction at a 1,000-acre site in Florida's Manatee County for 1,900 single-family homes, 600 multifamily units, and 64 acres of commercial. The project, which took 18 months to get entitled, is surrounded by nine contiguous properties, each owned by separate developers (including Ryland Homes and Centrum Homes) that are working together to install utilities. “The county loves this because they never saw the growth coming and didn't have a master plan [for infrastructure] in place,” says Meath, whose company is coordinating this effort.

Grading began in May at Laguna Ridge, a 7,800-home community in Elk Grove, Calif., that had 22 landowners and took seven years and more than $5 million in pre-development costs to get entitled. Reynen & Bardis was the first builder to enter the project, and several others—including D.R. Horton, Centex, Pulte, and Lennar—followed by optioning land there. Winn says his company did “a lot of the legwork” to get this land ready for building, including hiring consultants to check on what zoning and planning commissions were supposed to be overseeing. “I'd be lying if I said that we didn't take advantage of doing things other builders didn't want to do,” says Winn. National builders prefer entitled land, he says, “and even the big public companies sometimes want to be led.”

Builders say the Army Corps of Engineers can be inflexible in its enforcement of wetlands regulations. The Corps says builders and developers could be more forthcoming about their plans.

It still bothers Scott Stowell, several years after the fact, that his company, Standard Pacific Homes, spent $30 million to build three bridges at its Talega master planned community near San Clemente, Calif., over what the Army Corps of Engineers insisted were navigable waters, but what Stowell—the builder's regional president for Southern California—claims were merely runoff streams.

Builders around the country complain that it's taking them up to two years to satisfy the Corps' regulatory arm-twisting for permit approval. Ed Smith, vice president of land acquisition and development for Capital Pacific Homes' Phoenix division, calls the Corps “our biggest frustration” because it requires that waterways be determined. “In Phoenix, the two main ‘rivers' are dry beds, so you can see the irony.”

Corps officials insist they do what they can with the tools at their disposal. For example, its command in Sacramento, Calif., has a staff of 35 that regulates the Clean Water Act for 350,000 square miles in four Western states, one of which—California—has more endangered species (55) than any state in the nation. Less than 1 percent of the Sacramento command's $450 million annual budget goes to regulation, says spokesman Jason Fanselau. (Congress establishes the Corps' manpower and budget.)

ADVISE AND CONSENT: Through early July, 23 owners had moved into the 26-home Woodhaven community in Arvada, Colo., which Brittany Cos., a local builder with $7.5 million in annual sales, designed after soliciting comments about its plan from surrounding neighbors during 10 “town hall”–like meetings.

Fanselau and Dave Hewitt, the Corps' national spokesman in Washington, note that a new ruling, under review this spring, could, if approved, speed up permit approvals by expanding the allowable use of mitigation banks. But Fanselau attributes some delays to the reluctance of builders and developers to provide complete and “honest” information about the environmental impact of their projects. He notes that one developer recently gave the Corps a wetlands map showing no wetlands. “In fact, it had 6.6 acres of wet-lands. Maybe this was a honest mistake,” Fanselau says, “but it's not uncommon.”

A new survey on land use tells builders they need better reconnaissance about homeowners' psyches and a market's politics.

One in five Americans has actively opposed a development project. That unnerving finding emerged from a nationwide survey of 1,000 people about their attitudes toward land use, which the University of Massachusetts at Lowell conducted last fall for The Saint Consulting Group, a Hingham, Mass.–based firm that has worked on over 800 “contested neighborhood” projects. The survey found large majorities—between 73 percent and 93 percent—who are generally against new development, think planners and developers collude, oppose the seizure of private property through eminent domain, and vote based on a candidate's position on growth.

Michael Saint, Saint Consulting Group's CEO, doesn't think builders and developers spend enough time studying the political dimensions of land and project approval. He also doesn't think their antennae are tuned into what existing homeowners want. “A lot of people won't accept New Urbanism, no matter what planners OK,” he says.

At the very least, he notes, builders and developers need to survey a market's political landscape before presenting their plans to a community and bring homeowners into the design process before a project is announced, so they can feel that their input is valued. Saint says builders and developers would benefit as well from canvassing surrounding neighborhoods to identify who their real opponents are and what issues they're against, “so they can meet them head on” when a project reaches the approval stage.