Evaluating the Viability of a Redevelopment Project – Is it a Diamond in the Rough or a Piece of Coal?
Developers who take on redevelopment projects do so because despite the heightened risk, there is the potential for great reward on many levels. Successful development projects are financially successful, transform communities and are intellectually satisfying because innovation and creativity are often required to overcome the inherent challenges posed by the existing development, the neighborhood or other factors. However, finding the right project is not easy, and evaluating project viability requires a complex analysis. Even experienced developers find spending money and time on lawyers and consultants who have worked on multiple successful redevelopment projects is a good investment because due diligence goes beyond the typical considerations of title, physical encroachments, property condition and zoning. In fact, that is just the beginning. If you are looking at a potential redevelopment project, here are some questions that should be answered before you commit:
- Is the proposed project located in an area identified by the government for economic development incentives? If yes, what types, and what are the requirements for benefitting from the incentives?
- Are there other redevelopment projects occurring in proximity to the proposed project, or will the proposed project be trailblazing renewal of a neighborhood?
- Are there zoning or density bonuses offered by the local government to incentivize development? If yes, what types of uses are required to be included to benefit from the bonus?
- What is the location of the nearest public transit, public services, gas stations, pharmacy and groceries?
- Is the property currently identified as a brownfield, or would it be beneficial to obtain a brownfield designation?
- If the property is environmentally contaminated, what types of remediation will be required and will the remediation process delay or change the development construction timeline or procedures?
- Will the property condition ultimately limit permitted uses of all or a portion of the property?
- Is a lender going to require insurance to cover environmental risks associated with the property?
- Is the property surrounded by neighboring uses that will negatively or positively impact the project?
- Is the proposed redevelopment consistent with the zoning of surrounding uses or will it be a departure? For example, if the proposed project will be mixed use commercial/residential building, and the existing surrounding uses are industrial from which malodorous smells emit 24 hours a day, marketing the mixed-use building to tenants might be a challenge. Conversely, if all the industrial buildings are abandoned, and the proposed project will create artist and creative industry work space paired with affordable workforce housing for artists and artisans, the neighborhood may be ideal.
- Is the proposed project in an area where crime during and after construction will be a problem?
- Do the neighbors support or oppose redevelopment in their neighborhood?
Successful redevelopment projects leverage challenges to create diamonds that sparkle with financial success and result in creating neighborhood revitalization and economic growth for the benefit of the community. If you are looking at a redevelopment project and have questions as you assess the viability of the project, our lawyers have worked on redevelopment projects for many years and will be happy to assist you in your analysis.
Leigh Kellett Fletcher has been practicing land use, environmental and real estate law since 1997 and regularly represents clients acquiring, developing and selling real estate in Florida and the U. S. Virgin Islands. She has been involved in the purchase, sale and redevelopment of multi-family residential projects, office, commercial and mixed use properties and has worked with clients to obtain land use entitlements and environmental permits to develop and expand commercial development. Read Leigh’s Full Biography