Presenting a live 90-minute webinar with interactive Q&A Land Use Entitlements For Mixed-Use Projects, Master Planned Communities and Infill Development Navigating the Approval Process for Permitted Uses, Site Plans, Sustainability Policies, Zoning and Parking WEDNESDAY, NOVEMBER 5, 2014 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Michael Levin, Principal, Development Management Associates, Chicago Ken Kecskes, Partner, Fox Rothschild, San Francisco Donna J. Pugh, Partner, Foley & Lardner, Chicago The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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LAND USE ENTITLEMENTS FOR MIXED-USE PROJECTS, MASTER PLANNED COMMUNITIES AND INFILL DEVELOPMENT - SITE PLAN REVIEW, APPROVAL & MODIFICATIONS November 5 th, 2014 MIKE LEVIN, PRINCIPAL, DEVELOPMENT MANAGEMENT ASSOCIATES 1201 NORTH CLARK STREET, CHICAGO, IL 312.640.2000, mike@dmassociates.com
ENTITLEMENTS IMPLICATIONS PROJECT GO/NO GO (FINANCIAL FEASIBILITY) LAND PURCHASE AGREEMENT FINANCING REQUIREMENTS FOR LOAN CLOSING TIMING OF LOAN CLOSING UP FRONT $$/AT RISK RELATIONSHIPS ( NEW GUY IN TOWN) 5
ENTITLEMENTS PROCESS PLAYERS MUNICIPAL CITY DEPARTMENTS POLICE FIRE ENGINEERING PLANNING ECONOMIC DEVELOPMENT BUILDING LEGAL CITY MANAGER OUTSIDE CONSULTANTS PLANNING COMMISSION ZONING BOARD OF APPEALS ARCHITECTURAL REVIEW BOARD BOARD OF TRUSTEES/MAYOR 6
ENTITLEMENTS PROCESS PLAYERS REGIONAL /STATE/FEDERAL STATE DEPARTMENT OF TRANSPORTATION ARMY CORPS OF ENGINEERING REGIONAL/METROPOLITAN STORM WATER AGENCY 7
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ENVIRONMENTAL REVIEW PROCESS DESIGNATE LEAD AGENCY PREPARE DRAFT SCOPING DOCUMENT CIRCULATE TO GOVERNMENT AGENCIES/PUBLIC FOR COMMENT PREPARE DRAFT ENVIRONMENTAL REPORT PUBLIC COMMENT PREPARE FINAL ENVIRONMENTAL REPORT FINAL APPROVAL BY ALL INVOLVED AGENCIES 9
ENVIRONMENTAL IMPACT REPORT IMPACTS TO BE EVALUATED LAND USE AND ZONING SCHOOLS, FIRE, POLICE, UTILITIES FISCAL IMPACT STORM WATER WETLANDS/FLOODPLAIN SOILS/SLOPES/GRADING TRANSPORATION AIR QUALITY NOISE ENVIRONMENTAL (PHASE I, PHASE II) ENDANGERED SPECIES OPEN SPACE CULTURAL/HISTORICAL RESOURCES NATURAL RESOURCES VISUAL ALTERNATIVES 10
Sustainability Policies Kenneth Kecskes, Esq. San Francisco and Los Angeles, CA kkecskes@foxrothschild.com November 5, 2014 2014 Fox Rothschild
What kind of sustainability are we talking about? Sustainability types: 1. Human 2. Social 3. Economic 4. Environmental The focus here is on environmental sustainability policies that affect the development of master planned communities and mixed-use projects. 12
Sources of sustainability requirements Federal laws State laws Local laws General plan policies Project mitigation measures imposed by: Environmental impact reports (EIR, EIS) Permit approvals (conditions of approval) Subdivision approvals (conditions of approval) 13
Standards Organizations Voluntary standards organizations (LEED, Build It Green, others) Resist a local jurisdiction s desire to adopt an environmental rating system as law in your entitlements (i.e., project will meet LEED Gold ), because a rating system will change over the life of an MPC Refusing to lock in a rating system allows the flexibility to adopt new standards and advances in technology Keep focus on outcomes 14
Scope of Requirements A growing number of states have mandatory baseline requirements to promote environmental sustainability Residential and nonresidential projects, and greenfield and adaptive reuse projects Laws cover sustainable planning and design, water efficiency, material conservation, indoor environmental quality and energy efficiency 15
Site Development Measures Site development measures incorporate environmental sustainability strategies into the overall site plan, infrastructure design and building placement. Stormwater management Drainage systems Stormwater retention Infiltration systems Limits on impervious surfaces Green infrastructure promotes groundwater recharge Orientation single family home rooftops to facilitate use of solar energy systems. 16
Site Development Measures: Parking Reduce reliance on automobiles that use fossil fuels Electric car charging stations Bicycle parking (equal to 5% of total parking capacity in California), changing rooms and showers Designated parking for fuel efficient vehicles (up to 8% of parking stalls in California) and labeled CLEAN AIR/VANPOOL/EV parking Transit-oriented projects discourage automobile ownership by limiting parking ratios to 1:1 17
