So I thought I would share my experience with you about a project that I have been working on. I have an investor/ contractor that I have been working with to find a new property to develop. One particular listing that caught his attention was an L-shaped piece of land surrounding an undeveloped corner lot and is zoned for a multifamily dwelling. He was attracted to it because of the location and size. It is located near shopping, schools, and even other multifamily buildings. If done correctly, this lot could be subdivided. The first piece of land would be large enough to build a duplex and second leg would then hopefully be large enough to build a 9-10 unit building. If he could subdivide – then build out a duplex, we could sell that off and use the proceeds to fund the next part of the project. Once he develops a 9-10 unit, his intention would be to keep it and collect the rental income from it.
I have pondered over developing before and have often looked at vacant lots and wondered what it would take to actually build from scratch. We have a vacant lot behind my house that has been for sale for as long as I’ve been here. Every now and then I think about what it might be like to build out the 11 unit complex it’s supposedly approved for already. So when my investor/developer invited me to go down to the city to with him, I jumped at the chance. Here was an opportunity to learn how things work downtown and what kinds of cost requirements and permits would be required.
The first thing I learned is that things don’t change much in the planning dept. Wait times are still 45 minutes to an hour. I had dealt with them 7 years ago on another project I was developing at the time, but it was not a housing project and it came with it’s own unique idiosyncrasies. My contractor and I were to meet at 11:30 am at the planning department to go over some basic questions about subdividing and density restrictions. As it turns out, my investor had to reschedule and couldn’t make it – so there I was already.. all dressed up and “nowhere to go” so to speak. Having already made my way downtown and feeling spiffy about having just slipped into a parking spot with 45 minutes left on the meter, I decided I would just talk to the city myself and find out what I can. I knew I had to be very careful about what I said, as I have been warned that when dealing with the city, it is best to tread lightly , say little, and don’t be too specific unless they ask you. Turns out that there is a HUGE difference between a “dog house” and a “storage shed”, even if they are the exact same dimensions.
So the first order of the day was to determine if they would allow a subdivided lot in this location. In order to find out, my investor would need close to $10,000 for a site plan. But…before they can submit the site plan, they need to do the parcel map, which according to the guy at the counter means you have pay an engineer about $7,000 to work it up. They could not guarantee that it would be approved, but before you even start all of that, you need a sit down with the Development Review Committee so they can determine if what you want to do is likely to be approved or not.
If all that eventually pans out, then the first plot would actually be large enough to support a triplex; good news considering you can get more for a triplex than a duplex. But the cringe worthy revelation that the second lot would only support 6-7 units was not welcome news. I asked if we could build upwards, but because it is zoned R2-A, second stories are prohibited. As such, we lose three potential units and therefore a possible $18,000 – $24,000 a year difference.
Just as it looked like things were wrapping up, they remembered that I might want to stop by the Traffic and Works division upstairs. Oh really? Well yes, of course – they need to look over the map and see if we will need to put in sidewalks and gutters across the entire front of the property because the L-shaped parcel in question encloses around a vacant corner lot that is also undeveloped. They said that we may need to develop the entire corner lot’s sidewalks and gutters also. At the builder’s expense of course. However, they did say that the builder would be reimbursed when someone else develops the corner lot.
One more thing
No sooner am I digesting this information, than he’s saying “your also going to want to go stop by the flood control across town to get a sign off from them.” Hmmm.. ok .. to determine if it’s a flood zone or not, right? No. We need to find out if there is an existing water displacement basin already in place or isn’t overloaded once the gutters are built, cause if not – guess who is going to have to build a water displacement pond right there on the premises? That’s right, because “the water has to go somewhere”. My proclamations of being in a drought fell on deaf ears.
I’ve got to say that at this point, it doesn’t sound like it’s looking good – definitely going to have to re-run some numbers to see where all these fees put us – especially if he has to build extra sidewalks, gutters and water displacement ponds while building less units. We are going to get more information this week about it. He doesn’t seem to be dissuaded just yet though… he has a lot of confidence in his ability to build efficiently and inexpensively.
As for me, I got a great education about some of the details involved in developing on an undeveloped piece of land. I know that there is certainly much more to the process than I was exposed to and that I really only saw a small slice of what the planning stage will be like. As with any project, there is a lot of advance planning that needs to be addressed. When deciding to take on a construction project, remember to check with the city or county first. You may be surprised at the requirements expected of you. Don’t let that scare you off… just be prepared to spend extra time learning local zoning laws and a host of other new things you may never have thought of. That said, I have a lot of respect for what developers do and how they take a blank canvas and turn it into a work of art, but I get the feeling I know why this canvas has been sitting there for almost 3 years.
Have you ever dealt with your planning department? How did it go? Leave a comment and let us know.