Risk Tolerance- Risk caused by government is hard to avoid and is growing out of control- Part 3 of 3

There’s a saying in our business- building the product is the easy part. Dealing with local governments during entitlement is the hardest and least desirable part of the process. Entitling a project means getting the zoning, land use and density you need.

Why is that? Well, it was not always this way and is not that way today in smaller towns. Government here in Florida is bloated, especially in the central and southern part of Florida. Part of the problem is the large sums of property tax monies that increase annually due to an influx of more new people and rising home values. You can imagine people with little or no business and budgeting experience having millions of new dollars to spend on salaries, bus benches and build boards telling you to stay safe. And, they are not very good at it because our taxes are going up when they should be going down.

Bloated planning departments too. – Another reason is that more young folks with planning and urban design degrees (green with little to no experience) are hired on to examine complex projects that they should not be assigned to. This merely increases the time to approve as they struggle to catch up. Approval periods take longer and the cities now take a greater role in the design of your project. Which increase my risk based upon an inexperienced decision maker advising me. With 45 years of experience on how best to make projects financially successful I try to avoid these situations. How do you avoid this risk?

Risk Avoidance from government:

1. Avoid certain cities and municipalities- There are several cities I avoid looking for land in because of the length of approvals and their costly constraints. These cities have absurd fees for roads, schools, impact fees, sewer reservation fees and all kinds of arbitrary fees they invent along the way. If you wonder why housing is so expensive, this is number one on the list.

2. I look for land in higher zoned regions of a city to maximize my density if I need to. I can also reduce density to achieve just the right mix and make the elected officials happy.

3. I meet with all of the council members one-on-one to explain my project and why we think it is beneficial to their city or town.

4. I try to find out in advance what is plausible to seek in the way of density and product type. I find the best source for this is the city manager along with the head of planning. In most city these are very senior people with a wealth of knowledge and more importantly common sense. They also have the ear of the voting council members and become your advocate.

5. We donate services or money to pet projects within these towns to show we are good citizens.

6. We hire professionals in those cities that either live there or work their almost exclusively. This includes landscape architects, planners, land use attorneys, civil engineers and surveyors.

7. We use professional renderings and a wealth of drawings to give council and staff the most complete picture of what we intend to build.

8. We deal with neighbors around the project so the elected officials can make an educated decision on the merits of the project and not a political decision. If at all possible, we try to move a project through the town in an off-election year.

Common Sense approach- Most of the entitlements take time, money and extreme patience. Be ready to keep a straight face when a ridiculous request comes out of the mouth of a young newly minted planner. Sometimes they just can’t help themselves. For me, I let my professionals do the talking because they do this for a living and know how best to navigate the governmental mine field. By in large I have many good friends in government who truly perform admirably, but remember, not all cities are created equal.

Stephen Gravett has been a real estate developer for over 45 years and was most recently CEO of Kennedy Homes for the past 11 years and is still CEO of Kennedy Development Partners (KDP). He is also full time Director of Operations for 5 Star Developers. He is a state licensed broker and since 1980 a State licensed General Contractor Unlimited. Before becoming a real estate developer, he flew B-52’s in the US Air Force during the Vietnam War.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: