One of the difficulties for real estate developers, that are new to Central Florida Real Estate Development, is the amount of time it takes to get the land entitled for construction. Entitlements include all of the processes and permits required to start construction of the land’s infrastructure. This includes all of the off-site improvements, site clearing, grading, drainage, utilities, roads, parking lots and finished building pads. This requires that all of the land planning and civil engineering permit requirements be approved by the governmental agencies having jurisdiction over the property and construction permits issued.
Obtaining all of the land use and civil engineering permits in Central Florida could take between six (6) months to two (2) years depending on the complexity of the project. The majority of the risk of development from a land planning and civil engineering (entitlement) perspective is in the approval of the “future land use” (FLU), the zoning and the “preliminary subdivision plan” (PSP) or “preliminary site plan”. The reason for this is that these processes are quasi-political.
The preference of most real estate developers is to have a minimum of 90 day due-diligence period to establish the viability and feasibility of the project. This is followed by milestones and times in the contract to obtain the various approvals from the agencies to achieve the desired yield of the land that would deem the project to be feasible. If sufficient time is not allowed to accomplish the various processes then the developer is taking on the risk from the governmental approval (entitlement) processes.
It is common, in the development of larger tracts of land, for the existing future land use (FLU) to be in place but the land has some form of agricultural zoning. The reason for this has to do with property taxes. Agricultural land has the lowest property tax rate or it may be exempt altogether. However, when dealing with very large tracts of land in the outskirts of the municipality’s service area, many times these properties need to have the future land use changed along with the zoning.
Obtaining a change in “future land use” (FLU), zoning and the “preliminary subdivision plan” or “preliminary site plan” (PSP) requires public hearings. Once the technical staff, often referred to as the “Technical Review Committee” (TRC) or “Development Review Committee” (DRC), deems the paperwork to be complete and either supports or rejects the application it goes through a public hearing process.
The public hearing process varies from municipality to municipality. In Central Florida the process mostly follows the process described herewith. After the application is reviewed by the DRC or TRC it goes to the Planning and Zoning Board (P & Z). The planning and zoning board holds a public hearing where the hearing is advertised to the adjacent property owners and property owners within a certain distance from the property boundaries. A sign is typically posted on the property as well alerting the public at large of the public hearing.
The Planning and Zoning Board is made up of members appointed by each of the County Commissioners or City Council Members. Therefore, there are the same number of officers on the planning and zoning board as there are county commissioners or city council members. The case is brought up before the Board and staff makes a presentation to the board and provides reasons as to why they are for or against the application. Subsequently, the developer and the members of the public are invited to speak either in favor or against the application.
Once the planning and zoning votes for or against the application it goes before the Board of County Commissioners or City Council. If the P & Z Board approves the application it automatically goes to the next level. If they deny it the applicant needs to file a formal appeal and then it goes to the next level. In any case the decision of the Board of County Commissioners or City Council is final unless there are legal reasons to take the matter to the courts (to be determined by the developer and its legal counsel).
This same process occurs for a change in future land use, zoning and PSP. This takes time. The process for change in future land use could take as much as one year because these cases may only be heard twice a year. A change in future land use needs to go to the State level for amending the municipality’s Future Land Use Plan.
Once the FLU change is approved the property needs to be rezoned. It should be noted, that if the property already has the proper FLU designation then the FLU doesn’t need to be changed and that step is not necessary. The process can move directly to re-zoning.
The re-zoning process typically takes 3 to 4 months depending on the availability of the municipality in these hearings and whether the project is well supported or poorly supported by either the county staff, board members or the residents. Once the re-zoning is approved then the PSP can be filed. If the property doesn’t require a subdivision then the process goes directly to final construction site plan approval.
The developer can fast-track the process by approving the Central Florida land planning and civil engineering firm to prepare all of the zoning, PSP and final site plan documents concurrently. This will save several months in the process instead of waiting, sequentially, for each approval before starting the next step. Many governmental agencies will even review the documents prior to its ability to approve them. This enables several months of time to be saved in the preparation and approval of the project.
For example, the zoning can’t be approved until the property has the proper future land use (FLU) designation. The preliminary subdivision plan, or preliminary site plan (PSP) can’t be approved until the property has the proper zoning designation. Finally, the final construction site plans (FSP) can’t be approved until the PSP is approved.
Therefore, in a perfect world the contract for purchase of the property should have a minimum 90 day due-diligence period to establish the feasibility of the project. Once the feasibility of the real estate development is established and the developer decides to move forward the other steps will be required. The contract should provide different milestones for advancing the purchase of the property to closing. For example, the contract could be based on getting the required zoning approved, getting the PSP approved and getting the construction permits. The contract could also be based on obtaining the required minimum number of lots, apartment units, or commercial square feet of building deemed necessary to make the real estate development project feasible.
All of this requires time and time is money. Negotiating a real estate purchase contract that addresses these time frames and conditions for the closing of the purchase is in the best interest of the developer. The developer should consult their attorney as well as their Central Florida land planning and civil engineering consultant to determine how long it will take to move the project through the entitlement process and obtain all of the required construction permits.
(This article is not meant to provide legal advice and you should discuss any real estate contracts with a qualified land use or real estate attorney. This article presents observations based on over 35 years of land planning and civil engineering real estate development experience in Central Florida.)
Excel Engineering Consultants is a Central Florida Land Planning and Civil Engineering Firm specializing in assisting real estate developers get their real estate development projects planned, entitled, permitted, constructed and completed. Our clients work with us because of our land planning and civil engineering expertise in Central Florida Real Estate Development and our quick response. You can contact Julian Coto at 407-260-2292, ext 102