Water Efficiency Water issues affect the negotiation of: Environmental documents and mitigation measures Land use entitlements, such as a local government s general plan, specific plan, planned unit development permit or zoning, or other development rights Development Agreements, describing the vested rights and the economics of the public-private deal Water Service and financing agreements with regional water districts 18
Trends in Water Efficiency Future water use is going to be significantly less in new residential master planned communities and mixed use projects as water efficient fixtures are installed in response to legal requirements and compliance with voluntary standards Automatic irrigation system controllers for landscaping provided by the builder and installed at the time of final inspection must be weather or soil moisture based controllers 2010 Model Landscaping Ordinance now requires compliance with an outdoor water budget based on location and lot size 19
Impacts on water related infrastructure Master planning of water and wastewater infrastructure is still using outdated design criteria in local government codes and public works policies. Smart developers of large scale projects will seek changes to design criteria based on today s water use and wastewater generation -- saving potentially $1,000,000s -- as infrastructure is downsized and impact fees are rescaled Set performance metrics tied to approved water demand Promote flexibility on how to achieve goals over the life of the MPC (such as an initial menu of measures with ability to add new measures approved by local gov t) 20
Impact of water efficiency in entitlement negotiations Water saving measures can help you make the case for increased residential or commercial density in your project, because you are using less water per dwelling unit, per square foot in commercial uses or per acre in common area landscape. Developers that incorporate water saving measures into their MPCs may increase the overall value of a project when compared with projects that do not adopt such measures. 21
Impact of water efficiency in Entitlement Negotiations Addressing water saving measures in the environmental documents: CEQA EIR, NEPA EIS, etc. Know today s baseline use Current water use on greenfield sites (i.e., farming) Quantify water use in redevelopment sites (check with retail utilities, government, poll current users). Know the water demand factors and the anticipated water use identified in prior environmental documents. Did those prior water demand numbers take into account the implementation of water saving measures? Important when analyzing the cumulative effects of your project and other projects. 22
Impact of Water Efficiency in Entitlement Negotiations Know the current water demand factors used by a local government and question the validity of their assumptions with data on your water saving measures Be prepared to explain why your water demand factors are more reliable by referencing technical data, published papers or journals. Create a record of substantial evidence for a change in standards. Arrive at a number for the water demands of your project Break up into indoor and outdoor components 23
Impact of Water Efficiency in Entitlement Negotiations Negotiate your mitigation measures based on the agreed upon water demand factors and project water use. Negotiate increased density or building intensity based upon water savings measures Reduce impact fees required by public agencies, because your project requires less water Government can be guilty of a taking if impact fees do not have a nexus to the proposed project and the size of the impact fee is not roughly proportional to the impact of development. (Koontz v. St. Johns River Management District) 24
Material Conservation Builders must recycle and/or salvage for reuse nonhazardous construction and demolition debris (50 percent in California, more in other jurisdictions), or meet a local construction and demolition waste management ordinance, whichever is more stringent. Construction waste management plan must be prepared, with all trades signing off. Local ordinances or mitigation measures in project approvals require new construction to provide three can waste management: recycling, composting, and landfill. 25
