A Good Time to Pursue Entitlements

Otten Johnson Alert August 2009

Despite today's economic reality, real estate developers should consider the unique opportunities of pursuing land use entitlements now. While there is expense entailed in pursuing annexation, zoning, subdivision and related approvals, many jurisdictions are experiencing a significant drop in tax and fee revenues due to reduced development activity. Accordingly, developers who are able to pursue land use entitlements during this difficult economy may find these jurisdictions more responsive to development proposals than they historically have been.

Although obtaining entitlements now may be "early" (end users or the ultimate land plan may be unknown), jurisdictions have been recognizing such circumstances and the need for flexible zoning that will allow for diverse development opportunities. Planned Unit Development (PUD) or similar zoning can provide for standards that differ from the jurisdiction's generally applicable zoning or technical standards to accommodate a variety of users.

If development of the project will not commence immediately or if the project is phased, vested property rights should be requested to provide protection against non-consensual changes to the terms of the development approvals. Because commencement or build-out of projects generally has been prolonged due to current market conditions, jurisdictions have been more accommodating concerning vested property rights, which may include a longer term or an initial term with the possibility of one or more extensions if certain negotiated performance triggers are met.

In order to facilitate the construction of public improvements or to stimulate commercial and retail development within an accelerated time frame, some jurisdictions have been more receptive to participating (or participating to a greater extent) in various public/private cooperative financing arrangements, including public improvement fees, tax increment financing and tax credits and incentives.

Other incentives that historically would have been rarely available should be considered, including the absence of time restrictions on reimbursements for over-sizing public improvements benefiting other properties; deferred construction of, or security for, public improvements; and waived, reduced or deferred payment of various fees and required dedications.

Because there are fewer development applications being submitted today, applications may be processed in an abbreviated period of time. And, as it traditionally may take years to process and obtain final approval of complete land use entitlements, there is no better time than the present to initiate that process.

Our Land Use group is nationally lauded for representing private-sector developers in zoning, subdivision, annexation, urban renewal and related land use entitlement matters. For more information on this Client Alert or for help evaluating your current situation, contact any of the attorneys in the Land Use practice group. (For a listing, click here).

Our lawyers are pleased to present timely, topical issue alerts on the latest legal developments, trends and other subjects of interest to our clients and colleagues. Otten Johnson publishes Client Alerts on a monthly basis.

This Client Alert has been prepared for informational purposes only and does not constitute legal advice or the opinion of Otten Johnson. Receipt of this summary does not create an attorney-client relationship between you and Otten Johnson. You should not act or rely on any information in this article without seeking the advice of an attorney. Otten Johnson provides legal advice only after being engaged to do so by a client with respect to particular facts and circumstances. Click here to read our full disclaimer.