Don’t be caught by surprise! These are the types of costly public off-site improvements you may be expected to take on within your project scope.
Picture this. Your team has identified the perfect land development site. All the elements for success seem to be in place, and you have taken the proper steps to begin the project. Everything seems to be in order, and you’ve got a meeting scheduled to speak with the city planning department.
You stroll into your first meeting with the planning department full of excitement, and in the span of one meeting, the project scope snowballs to include numerous costly public improvements. New traffic signals, center medians, deceleration and turn lanes, just to name a few, and suddenly the feasibility of your project isn’t looking as realistic as it did before you walked in.
From the local government’s standpoint, the success of your project may be contingent on the work they necessitate, but the added cost for required improvements could push the project way over budget. Off-site or public street improvements can be a significant, and sometimes unexpected setback during the land development process.
In this article, we will define common off-site improvements and discuss potential ways to mitigate the process so that you can know what to expect when planning your next project.
Street Improvements
This category of improvement is one of the most nebulous. Development projects are required to undergo a traffic impact analysis to predict a development’s impact on the existing traffic flow. The resulting improvement requirements can vary greatly from project to project depending on the magnitude of the increased trip counts added to the local streets. These requirements can include items like road widening, medians, additional turn lanes, acceleration and deceleration lanes, traffic signal upgrades, and improving intersections not necessarily adjacent to the project.
Property dedications are often associated with the required public improvements. A dedication takes away from the usable area of a project, which can have significant impacts on site planning and building sizes. Understanding how much of your valuable property will be required to be dedicated during the due diligence and site planning phase is essential.
Implementing New Traffic Signals
Adding a traffic signal to a street corner can quickly make a project no longer feasible. This type of improvement starts around $300K+ for just one street corner, and in some cases, projects can be responsible for additional corners. Traffic signal implementation requires hardware including the steel poles and mast arms to support the signal that come with their own set of difficulties. Currently parts like this are on backorder, with a wait time of over 12 months in some cases. This puts the project owner in the difficult position of either ordering parts before plans are approved, or risking project-halting delays while waiting for hardware to come in. New signals also require updated software and all new programming, all of which comes at a potentially exorbitant cost.
Undergrounding Overhead Utility Lines
“Undergrounding” is the process of relocating overhead utility lines below ground. Most cities and counties have requirements that any utility poles with electric lines under a certain kilovolt (kV) threshold need to be undergrounded. Knowing this during the due diligence phase and flagging potential utility undergrounding requirements should prevent proforma surprises and enable development of a realistic schedule.
Not only is relocating overhead utilities expensive, but it also requires collaboration with utility providers, which, when not coordinated well in advance, may add a heavy layer of difficulty and untimely delays. For perspective, working through the design and approval process with an electric company can take 12 – 18 months or more. If this effort isn’t started very early in the development process, you could be facing significant project delays. Depending on the length of your development’s frontage, the cost of this type of improvement could be extensive and impactful to your schedule.
How to Mitigate Improvement Requirements
Off-site improvement requirements are inevitable, and can catch even the most seasoned developers off guard. The added expense is a factor that can very quickly make a project no longer feasible. Really, it all comes down to dollars and cents. The municipalities want the necessary improvements made (at the developer’s expense), and of course, the developer wants to keep their involvement and costs to a minimum. Ultimately, the two parties need to find a compromise that the community at large will benefit from. The strategies below can help to mitigate the financial impact of these improvements.
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Define the Scope of Work
The most important thing a developer can do to protect their interests is to define the scope of work. Project expectations should be equitable, and additional site improvements should pertain to only the developer’s frontage and side of the street. Cities and counties often start with a big wish list, but those requests are not necessarily the final outcome. It should be noted, the development is a considerable investment in the community which will bring jobs, tax revenue, and other benefits. Generally speaking, the city does not want to overburden a project to a point where the developer will walk away and the city will lose those benefits.
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Negotiate
Depending on the size of the development and the scope of the city’s requirements, the developer could threaten to cancel the project altogether, leaving the city to either make the improvements themselves, or find someone else to shoulder the cost. Developers have successfully negotiated a more reasonable expectation for improvements where both the developer and the city can agree that the community will benefit.
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Contribute a Fee
In some cases, rather than taking on the costly improvements, the project owner can offer to pay an “in lieu” fee. If a project is located in a place where the majority of the street is undeveloped, rather than just having a few minor improvements taken care of, the developer could offer to contribute to the overall improvement of the street. This can be accomplished by way of a fee so that the city can later orchestrate the full extent of the necessary improvements.
Get An Expert Involved Early
Off-site improvements are a part of the land development process and can be unpredictable. Working with an experienced civil engineer can make a big difference to the timelines and overall success of a project. Experience is key: experience in navigating every type of development project, in different cities, and under varying circumstances.
At CDR, we take a proactive approach to managing projects, anticipating off-site improvements, and other issues before they occur to keep your project on schedule and within budget. With years of experience with local public and private utility companies in Southern California, CDR’s Dry Utility Consultants specialize in guiding our clients through the complex processes of this industry. We will tell you from very early on what the requirements are going to be so you can plan around them during the process.