Indoor Air Quality Construction materials must not exceed low VOC (volatile organic chemical) thresholds VOC tables must be included in plans Product cut sheets must be onsite Applies to paints, coatings, adhesives, sealants, caulks, carpet systems, composite wood products 26
Energy Efficiency States set goals for reducing residential energy use from business as usual (BAU) baseline (California, residential by 20% and commercial by 15%). Installation of high efficiency lighting fixtures (especially LED fixtures), vacancy sensors in most spaces Commercial buildings must have post-construction, on-going commissioning program Energy use reporting by commercial tenants to landlords, shared with prospective purchasers, tenants, lenders 27
Climate Change and GHG Land use policy is increasingly taking into account carbon emissions into the approval process. A project must quantify carbon emissions from various sources during and after construction and disclose those emissions in environmental documents (in California EIR) Environmental policy now emphasizing auto trip generation and vehicle miles travelled, de-emphasizing congestion management and LOS standards Mitigation measures may be adopted to reduce carbon emissions 28
Climate Change and GHG Transit priority projects that help a jurisdiction meet regional GHG emission targets are given priority for federal transportation dollars (California s SB 375) What s next? Resilient design as a response to climate change concerns Net zero water or energy projects Design buildings to handle severe storms, flooding, wildfire Anticipate forecasted changes in sea level rise in placement of buildings 29
Implementation Issues Smaller cities and towns may not have the staff, or the expertise, to verify installation of numerous sustainable features Delays at plan check stage, as building permit level plans take longer to review or must be sent out to experts Potential for delays in issuance of certificates of occupancy, pending confirmation of compliance Inspection fees may increase to hire qualified staff Allow verification by third party inspectors who submit compliance certificates. Marketplace can set fair and reasonable inspection price. Local government can vet the reputation and procedures of inspectors or maintain a list of approved providers. 30
Post-Construction Implementation Issues Negotiate post-sale enforcement mechanisms Who will verify that efficiency measures are still installed upon resale of dwelling units City inspector, third party verification, buyer/seller reporting, or HOA enforcement Negotiate scope of commissioning obligations Frequency and type of reporting to government officials on effectiveness of water saving measures in HOA common areas and in commercial office, industrial, institutional uses Determine penalties for noncompliance after build out and who imposes penalties building department, HOA, or someone else? 31
Land Use Entitlements for Mixed-Use Projects, Master Planned Communities and Infill Development- Rezoning and Zoning Variances Donna J. Pugh, Partner, Foley & Lardner LLP, Chicago 321 N. Clark, Chicago, IL 312.832.4596 djpugh@foley.com
Accommodating Mixed-Use Projects Can stem from Industry or Market Changes Transit Oriented, Mixed Use, higher density developments are becoming more common 33
Accommodating Mixed-Use Projects (Chicago Ridge Redevelopment) 75 acre abandoned trucking terminal and adjacent property targeted for mixed-use development TIF District established 34
Accommodating Mixed-Use Projects (The Shops at North Bridge) Vertical and horizontal transportation among hotel and shopping center required additional escalator 35
Adaptive Reuse Reserving options to reuse vacant and underutilized structures for other purposes Key factor in sustainability and conservation Walgreens moved into former bank (see right) 36
Adaptive Reuse (Bradley Place) Largely vacant warehouse Developers sought to re-tenant the building Obtained a rezoning to add land into an existing Planned Development, and made list of allowable uses more expansive 37
Conducting Initial Zoning Analysis Determine zoning classification and review the code Use restrictions Bulk, height, size, F.A.R., setbacks, parking, signage restrictions Determine relief needed to provide sufficient flexibility for a mixed-use development 38
Primary Types of Relief Rezoning Variances Text Amendments Special Uses (P.D.) Planned Developments or Planned Unit Developments (P.U.D.) 39
Rezoning Applicant seeks a rezoning to allow more density, different uses, etc. Sometimes there is a split zoning challenge (more restrictive applies) Ex: Rezoned from M3-3 to B3-3 to allow 2 different tenants 40
Variances Typically go to a Municipality s Zoning Board of Appeals Demonstrate hardship Ex: ALDI grocery store setback relief 41
Planned Developments 42
How do you Allocate Development Rights Across Multiple Uses? Parking Different types of uses have different parking requirements When uses change (or structures built), the parking requirement may increase F.A.R. Typically controlled by the zoning district If in a P.D., some P.D.s will allocate Floor Area by Subarea or use type Mezzanines and other changes can affect F.A.R. Westfield Old Orchard 43
Who Speaks for the Development? Joint Ownership and Control Zoning Control Agreement Can be part of a larger reciprocal easement agreement or ground lease 44
Conclusions/Questions Do your due diligence, and stay up-to-date with local zoning ordinances Aim to provide as much flexibility as possible Be Proactive about who has what rights to approve changes; maintain good relationships among stakeholders 45
Vested Rights, Impact Fees, Exactions Kenneth Kecskes, Esq. kkecskes@foxrothschild.com 2014 Fox Rothschild
Why do vested rights matter? The entitlement of master planned communities and large scale projects can take many years, in some cases longer than a decade. Courts and legislatures use the vested rights doctrine to determine whether a developer has the right to build its project free from legislation enacted after project approval that might increase project costs or limit the scope of the development 47
Basic vested rights rules Majority Rule - Permit plus construction A landowner has a vested right to develop when, relying in good faith, the landowner has a made substantial expenditures in reliance on a permit approval prior to a change in zoning laws. More than 30 states follow this approach Minority Rule Permit approval for a limited time A landowner has a vested right to develop for a period of years, as specified by statute, upon receiving permit approval of the project. The balance of the states follow this approach, except a handful of states says zoning laws are frozen for a particular project as of the date filing of an application 48
Common Vesting Tools Avoid the application of majority or minority rules, if possible in your jurisdiction, by use of the vesting tools: Vesting subdivision maps A landowner with an approved vesting subdivision map gains the vested right to proceed with development (including the right to building permits) under the ordinances, standards and policies in effect when project application is accepted as complete Limited duration provided by statute 49
Common Vesting Tools Development Agreement A contract between a local government and a landowner whereby, in exchange for public benefits, the landowner receives a vested right to develop the project for an agreed upon number of years Typically better for the longer period needed to build out large scale master planned communities and mixed use projects 50
Watch Your Permit Deadlines Local governments were very gracious during the last economic downturn, extending permit deadlines by legislation or through over the counter extensions. Local governments are becoming less flexible, so review permits and understand deadlines for commencement of construction (or potentially suffer a loss of the right to build the permitted project) under: Development permits Building Permits Subdivision Maps 51
Impact Fees and Exactions What are impact fees and exactions? Payment of fees or dedication of land from a developer to the government in exchange for a permit to develop land. Examples: traffic mitigation fees, school impact fees, park fees, affordable housing fees, public art fees Sources of authority to impose fees/exactions Local government has the authority to impose exactions through the use of its police power. Any discretionary approval 52
Impact Fees and Exactions Limitations on imposition of impact fees and exactions Must substantially advance a legitimate governmental interest Must have a rough proportionality to the development s impact City must make findings to show the relationship between an project s impacts and the fee/exaction 53
Impact Fees and Exactions Practical issues relating to impact fees and exactions When to negotiate How to negotiate What to do when faced with overreaching 54
Kenneth Kecskes, Esq. 415-364-5529 kkecskes@foxrothschild.com 55